Key Highlights

  • Net income reached USD 116.2 million, or USD 0.48 per diluted share, against USD 97.1 million a year earlier.
  • Net interest income was USD 218.9 million, with net interest margin at 4.48% against 4.36% in the prior-year quarter.
  • The efficiency ratio on a fully taxable equivalent basis improved to 45.4% from 47.7% a year earlier.
  • The Common Equity Tier 1 ratio was 29.1%, which management put at USD 2.0 billion above its 13.5% long-term target.

Margin and Fee Income Lead Growth

Central Bancompany (NASDAQ:CBC), the holding company for The Central Trust Bank, announced preliminary third-quarter results on Tuesday. Net income was USD 116.2 million, or USD 0.48 per diluted share, against USD 113.8 million and USD 0.47 in the second quarter and USD 97.1 million and USD 0.44 a year earlier. Return on average assets was 2.27%.

Net interest income was USD 218.9 million, up 10.0% from the prior-year quarter. Net interest margin rose to 4.48% from 4.40% in the second quarter, driven by higher loan and securities yields, loan growth, a favorable earning asset mix and lower interest-earning cash balances. Average earning assets grew 7.1% to USD 19.4 billion.

Noninterest income was USD 66.8 million, up USD 9.7 million, or 17.0%. Wealth management revenue rose 16.7% to USD 23.6 million as assets under advice grew 13.8% to USD 17.5 billion. Mortgage banking revenue fell 14.3% to USD 8.8 million on lower origination volumes.

Loans, Deposits and Expenses

Average loans held for investment were USD 11.7 billion, a 3.2% annualized increase from the second quarter, even as the company worked to reduce certain consumer loan balances. Average deposits were USD 15.4 billion, up 4.4% from a year earlier, including 6% growth in noninterest-bearing deposits. The cost of deposits was 1.11%, down 8 basis points from a year earlier.

Noninterest expense was USD 131.0 million, up 3.2%, well below revenue growth. Salaries and employee benefits were USD 80.0 million, up 6.3% on merit increases and performance pay, partly offset by a 13.9% drop in legal and professional fees. The provision for income taxes was USD 34.4 million at an effective rate of 22.8%.

Credit and Capital

The provision for credit losses was USD 4.0 million, up 14.2% from the second quarter on loan growth. The allowance for credit losses was USD 150.9 million, or 1.29% of loans held for investment. Nonperforming assets were USD 66.0 million, or 33 basis points of total assets against 30 basis points a year earlier. Net charge-offs were USD 3.6 million, or 12 basis points annualized, and delinquent loans were 24 basis points of loans.

The Common Equity Tier 1 ratio was 29.1%, while the bank-level ratio was 13.4%. Chief Executive John Ross also announced leadership changes, naming Matthew Adams president and chief executive of the Oklahoma market and moving Brandy Bryant into an enterprise role covering consumer and small business credit.

Bank Markers to Follow

Tracking points include net interest margin against 4.48%, mortgage banking revenue relative to USD 8.8 million, and wealth management growth against 16.7%.

Further items are nonperforming assets relative to 33 basis points of total assets, the efficiency ratio against 45.4%, and loan growth from the USD 54 million by which period-end loans exceeded the quarterly average.