Dollars and Sense with Jim Victor: July 17, 2017

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QUAD CITIES (KWQC) — Two Quad Cities area banks kicked off the second quarter earnings report season in fine form, with both beating analysts estimates. For J.P. Morgan Chase, adjusted profits rose an impressive 10.3% from one year ago, up from $1.55 per share to $1.71. Strong loan growth helped. Their average core loan book grew 8% from one year ago. And higher interest rates helped, by lifting the income from that loan book. CEO Jamie Dimon said simply, “The U.S. consumer remains healthy.” Still, the big bank added to loan loss reserves, a cautionary move as the loan portfolio grows.

Wells Fargo also beat estimates reporting second quarter profits up a healthy 6% from $1.01 per share last year to $1.07. Again, loan growth and higher interest rates helped. Wells saw more net interest income and a better net interest margin. That margin is the difference between what they earned from loans minus what interest they paid on savings. For Wells, that margin grew from 2.87% one year ago to 2.90%.

Quad Cities home sales continue to grow by rates that rival national trends. The Quad City Area Realtors Association says closings were up 5.7% in June over one year ago to 683 closings. But, dollar volume of the closings was up an impressive 12%, to $118 million. This means the average closing amount was $172,723 up 5.9% from one year ago. And they’re selling faster, with the average sale taking just 55 days on the market.

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Farm equipment sales, industry-wide, are continuing to show signs of bottoming and a tentative upturn. The Association of Equipment Manufacturers now reports that June sales of large two wheel drive tractors and four wheel drive tractors remained lower. But, combine sales saw a resurgence, climbing 18.7% over one year ago. If the trend continues, it promises growing demand for Deere and area suppliers.

Watch Tuesday for the latest earnings report from United Health Group, with over 600 employees in the Quad Cities. The big healthcare insurer is expected by analysts to post a hearty 20.4% growth in profits, from $1.96 per share one year ago to $2.38. United has been careful to back out of geographies where they were losing money and careful to grow revenues through acquisitions.

Wednesday brings the latest from another big Quad Cities are bank. U.S. Bancorp is expected to show just a small increase from 83cents per share in profit one year ago to 84 cents in the recent second quarter. The keys to watch for are loan portfolio growth and a positive increase in their net interest earned. Then, Thursday brings QCR Holdings late afternoon report, where seven analysts predict profits up 24.5%, helped by loan growth, but also by paying off preferred debt last year. Also, look for company comments on their recent acquisition Cedar Rapids.