With news from Northern Trust, National City Corp., U.S. Bancorp, Anchor Bancorp and Associated Bank
Northern Trust to receive boost from feds
Northern Trust Corp. announced Monday it is among the first 14 U.S. banks to receive capitalization from the U.S. Treasury Department’s financial industry rescue plan.
The Treasury will purchase $1.5 billion in Northern Trust’s preferred stock.
Chicago-based Northern Trust operates a wealth management office in downtown Milwaukee.
"Northern Trust fully supports the U.S. government’s efforts to strengthen our nation’s financial system," said Frederick Waddell, president and chief executive officer of Northern Trust, which is the 21st-largest American bank. "While our capital ratios exceed, by a considerable margin, those needed to earn the designation ‘well capitalized,’ the program will provide us with additional capital to maximize growth opportunities."
The other three banks that announced today they will join the ranks of the institutions receiving the federal funds are Huntington Bancshares, KeyCorp and SunTrust.
The government already had provided $257.7 billion to the 10 largest financial institutions, including a $7.7 billion investment in PNC Financial Services Group Inc., which announced Friday it will acquire National City Corp.
PNC to acquire National City
Pittsburgh-based PNC has reached terms to acquire Cleveland-based National City Corp., the corporate parent of National City Bank for $2.23 per share, or an aggregate fixed amount of $5.2 billion in PNC stock.
National City entered the Milwaukee market last year, when it acquired MAF Bancorp Inc., the parent company of MidAmerica Bank that had acquired St. Francis Capital Corp., the former parent company of St. Francis Bank, in 2003. MidAmerica Bank operated 24 branches with $1.3 billion in deposits in the Milwaukee area.
The merger will create the fifth largest bank in the U.S., based on deposits, PNC said this morning. The bank will be the fourth largest in the U.S. based on its number of branches. The merged bank will have large concentrations of branches in Pennsylvania, Ohio, Kentucky, Indiana and Maryland.
After the transaction closes, all National City banking affiliates will be absorbed into PNC. All National City branches will be rebranded as PNC Bank. National City shareholders will be entitled to 0.039 share of PNC stock for each share of National City stock.
Fifth Third Bancorp on Saturday said it has held talks with the Treasury and filed an application to receive a government investment of about $3.4 billion.
U.S. Bancorp still profitable
The Minneapolis-based parent company of U.S. Bank reported third-quarter net income of $576 million, or 32 cents per share, down from $950 million, or 53 cents per share, in the same period a year ago.
U.S. Bancorp chairman, president and chief executive officer Richard Davis said, "U.S. Bancorp’s third quarter results reflected the underlying strength of our banking franchise and business model, as well as the challenges presented to us by the current operating environment. Strong year-over-year growth in average loans and deposits, an expanded net interest margin and higher fee-based revenue, demonstrated our ability – and on-going opportunity – to provide banking products and services to our growing customer base."
Davis said market conditions led to valuation losses on certain investments and higher credit costs.
"As expected, credit costs were higher this quarter, reflecting stress in the residential mortgage portfolio and residential homebuilding and related businesses, as well as the overall economy. Net charge-offs of $498 million were higher than the previous quarter by 25.8 percent and equal to 1.19 percent of average loans outstanding. Nonperforming assets ended the quarter at $1,492 million, an increase of 31.5 percent over the second quarter of this year, and equal to .88 percent of outstanding loans plus other real estate," Davis said. "We began this credit cycle with a strong balance sheet and we intend to keep that balance sheet strong throughout, and beyond, the end of this cycle. Credit costs will continue to increase in the coming quarter, but we expect that increase to be manageable given the company’s capacity to produce solid, core operating earnings."
Anchor Bancorp announces penny dividend
The board of directors at Anchor BanCorp Wisconsin Inc., the corporate parent of Madison-based Anchor Bank, announced a one-cent dividend for the second quarter of fiscal 2009 to be paid on Nov. 15.
The dividend is a nine-cent reduction from the bank’s first quarter payment for fiscal 2009.
"In view of the financial challenges presented by the current economic environment, the Board felt that the most prudent course of action was to focus on maintaining our capital position versus paying out these funds in the form of dividends," said Douglas Timmerman, chairman of the bank.
The bank plans to raise as much as $200 million in additional capital, and may participate in the U.S. Treasury’s bank stock purchasing program, Timmerman said. The program is part of the Emergency Economic Stabilization Act passed by Congress earlier this month.
"While we currently meet all regulatory capital requirements, current economic conditions make achieving a higher capital level a sound and fiscally responsible strategy," Timmerman said.
Associated Bank pays 32 cent dividend
Associated Banc-Corp declared a 32-cent cash dividend last week, payable on November 17, 2008 to shareholders of record on November 7, 2008.
The bank paid a similar dividend at the close of the second quarter of this year and paid a 31 cent dividend after the third quarter of 2007.