Second-quarter earnings from the nation's big banks show the firms experiencing modest loan growth and higher pre-provision earnings during the period, FBR Capital Markets
said in a new report.
Still, total loan balances remained largely flat at the nation's banks, according to the analyst firm's report.
FBR Capital noted that of the 13 covered banks, which hold 68% of U.S. banking assets, loan growth was relatively flat in the quarter even though commercial and industrial loan growth did occur in 11 of the 13 institutions.
Meanwhile, the regional players experienced stronger loan growth largely due to smaller run-off portfolios and a greater deal of exposure to commercial and industrial lending as opposed to the residential loans that are slowing down big banks.
Commercial and industrial loans grew 2.2% in the most recent quarter, while residential lending experienced a 0.3% decline, FBR Capital said. Large players like U.S. Bancorp (USB)
, PNC Financial Services (PNC)
, JPMorgan Chase (JPM)
and Wells Fargo (WFC)
grew their C&I lending by more than 2%.
"We believe this quarter showed some promise, as core operating pre-provision earnings bounced slightly from their slide over recent quarters, there was modest loan growth at some banks, and credit continues to slowly recover," FBR Capital said in its report.
Overall, the outlook for banks was more optimistic after the release of second-quarter earnings, according to FBR Capital.
SunTrust Banks (STI) exemplified this trend
, recording a second-quarter profit of $174 million, or 33 cents per share, up from a loss of $56 million, or 11 cents per share, during the second quarter of 2010.
SunTrust attributed its earnings growth to improvements in the overall quality of its assets.
U.S. Bancorp (USB) experienced
a 57% jump in earnings from year ago levels, with a profit of $1.2 billion, or 60 cents per share, in the second quarter. The firm cut its provision for credit losses more than half to $572 million, down from $1.1 billion a year earlier. In addition, net charge-offs on residential loans fell from $138 million in the second quarter of 2010 to $119 million.
Meanwhile, Wells Fargo & Co
. (WFC) posted second-quarter earnings
of $3.9 billion, or 70 cents per share, up from $3.8 billion, or 67 cents per share, a year earlier. The San Francisco-based bank attributed its higher earnings to increased revenue, loans and deposits as well as improved credit quality and higher capital levels.
PNC Financial Services Group earned
$912 million, or $1.67 per share, in the second quarter, as nonperforming assets declined.
JPMorgan Chase & Co. (JPM) posted a second-quarter profit
of $5.4 billion, or $1.27 a share, even as the banking giant continued to record charge-offs from its mortgage portfolio. CEO Jamie Dimon said JPMorgan's delinquency and net charge-off trends improved modestly over the previous quarter.
Bank of America (BAC)
, on the other hand, reported an $8.8 billion loss
for the second quarter on the bank's $8.5 billion settlement with mortgage-backed securities investors.
When analyzing the banks' second-quarter earnings reports, FBR Capital concluded that competition is growing between banks when it comes to rates and that "makes us uneasy as this is not a good environment to grow loans, and competition makes it worse," analysts with FBR said.
Write to Kerri Panchuk