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Net income rose to $721 million, or $4.02 a share, from $690 million, or $3.98 a share, a year ago.
The $212 billion-asset regional bank said its average loans and leases increased 2% from a year earlier — and slightly from the prior quarter — as its commercial and industrial credits grew. This included financial and insurance industry customers, motor vehicle and recreational finance dealers and service industry clients. The bank also grew its consumer portfolio, with advances in its recreational finance and automobile lending.
The growth in those areas more than offset a 15% year-over-year decline in CRE loans. The bank has been consciously
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Bank CRE mortgage delinquencies continued an upward climb through the second quarter. That extended a trend that began in the final quarter of 2022, according to Trepp analyst Emily Yue. The overall delinquency rate rose to 2.01% in the second quarter from 1.83% the previous quarter, "reflecting mounting pressure on the commercial real estate sector," Yue said.
In comments at a September conference, however, Bible said Federal Reserve interest rate cuts would lower borrowing costs and likely boost loan demand in coming quarters. This could also lower costs for CRE borrowers with adjustable-rate loans and minimize the likelihood of credits souring. Lower rates could gradually reduce banks' deposit costs, too, supporting the margin between what banks pay for funding and earn on lending.
The Fed cut its benchmark rate by 50 basis points last month and signaled that several more reductions were likely later this year and next year.
Increased lending that is funded with more favorably priced deposits would bolster
Its net interest margin was 3.62%, up 3 basis points from the prior quarter but down 17 basis points from a year earlier.
The bank said its nonaccrual loans as a percentage of loans outstanding declined to 1.42% from 1.50% the previous quarter and 1.77% a year earlier.
Provisions for credit losses fell to $120 million from $150 million a year ago.