Banks had long been positioning themselves for the Fed to increase interest rates. Now, as rates inch up, some are starting to reap the rewards of that preparation, as well as of an overall improving economy.
Fulton Financial Corp.
Net income: $43.38 million, up 13.4 percent from Q1 2016
Net interest margin: 3.26 percent, up three basis points from Q1 2016
Fulton CEO Phil Wenger cited loan growth, a decline in non-interest expenses and “slightly improving credit conditions” as boons for the bank holding company at the start of 2017. An increased net interest margin – the spread between the interest banks pay depositors and the interest they collect from borrowers – also helped boost income for the first quarter.
Wenger credited part of this growth to the company’s decision to invest in additional commercial lending personnel.
“Our commercial pipeline remains strong, increasing 6.7 percent linked quarter and 12.4 percent year-over-year,” Wenger said during a call with investors. “The increase reflects our continued focus on adding commercial relationship managers, our continued calling and sales efforts, improved business activity, improved customer sentiment and market disruption.”
Fulton remains under consent orders for allegedly falling short of federal anti-money laundering and Bank Secrecy Act requirements. The company still plans to collapse its subsidiary banks into a single company once that order is removed, Wenger said during the call.
“Emerging from the orders continues to be a top priority for us, and meaningful progress has been made, but the ultimate decision remains with our regulators,” Wenger said.
The company also remains the subject of a Department of Justice fair lending investigation. Fulton officials said they had no updates on that investigation.
Codorus Valley Bancorp, Inc.
Net income: $3.4 million, up 21.4 percent from Q1 2016
Net interest margin: 3.81 percent, down 14 basis points from Q1 2016
An increased volume of commercial loans drove much of the growth for PeoplesBank parent Codorus Valley Bancorp’s in the first quarter of the year, Larry Miller, the company’s chairman, president and CEO, said in the quarterly earnings release.
The company had just over $1.3 billion in net loans as of March 31, up from the roughly $1.14 billion it had at this time last year. The increase helped lift the company’s net interest income, despite a decreased net interest margin.
Noninterest income was also up about 12.4 percent from the first quarter of 2016, thanks in part to gains on loan sales, service charges on deposit accounts and income from bank-owned life insurance, Miller said.
PeoplesBank also opened limited-service branches in three Lancaster County retirement communities over the past few months.
“Each of these facilities is off to a strong start and we are confident that our teams will be successful in building long-term relationships with the residents of these communities,” Miller said.
ENB Financial Corp.
Net income: $1.83 million, down 4.4 percent from Q1 2016
Net interest margin: 3.41 percent, up 32 basis points from Q1 2016
After reporting a 9.3 increase in net income for 2016, the holding company for Ephrata National Bank reported a year-over-year decrease in earnings for the start of 2017.
Net interest income was up 19.8 percent, and the company’s growing mortgage practice netted the bank $200,000, or 129 percent, more this quarter than in the first quarter of last year.
Still, the bank saw a $140,000 decrease in income because of increased provision expenses, mostly because it took on more classified loans this quarter (loans that are considered more likely to default).
ENB’s gains from securities sales were also lower – $140,000 for the quarter compared to $728,000 at the start of 2016 – because of the higher interest rate environment.
Operating expenses were up 16 percent from last year, in part because of hiring to support new branches and increased benefit costs.
York Traditions Bank
Net income: $605,000, down 10 percent from Q1 2016
Net interest margin: 3.45 percent. Up 11 basis points from Q1 2016
Although net income for the quarter was down year-over-year, the overall financial picture at the bank is a good one, York Traditions president and CEO Eugene Draganosky said in the bank’s earnings release.
First-quarter earnings are up 17 percent from the last quarter of 2016, and loan volume is up $48.6 million from this time last year.
So why was income so lower than this time last year?
That difference came largely from $108,000 in non-recurring income the bank received in the first quarter of 2016, Draganosky said in the release.