Most of the banks with $10 billion to $100 billion in total assets recorded an improvement in earnings in the first quarter amid an improving economic outlook.
Among the 53 banks with $10 billion to $100 billion in total assets that had reported earnings as of April 23, 13 reported a decrease and one posted no change in EPS quarter over quarter. On a year-over-year basis, only two banks — Pine Bluff, Ark.-based Simmons First National Corp. and Pittsburgh-based TriState Capital Holdings Inc. — reported a decrease in EPS.
Rosemont, Ill.-based Wintrust Financial Corp. saw the second-largest quarter-over-quarter EPS increase, on a nominal basis, behind California's Farmers & Merchants Bank of Long Beach. Wintrust recorded a negative provision for credit losses of $45.3 million in the quarter, versus $1.2 million of provision expense in the prior quarter. "The negative provision was driven by a reduction in the allowance for credit losses, primarily due to improvements in the macroeconomic forecasts," Wintrust CFO David Stoehr said on a call to discuss earnings.
The largest year-over-year nominal EPS increases in the group were recorded by Farmers & Merchants Bank of Long Beach; Portland, Ore.-based Umpqua Holdings Corp.; and Beverly Hills, Calif.-based PacWest Bancorp, with both Umpqua and PacWest swinging to net income in the first quarter from net losses a year earlier. Umpqua recorded no provision for credit losses for the first quarter, compared with $118.1 million in the prior-year period, while PacWest's provision for credit losses for the period decreased by $58 million to a benefit of $48 million, compared to a $112 million provision for the first quarter of 2020. Executives from both Umpqua and PacWest attributed the lower provisioning to improvements in the macroeconomic forecast, among other factors.
Salt Lake City-based Zions Bancorp. NA, one of the larger banks in the asset range, recorded earnings improvement both quarter over quarter and year over year. The company's first-quarter results reflect an "improving credit environment and outlook, which resulted in minimal net charge-offs and a substantial reversal of loan loss provisions made in prior quarters" as the COVID-19 pandemic took hold, Chairman and CEO Harris Simmons said in the company's earnings release.
On an earnings call, Simmons said the EPS increase in the first quarter from the fourth quarter of 2020 can be attributed to the lower provision for credit losses. The company recorded a negative provision for credit losses of $132 million in the most recent quarter, compared to a negative provision of $67 million in the fourth quarter of 2020 and a positive provision of $258 million during the first quarter of 2020.
The reserve release, which is almost double the size of the release in the past quarter, was the result of continued improvement in the economic outlook, among other factors, according to Simmons.
On a quarter-to-quarter basis, Houston-based Cadence Bancorp. logged the largest nominal EPS decrease of 73 cents from the linked quarter. During the company's earnings call, Cadence Chairman and CEO Paul Murphy said he thinks the first quarter was a "solid" one. "We're pleased with the results and credit for the first quarter, and we maintain a view that credit trends will continue to improve as the year progresses," he said. The bank's 2020 fourth-quarter results included a $129.5 million benefit from accelerated hedge revenue.