Fueled by decreased loan-loss provisions, tight expense controls, and a little loan growth, second quarter earnings for four major Northeast banks, including Pennsylvania's two largest, increased from the same period last year.
However, one of New England's premier banks, Shawmut National Corp., reported a $19 million loss this quarter.
Pittsburgh-based PNC bank Corp. earned $187.8 million, posting an 11% increase over last year's second quarter income of $169.1 million.
Except for purchases of an investment management firm and a mortgage servicing portfolio, PNC kept costs down. "Excluding acquisitions, (noninterest) expenses were up less than one percent," said Sanford C. Bernstein's Ronald Mandle.
Nonperformers Down
PNC's provision for loan losses dropped almost 50% to $25 million from $54 million in the second quarter of last year. The bank's ratio of nonperforming assets to total assets was .85% this quarter, down from 1.25% in the second quarter of 1993.
PNC showed loan growth as well. Outstanding loans, excluding the bank's acquisitions, increased 5.5% over last year's second quarter.
Mellon Bank Corp., another Pittsburgh-based bank, posted a 35% increase in earnings this quarter over the same period last year. Net income rose to $134 millio from $99 million in the second quarter of last year.
Analysts attributed Mellon's success to its steady dumping of problem assets over the last few years.
"Nonperformers are down to about 1% of loans when just a couple of years ago people were wringing their hands about credit quality," said Merrill Lynch's Livia Asher.
Fee revenues at Mellon also fueled growth. The bank's fee revenues increased to $336 million, up 20% from $281 million a year ago, thanks to the bank's acquisition last year of the Boston Company.
Fee revenues Comprised nearly 50% of total revenue for the quarter.
Unlike its Pennsylvania counterparts, Hartford- and Boston-based Shawmut National Corp. reported an $18.7 million loss for the second quarter due to $140.7 million of merger and restructuring charges, the bank reported.
The $27.3 billion-asset bank said income would have been $81.1 million without the charges, a 20% increase over the second quarter of 1993, when earnings reached $64 million.
In Pittsburgh, Integra Financial Corp. saw an 11.6% increase in earnings this quarter to $41.8 million from $38.5 million for the same period last year.
William Roemer, chairman and chief executive officer, said growth for the $13.6 billion-asset bank resulted from a lower loan-loss provision and improved asset quality.
The bank lowered its loan-loss provision to $8 million from $13 million in the second quarter of last year.
Nonperforming assets also dropped significantly, to $138 million. Last year in the second quarter the bank reported $201.6 million in nonperformers.
In New Jersey, Princetonbased UJB Financial Corp. reported a net income of $31.6 million, a 41% increase over the same period a year ago.
"We are especially pleased with the improving economic environment which is reflected in stronger commercial and consumer loan growth," said T. Joseph Semrod, chairman of the $14 billion-asset bank.
UJB reported an increase in total loans of 3% to $9 billion, from $8.7 billion in the second quarter of 1993.
Commercial loans were up 3.3% this quarter, to $4.5 billion. Installment loans jumped 5.5% to $2.1 billion.
While these banks showed growth from improved loan portfolios, analysts noted they also showed signs of increased loan volume.
"The one driving fact behind all of these banks is they are all benefiting from an acceleration in loan growth both on a year-to-year basis as well as a sequential quarter basis," said CS First Boston analyst Thomas Hanley. In news from Boston, State Street Boston Corp. reported net income of $61 million for the quarter, up 18% over $43.2 mil- lion reported for the same peri- od last year.
The bank, which services fi- nancial assets worldwide, said its assets under management this quarter were $139 billion, up 8% from the same period a year ago. Assets under custody were $1.6 trillion, up 10% from a year ago.
