Higher net interest income helped U.S. banks post record first-quarter profits of $21.7 billion, marking the first time the industry's quarterly earnings exceeded $20 billion.

        The $21.7 billion was 9.6 percent higher than the previous record of $19.8 billion set in the first quarter of 2001, according to preliminary data from the Federal Deposit Insurance Corp.

        Banks hit the mark despite loan losses rising to $11.1 billion, about 60 percent higher than the $7 billion in last year's first quarter. The sluggish economy and effects of the Sept. 11 terrorist attacks hurt many U.S. companies and weakened their ability to repay business loans.

        Banks' net interest income came in at $58.6 billion, up 13 percent from $51.9 billion a year ago.

        Still, banks continue to have problems with credit quality. Banks' number of noncurrent loans — loans 90 days late and no longer paying interest — came in at $57.2 billion, up from $46.1 billion a year ago.
       

Fifth Third to spend $3M promoting funds

        Fifth Third Bank plans to spend another $3 million this fall to sell its mutual funds to new and existing clients.

        The Cincinnati-based bank already has spent $3 million on print and electronic ads this year in its seven-largest markets — including Cincinnati, Indianapolis, Chicago and Detroit — to boost sales of its bank-owned funds.

        That move helped it raise $600 million in assets since January, increasing assets under management in the funds to about $13 billion.

        Fifth Third, which doubled its mutual-fund menu to 31 with its $5 billion purchase of Michigan's Old Kent Financial Corp. last year, plans to add five more bank-owned funds this fall. That will boost the bank's family of funds to 35 by year's end after it merges one into an existing fund.
       

Credit union changes name after merger

        Hambuco Federal Credit Union, one of Greater Cincinnati's largest credit unions, has changed its name to AurGroup Financial Credit Union.

        The name change comes after Hambuco completed its merger in January with Mutual Benefit Credit Union, creating a Fairfield-based entity with assets of more than $130 million and 22,000 members with nine branches in Southwest Ohio and Indiana.

        The credit union says the name change reflects its commitment to become a larger-service financial institution, as opposed to one that just offers savings and loans.

        For example, AurGroup offers such nontraditional financial products as mutual funds, annuities and retirement planning.
       

PNC unit joins with Hilliard brokerage

        The parent of PNC Bank has merged its PNC Brokerage unit into Hilliard Lyons, a brokerage company.

        The merger comes three years after PNC Financial Service Group Inc. bought the Louisville-based company for about $275 million.

        As a result, Hilliard Lyons has created a new unit to be known as PNC Investments to serve clients, including those at the PNC Center at 201 E. Fifth St. in downtown Cincinnati.

        In addition, all PNC Brokerage offices that serve clients at PNC branches will do business at PNC Investments.

        The Hilliard Lyons offices at 105 E. Fourth St. downtown and 7373 Beechmont Ave. in Anderson Township will remain the same.

        Contact Jeff McKinney at 768-8499; fax 564-6991; or e-mail jmckinney@enquirer.com.

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