These 12 US Big National/Regional Banks had their Total Pretax Income in the 2Q 2012 decline by 3% from the 2Q 2011, which was a marked earnings reversal from the 10% earnings growth experienced by these same 12 Banks in the 1Q 2012 as compared with the 1Q 2011.
And there was a lot of noise in these 2Q 2012 earnings reports, as follows:
· Bank of New York Mellon reported a Special Pretax Litigation Charge in the 2Q 2012 of $350 mil, which I excluded in the Pretax Income numbers below.
· PNC Financial reported a Pretax Charge from Redemption of Preferred Securities in the 2Q 2012 of $130 mil, which I excluded in the Pretax Income numbers below. PNC also reported Provisions for Residential Mortgage Loan Repurchase Obligations in the 2Q 2012 of $438 mil, which I included in the Pretax Income numbers below.
· BB&T benefited from much higher Mortgage Banking Income and Insurance Income in the 2Q 2012.
· Fifth Third Bancorp’s PTI numbers in both years exclude Gains from revaluing its Warrant in Vantiv.
· Regions Financial benefited from reporting a substantially lower Provision for Loan Losses…..$26 mil in the 2Q 2012 and $398 mil in the 2Q 2011.
· SunTrust Banks also benefited from reporting a lower Provision for Credit Losses…..$300 mil in the 2Q 2012 and $392 mil in the 2Q 2011.
· M&T Bank’s 2Q 2011’s Pretax Income amount below excludes a $65 mil Acquisition Gain.
But the most significant noise of all was Capital One Financial, whose 2Q 2012 earnings included a $1,200 mil earnings charge for a Loan Loss Allowance established as a result of its acquisition in 2012 of HSBC US’ credit cards. I think there is something wrong with US Generally Accepted Accounting Principles, or the way they are being applied, if Capital One Financial, as well as other financial firms, are able to book this huge charge all at once, which is considered by many as a one-off, and then subsequently fine-tune down the resultant Reserve Allowance, thereby being able to increase their future earnings for many quarters…..a bit of an accounting flim-flam, I think.
I included this $1,200 mil charge in Capital One Financial’s Pretax Income below.
I excluded from Capital One Financial’s 2Q 2011 Pretax Income its Bargain Purchase Gain of $594 mil.
I don't think it is good for the US economy for the two largest traditional banks to have their earnings growth in the 2Q 2012.....Wells Fargo at 17% and US Bancorp at 19%.....which is so much better than the 3% total earnings decline of these 12 much smaller banks.
Below here is the Pretax Income (PTI) of these 12 US Big National/Regional Banks for the 2Q 2012 and the 2Q 2011.
| Increase | Increase | |||
| PTI | PTI | (Decrease) | (Decrease) | |
| 2Q 2012 | 2Q 2011 | Amount | % | |
| mils $s | mils $s | mils $s | ||
| US National/Regional Banks | ||||
| Bank NY Mellon | 939 | 1,034 | (95) | -9% |
| PNC Financial | 849 | 1,146 | (297) | -26% |
| BB&T | 729 | 418 | 311 | 74% |
| State Street Corp | 652 | 715 | (63) | -9% |
| Fifth Third Bancorp | 509 | 477 | 32 | 7% |
| Regions Financial | 477 | 45 | 432 | 960% |
| SunTrust Banks | 368 | 237 | 131 | 55% |
| M&T Bank | 352 | 383 | (31) | -8% |
| Key Corp | 288 | 346 | (58) | -17% |
| Northern Trust | 266 | 230 | 36 | 16% |
| Capital One Financial | 236 | 801 | (565) | -71% |
| Huntington Bancshares | 202 | 195 | 7 | 4% |
| Total all 12 | 5,867 | 6,027 | (160) | -3% |
