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Click on individual bank names in the table below to access American Banker's coverage of each company's earnings report. Links to relevant coverage, filings, releases, and bank benchmark profile data can be found in the Related Links area of each article.
April 29
The first two quarterly reports from regionals spoke volumes about the widening gap between healthy banks and those in recovery.
M&T Bank Corp. and KeyCorp curbed loan losses in the first three months of the year, but M&T alone showcased its profit potential by expanding loans for a second consecutive quarter as it added more than $500 million of business loans.
Doubts remain about the earnings power at KeyCorp. The continuing runoff of $5 billion of unwanted car dealership, construction and other types of loans squeezed revenue and hurt margins. Fee income, which KeyCorp relies on more than most banks of its size, also stagnated because gains from investment banking and securities sales lagged.
"It is very difficult to predict their 'normalized-earnings power,' " Terry McEvoy, an analyst with Oppenheimer & Co. Inc., said of KeyCorp.
M&T's shares rose 2.18% Monday, to $87.21. KeyCorp's shares fell 2.61%, to $8.59.
The contrast between M&T, with $68 billion of assets, and KeyCorp, with $90 billion of assets, may foreshadow the disparity among other banks in different stages of their recoveries as they report earnings over the next two weeks, experts said.
Both companies are profitable. M&T posted a $206 million profit and KeyCorp a $173 million profit. But KeyCorp is having trouble showing it can make money outside of recapturing capital set aside to absorb loan losses.
M&T, with more than 700 branches from New York to Maryland, is demonstrating it has the means to increase revenue.
"We seem to be coming off a period where loans have been declining for several quarters," said Rene Jones, its chief financial officer. During the economic downturn "we were able to continue to lend and that allowed us to bring on more customers."
Business-related lending increased at an annual rate of 9% in upstate New York and 21% in the New York City region, Jones said. As the economy recovers in the Northeast, M&T is benefiting from a "broad-based" uptick in demand for credit from manufacturers, health care companies and other non-housing-related businesses, he said.
Jones said the M&T's first-quarter results only hint at its earnings potential after the economy stabilizes and it closes its deal to purchase Wilmington Trust Corp. of Baltimore.
"We're in great shape," he said. "That's what it comes down to."
Quarter to quarter, M&T's net interest margin widened, due in part to more loans and cheaper deposits. The company continues to replace pricier short- and long-term borrowings with noninterest and core deposits; commercial loans increased about 4%. Fee-based income increased 10%, and mortgage revenues increased from the prior quarter because it didn't have to buy back as many bad mortgages from investors. It also booked a gain of $39 million selling $484 million in securities to manage capital as it prepares for more loan growth as well as the integration of Wilmington Trust Corp.
KeyCorp, which has more than 1,000 branches in 14 states, isn't quite free of its past problems with bad construction loans.
It posted weak first-quarter results aside from $47 million gain from lower credit costs. Interest from loans declined as total loan balances declined about 3%, and about $90 million of commercial bank loan growth was far exceeded by $1.5 billion in business and consumer loan runoff.
Beth Mooney, who is scheduled to succeed Henry Meyer as KeyCorp's CEO in May, said the bank is poised for growth in the second half of the year after returning its federal aid in the first quarter and making progress winding down several national lending businesses.
KeyCorp, with a core capital level that is among the highest in banking, has a lot of "strategic flexibility" to make acquisitions, invest in loan growth, increase dividends or repurchase stock, Mooney said.
She said Key Corp is getting back to its roots as a regional bank — but one that has "a lot of capabilities that I would say the large New York investment banks have."
Key aims to bring Wall Street-type investment banking services to midsize companies around the country.
"I don't see another regional bank out there with those capabilities," Mooney said. "I think it is over time going to be a very compelling business model."
