Many banks reported a profit in the first quarter of 2011, but struggled with growing loans as weak demand continued to impact many parts of the economy. There were a few institutions that managed to grow loan balances on either a sequential or year-over-year basis.
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Huntington Bancshares (Nasdaq:HBAN) reported a 3% annualized growth in average total loans in the first quarter of 2011, compared to the final quarter of 2010. The bank cited particularly strong annualized growth in commercial and industrial loans and automobile loans, which were up 11% and 13%, respectively. Commercial real estate loans and other consumer loans were the weakest areas with annualized declines of 16% and 12%, respectively. (Learn more about commercial real estate. see Find Fortune In Commercial Real Estate.)
Huntington Bancshares also grew its loan portfolio by 3% on a year-over-year basis, from $37 billion in the first quarter of 2010 to $38.1 billion in the most recent quarter. This might quell the argument that the loan growth was seasonal and not reflective of true growth.
Fifth Third Bancorp (Nasdaq:FITB) also reported modest growth in average loans in the most recent quarter. The bank said that its loan portfolio grew 2% sequentially, but declined by 1% over the final quarter of 2010.
People's United Financial (Nasdaq:PBCT) reported a $195 million increase in loans in the first quarter of 2011 relative to the final quarter of 2010. This was annualized loan growth of 4.5% and excludes any loans acquired during the quarter.
SunTrust Banks (NYSE:STI) had a smidgen of loan growth in the first quarter of 2011, with average loan balances totaling $115.2 billion, compared to $114.9 billion in the final quarter of 2010. On a year over year basis, average loan balances grew by $700 million, or 1%.
One thing that investors should consider is that loan growth is not necessarily the most important feature to look for when analyzing a bank. Many banks were devoted to growing assets and loans prior to the financial crisis and recession, only to find themselves with huge amounts of nonperforming loans that many are still trying to work through.
Also, public companies typically perform "spin control" on earnings releases and highlight whatever makes them look better to investors. Fifth Third Bancorp reported no growth in loans if period end loan balances are used rather than average balances during the quarter.
Most banks reported a profitable first quarter of 2011 as they continued to manage loans that turned ugly during the recession. A few even managed to show loan growth in the quarter. (For related reading, see Tips For Recession-Proofing Your Portfolio.)
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