Consumer loan production totaled $2.8 billion in second quarter, which is an increase of 24% over last year. Indirect auto loans experienced a 6 percent increase in balances but this was offset by declines in the residential mortgage and home equity portfolios. Consumer loan balances continue to be impacted by consumer deleveraging and the overall economic environment including home prices.
Overall, average loans declined 1 percent linked quarter reflecting a further $638 million or 6 percent decline in the investor real estate portfolio. The company’s aggregate loan yield was flat linked quarter at 4.29 percent, primarily due to the low rate environment.
Funding mix improvement resulting in a decline in deposit costs
Average low-cost deposits improved 2 percent linked quarter while higher cost time deposits declined 10 percent. This deposit mix shift drove an improvement in the company’s funding mix during the quarter, as average low-cost deposits as a percentage of total deposits rose to 82 percent compared to 77 percent last year. This positive mix shift resulted in deposit costs declining to 32 basis points for the quarter, down 5 basis points from first quarter and 21 basis points from last year. Total funding costs declined to 60 basis points, down 20 basis points from one year ago.Net interest income from continuing operations was $838 million; an $11 million increase linked quarter. The net interest margin rose linked quarter to 3.16 percent due to lower deposit costs, lower non-accrual levels and further deployment of excess cash. Broad based asset quality improvement continues Asset quality continued to improve in the second quarter. The provision for loan losses totaled $26 million or $239 million less than net charge-offs and was down from first quarter’s provision of $117 million. Total net charge-offs decreased $67 million or 20 percent linked quarter to $265 million. The company’s loan loss allowance to non-performing loan coverage ratio increased from 1.12x to 1.20x year-over-year and the allowance for loan losses as a percent of loans was 3.01 percent as of June 30, 2012.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV