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The lackluster earnings season for regional banks continued. Executives at Fifth Third and BB&T shared concerns about margin shrinkage and other forces beyond their control, and they provided contrasts in expense control and management of interest rate uncertainty.
October 16 -
Market tumult and a disappointing third-quarter revenue report Wednesday loomed larger over Bank of America, putting it in a bind unique among the nation's megabanks.
October 15 -
Regional banks are doing their best to hold down expenses, compete for quality loans and generate more fee income, but until the Federal Reserve raises interest rates, their quarterly profits will remain sluggish, bankers and analysts say.
October 15
Capital One Financial reported flat third-quarter earnings Thursday as rising loss provisions offset modest loan growth.
The McLean, Va., company announced net income of $1.08 billion, which was slightly below the $1.11 billion it earned in the third quarter of 2013. The firm's net income per share was $1.86, which was up from $1.84 in the same period a year earlier.
Capital One, which is best known for its credit card business but also make auto, home and commercial loans, recorded a $993 million provision for credit losses. That was up 17% from the same period a year earlier.
The company bolstered its loss provisions despite the fact that chargeoff rates on its loans continued to fall. Its total net chargeoff rate was 1.52% in the third quarter, down from 1.92% in the third quarter of 2013.
Capital One's revenue was basically flat in the third quarter. The firm reported $5.64 billion in total net revenue, which compared with $5.65 billion in the three-month period in 2013.
The company's net interest margin fell slightly as the yield rate on its loans shrunk. Capital One's net interest margin was 6.69% in the third quarter, down from 6.89% one year earlier.
Loan growth was a bright spot for Capital One, except in mortgages.
Average home loans held for investment totaled $35.6 billion in the third quarter, down 16% from the same period a year earlier.
But in commercial banking, average loans held for investment totaled $49.8 billion during the third quarter, up 17% from the third quarter of last year.
And in Capital One's flagship credit card business, average loans held for investment totaled $79.4 billion during the third quarter, up 2% from a year earlier.
In a news release, Capital One Chief Executive Officer Richard Fairbank called the results "solid," adding that the company has "the financial strength to deliver very attractive risk-adjusted returns while we invest to drive future growth."
