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6 Banks Actually Growing Their Banking Business

NEW YORK (TheStreet) -- Now that the bulk of first-quarter earnings season has passed, TheStreethas identified six actively traded banks that grew their net interest income and their net interest margins.

And that's no mean feat in a prolonged low-rate environment.

While so much of the earnings coverage this season has focused rightly on recovering trading revenues for the largest U.S. banks, and also on confusing one-time items, some banks have also managed to grow their actual banking businesses.

Using data provided by HighlineFI, we isolated six actively traded names that grew their first-quarter net interest income sequentially and year-over-year, and to keep things honest, since these numbers could easily go up just from acquisitions, we only included banks that also saw sequential and year-over-year increases in net interest margin, which is the difference between the average yield on loans and investments and the average cost for a bank's deposits and wholesale borrowings.

We limited the list to actively traded names with average trading volume of at least 40,000 shares.

This type of approach excludes a couple of solid earners that grew their net interest income very nicely, but saw their net interest margins decline, along with other credit card lenders:

  • Discover Financial (DFS) grew its first-quarter net interest income by 3% sequentially and 10.5% year-over-year, to $$1.3 billion during the first quarter. The company was excluded from our list because its net interest margin declined to 7.63% during the first quarter from 7.95% in the fourth quarter. Discover's first-quarter return on average assets (ROA) was 3.63% and its return on average equity (ROW) was a world-beating 29.57%, according to HighlineFI.
  • Capital One Financial (COF) saw its first-quarter net interest income increase by 7% sequentially and 9% year-over-year, to $3.4 billion. The company was excluded from our list because its first-quarter net interest margin of 6.20% declined from 7.26% the previous quarter, reflecting the fact that the deposits gained through the company's ING Direct (USA) acquisition have yet to be deployed through the purchase of HSBC's (HBC) U.S. credit card portfolio, which is expected to be completed during the second quarter. Capital One's first-quarter ROA was 2.28% and its ROE was 17.02%, according to HighlineFI.

Here are the six actively traded bank stocks, for companies that through Tuesday had reported sequential and year-over-year increases in net interest income, as well as in their net interest margins, ordered by ascending year-over-year growth in net interest income:

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