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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.
July 28
BB&T Corp., Fifth Third Bancorp and Huntington Bancshares Inc. have a tough sales job on their hands. It involves convincing skittish investors that the companies can continue to grow in auto and business lending without slashing prices or standards — even as rivals offer increasingly attractive terms.
Meanwhile, concern is growing that the lending momentum seen recently at the three regionals could prove short-lived. Executives at all three banks played down such fears in discussing their second-quarter results on Thursday and insisted that they will to stick to their guns on rates and underwriting.
At BB&T, average loan balances, excluding construction, acquired and covered loans, rose 3.4%, or nearly $800 million, to $94 billion quarter to quarter.
The "primary driver" of BB&T's loan growth in the quarter was "market share movement," Chairman and Chief Executive Kelly King said during a conference call. "The increase in risk would be zero."
The Winston-Salem, N.C., company has been increasing its share in places like Alabama and Florida, where failures and mergers have created a competitive vacuum for large and midsize corporate loans.
The question is whether the regionals' safe strategies can sustain growth in an increasingly competitive market.
"Other guys are really undercutting pricing," said Paul Miller, managing director and head of financial institutions research at FBR Capital Markets. "I think it is just killing the regionals."
BB&T acknowledged that view. "The most pressure is on pricing, but we are beginning to see … structural issues developing," said Clark Starnes, its chief risk officer. "Frankly we are just not choosing to participate."
Unlike the regionals, top banks like Bank of America Corp. and Wells Fargo & Co. can make up for thin loan spreads by generating fees from other services. U.S. Bancorp competes on price, thanks to a very low ratio of expenses to revenue.
"The big guys are taking additional risks, but they're able to handle it better," Miller says. "Something has to give. It has to be [looser underwriting standards or pricing] or no growth."
BB&T earned $307 million on $2.18 billion in revenue in the quarter.
Huntington made a similar case that it can still make lucrative, safe loans in the face of stiffer competition. The Columbus, Ohio, company's total loans rose 1%, or $400 million, to $38.5 billion quarter to quarter on higher commercial industrial and automotive lending. It said that its rates on new car loans to borrowers with good credit in the quarter remained higher than the industry average in the quarter. They also did not narrow as sharply as the average industry rates.
Huntington earned $146 million on $633 million in revenue in the quarter.
Fifth Third's total loans grew by about $300 million, or less than 1%, in the period, to $77 billion, on stronger commercial and industrial and auto lending.
The Cincinnati company said it would proceed cautiously on pricing and risk in auto lending portfolio. Fifth Third CEO Kevin Kabat said experience, not just pricing, matters in that category.
It has "strong relationships with our dealers and dealerships … so we're positioned a little bit differently than, obviously, a national player from that perspective and we think that's a business that we can continue to stay in and continue to contribute to our growth," he said.
