Tuesday, April 15, 2008

VISA IPO balances bad loans for Regional Banks

The much anticipated balance sheet deterioration in U.S. regional banks has not materialized yet, although first quarter earnings show a concerning trend of increases in write offs and provisions for loan losses. Shares of regional banks rallied on Tuesday as analysts said that first quarter credit trends were not as bad as some had feared. Strong gains from transaction processor VISA Inc's IPO also helped bolster earnings reports.

here are some examples:
In Alabama, Birmingham-based Regions Financial Corp.'s net loan charge-offs rose to $125.8 million, or an annualized 0.53% of average net loans, in the first quarter of 2008, up from $107.5 million, or an annualized 0.45%, in the prior quarter.

In Minnesota, U.S. Bancorp saw quarterly loan-loss provisions soar to $485 million from $177 million.

In Milwaukee, Marshall & Ilsley said first-quarter charge-offs totaled $131 million, as the company raised its provision for loan and lease losses all the way to $146.3 million from $17.1 million.

In western New York, M&T Bank Corp.'s provision for credit losses increased to $60 million in the first quarter of 2008 from $27 million in the year-earlier quarter. Net charge-offs of loans during the recent quarter were $46 million, compared with the prior year's $17 million.

source: Bad loans paint grim landscape for regional banks
By Greg Morcroft, MarketWatch

No comments: