EARNINGS TIME: Cadence Bank, based in Mississippi and with five branches in Memphis, is among the banks with ties to the area that report third quarter earnings this week. -- PHOTO BY ANDY MEEK

The spate of third-quarter reports from banks with ties to Memphis continues this week, with Mississippi-based Cadence Bank and Trustmark next up to show how they fared between July and September.

Their earnings reports follow those from a handful of other regional and community banks including BancorpSouth, Regions and SunTrust. And they ought to provide another look at the distinction emerging in the banking industry between Main Street and Wall Street.

Compared to the same period in 2008, average analyst estimates are that Trustmark’s quarterly profit will dip slightly and Cadence will end up with roughly the same quarterly loss it posted last year.

Starkville, Miss.-based Cadence Financial Corp., a $2 billion bank holding company with five branches in Memphis, is expected to shave a penny off of last year’s third-quarter loss of $0.44 per share. This year’s Q3 consensus estimate for Cadence is $0.43, according to SNL Financial LC.

Jackson, Miss.-based Trustmark Corp., with $9.8 billion in assets and three branches in Shelby County, is expected to post a smaller profit for the quarter than it notched this time last year. The average estimate for Trustmark is a Q3 profit of $0.30 per share, down from last year’s earnings of $0.41 per share.

Cadence and Trustmark will make their earnings reports Tuesday and Wednesday, respectively.

Fee changes

The estimates reflect wide distinctions between the banks, including different degrees to which bad loans are piling up and money is being socked away to cover them. A big hike in fees the banks pay into the Federal Deposit Insurance Corp.’s deposit insurance fund also has played a role in their already-reported earnings this year.

Cadence set aside a lot more money to cover loan losses in the second quarter than during the same period in 2008. Its loan loss provision was $23 million in Q2 2009, up from $3.3 million in Q2 2008.

Trustmark socked away less money, setting aside $26.8 million in loan loss provisions in the second quarter, down from $31 million in Q2 2008. The bank also paid a special assessment of $4.4 million to the FDIC this year.

“We feel that’s a definite inconvenience and burden on those financial institutions that are out making loans and taking deposits, intending to make their economies grow,” Trustmark chairman and CEO Richard Hickson told analysts during the company’s recent second-quarter presentation.

“I will say we realize, as more institutions fail and the FDIC takes them over, we’re expecting this to continue. We’re modeling going forward with assessments in there. We don’t know what they’ll be, so we’re modeling what they were this quarter.

“If they’re more than that or less than that, so be it.”

Cadence’s FDIC insurance premiums and special assessments jumped from $274,000 in Q2 2008 to $1.2 million in the second quarter of 2009.

Cadence abandoned a planned stock offering to raise capital last month after management decided to wait for a rebound in the economy that would provide better borrowing terms. The bank also suspended its cash dividend in May to hold on to as much capital as possible.

Local trends

Banks like Cadence and Trustmark are more closely tied to the fate of individual borrowers than their larger competitors. One driver of profits among major Wall Street banks at the moment, for example, is rip-roaring investment banking units that can use trading activity to cushion the blow from a pileup of bad loans.

To describe the widening divide in banking, analyst Meredith Whitney told The New York Times last week it’s the reason Olive Garden restaurants are empty while San Pietro – an expensive Italian restaurant in Manhattan – is packed.

In the local market, the current trends seem to involve either losses getting worse or profits dropping slightly.

Atlanta-based SunTrust Banks Inc., the third-largest bank in the Memphis area market by deposit share, last week posted a $377.1 million loss for the quarter. The bank boosted its allowance for loan and lease losses by $128 million, pointing to a continued decline in the residential real estate market.

Regions Financial Corp., in the wake of reporting a third-quarter net loss of $437 million, is planning to close 6 percent of its roughly 1,900-branch network, which equates to 121 branches. As part of that decision, Regions is trimming its number of Memphis-area bank branches from 60 to 55 by consolidating five branches.

Tupelo, Miss.-based BancorpSouth Inc. came in a little under last week’s consensus analyst estimate when it reported Q3 net income of $21.5 million, or $0.26 per diluted share. The forecast had been $0.35 per share for the quarter.