The Season of Earnings

It’s that time of year. Banks and credit unions are reporting first quarter 2011 financial results.


Last week marked the beginning of earnings season, and the news was full of first quarter 2011 results. Here are three snippets of bank performance with comparative credit union numbers from Callahan’s FirstLook filings (so far, we’ve got information on 2,900 credit unions representing one-third of industry assets).

  • Bank of America’s revenue is down 16% from the previous year. One key factor? Lower service income from overdraft fees, presumably because of Regulation E. FirstLook credit unions posted an ROA of 0.87%, up from the 0.55% level posted in the first quarter of 2010. Fee income is up 2.9% annually but down 9.5% quarterly, and the $542.8 million posted in the first three months of 2011 is lower than that posted in the last three months of 2010.
  • Huntington BancShares tripled net income from the first quarter of 2010. The bank cut its provisions for loan losses by more than $185 million from last year. Credit unions cut provisions for loan losses in the first quarter by more than one-third from March 2010 levels, adding an additional $222.3 million to their aggregate bottom line.
  • Umpqua Holdings reported a wider net interest margin of 4.23% thanks in part to decreasing cost of funds, increasing loan yields, and expanding investment portfolio balances. The 2,900 FirstLook credit unions posted a narrower margin of 3.24% in March 2011 from both December (3.30%) and the previous March (3.29%). Credit unions are posting lower loan interest income; however, this decrease is nearly entirely offset by a lower cost of funds. And because of a continued low-rate environment, the remaining change in investment interest income pushed the margin lower in March.