Fourth-quarter profits rise at Washington area banks
By Abha Bhattarai,
Profits rose at Washington area banks during the fourth quarter, as low interest rates continued to boost commercial and mortgage lending.
Of 10 area banks that recently posted fourth-quarter earnings, all reported increases in profits. Total assets, deposits and loans were also generally on the rise as the broader economy improved.
“Mortgage loans are [running] on all cylinders right now,” said Catherine Mealor, senior vice president at investment bank Keefe, Bruyette & Woods. “Refinance business really picked up [in the fourth quarter] and we’re seeing really strong loan growth across the industry.”
For some banks, such as Waldorf-based Tri-County Financial, where profits nearly tripled, fourth-quarter results signal a return to pre-recession growth levels.
The bank’s profits rose to $1.47 million, or 47 cents a share, up from $494,000, or 15 cents a share, a year ago.
“Our earnings per share ... [was] better than last year, and our best performance since 2007,” said Michael Middleton, the bank’s chairman and chief executive. “We’re seeing our market stabilize.”
At Bethesda-based Eagle Bank, an increase in both loans and deposits helped boost profits by 42 percent. Earnings for the fourth quarter totaled $10.2 million, or 44 cents a share, up from $7.2 million, or 35 cents a share, a year earlier.
“This marks the first time our profits for the quarter have exceeded $10 million,” Ron Paul, the bank’s chairman, said in a call with investors.
Banks across the region had similar experiences leading to double- and triple-digit growth in fourth-quarter profits: McLean-based Capital One (107 percent), Access National in Reston (89 percent) and Cardinal Bank in McLean (58 percent).
However, Mealor cautioned that demand for mortgage loans may begin to taper off in mid-2013, leaving banks to rely more heavily on core deposits and other types of lending for future profits.
“It’s not going to last forever,” she said. “But the D.C. market certainly has been one of the strongest markets in the country.”
For detailed earnings charts for area banks, see Page 30.