Stock markets were generally higher at midday on Friday, with modest gains for major market benchmarks of up to a quarter-percent. Generally positive economic data have market participants feeling more upbeat about the possibility of avoiding a full-blown recession, and that could help justify what has already been an impressive move higher for stocks since the October 2022 lows.
Yet one area that is still feeling a lot of uncertainty is the regional banking industry. A trio of financial institutions gave their latest readings on their financial condition on Friday, and investors generally still seemed quite nervous about the prospects for another mini-crisis that could prompt weaker institutions to fail.
Below, you'll see what Regions Financial (RF 1.26%), Huntington Bancshares (HBAN 1.71%), and Comerica (CMA +0.00%) had to say about their respective performances.
Regions holds up
Shares of Regions Financial were down about 4% early Friday afternoon. The Alabama-based bank's second-quarter results had a considerable amount of good news, but investors seemed to focus on the less-certain aspects of its current condition.
Regions saw its revenue climb 12% year over year to $1.96 billion, based largely on a 25% jump in net interest income.
But noninterest income sources saw a considerable retracement, falling 10% from year-ago levels as drops in deposit-account service charges and income from capital markets and mortgage activity weighed on the top line. Net income remained roughly flat at $556 million, working out to $0.59 per share.
NYSE: RF
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Other metrics were mixed. Loans rose nearly 9% to $98.6 billion, but average deposits were down 10% from year-ago levels to $125.5 billion. Most asset-quality measures were fairly constant, although provisions for credit losses and net loan charge-offs doubled from extremely low levels.
Despite the fact that Regions didn't have to participate in the Fed stress tests this year, its common equity tier 1 (CET1) ratio climbed above the 10% mark, and other measures of capital strength looked positive as well. That shows the measure of the efforts Regions Financial has made over more than a decade.
Huntington keeps up its momentum
Shares of Huntington Bancshares were little changed on Friday. The Ohio-based regional bank reported generally favorable results for the second quarter.
Huntington's headline numbers were solid. Net revenue climbed 9% year over year to $802 million, buoyed by a 7% rise in net interest income. Net income rose almost 4% to $559 million, working out to $0.35 per share.
Although average deposits during the quarter were down slightly, Huntington had recovered its lost ground by the end of the period, with ending deposits up by $2.7 billion from where they were at the end of March.
NASDAQ: HBAN
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Huntington boosted its CET1 ratio to 9.82%, continuing a longer trend. CEO Steve Steinour called out the bank's award-winning performance from J.D. Power for customer satisfaction, and that could prove to be essential for regional banks looking to hang on to customers in an environment of high interest rates.
Comerica eases lower
Lastly, shares of Comerica fell 3%. Second-quarter performance for the Dallas-based regional bank was fairly solid.
Comerica reported net income of $273 million, which was up nearly 5% year over year. Earnings of $2.01 per share came in ahead of what some investors had expected to see. But Comerica kept seeing declines in average deposits, even as average loans outstanding kept climbing. An 11% rise in net interest income was helpful in boosting the bottom line, although noninterest income also saw considerable strength.
NYSE: CMA
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Investors could have been pleased at Comerica's efforts to boost efficiency and cut costs. Yet they seemed unimpressed with management's outlook, which called for a 14% to 15% drop in average deposits in 2023 and relatively modest 1% to 2% gains in net interest income.
Overall, regional banks haven't yet established that they've made it through the worst of times. Until they can accomplish that task, it could be hard for even encouraging results to generate lasting share-price gains.
