Stronger loan demand and a shift toward higher-yielding assets drove second-quarter earnings up 28% at Bank of New York Co. to $226 million, while extraordinary gains in the same period last year resulted in a 10% decline at J.P. Morgan & Co. to $315 million.
Analysts said results at both banks were broadly in line with expectations.
Morgan's earnings for last year's second quarter included $34 million in past-due interest from Brazil and $50 million in tax refunds.
Equity investment gains in this year's second quarter, which can vary widely from quarter to quarter, dropped 50% to $132 million.
However, if Morgan's results are considered without last year's special items, "most revenue components were up, net interest was stronger, underwriting came back strong and it was a pretty good trading quarter, even if it wasn't as good as the first quarter," said Raphael Soifer, a bank analyst with Brown Brothers Harriman.
"Not enough to knock your socks off, but still better than expected," he added.
With earnings per share of $1.56, Morgan came in at the high end of Wall Street estimates.
Earnings at Bank of New York got a boost from an initial $6 million after-tax gain on the sale of the bank's ARCS Mortgage Inc. servicing portfolio
"We still think the outlook for Bank of New York is pretty good and they've done a terrific job controlling expenses," said Lawrence Cohn, a bank analyst with Paine Webber Inc.
However, Mr. Cohn noted that the increase in Bank of New York's credit card receivables, or outstandings, has been slowing for several quarters.
Credit card outstandings were up 15% over the same quarter last year to $7.7 billion, but the increase on a quarter-by-quarter basis had slowed to 9% for the latest quarter from 21% in the first quarter and 25% in the final quarter last year.
A Bank of New York spokesman said that at least part of the slowdown has been deliberate.
"There's a lot of pressure on credit standards and we've decided we'd rather give up growth than lower our standards," he said.
Analysts said any further improvement in earnings at Bank of New York will likely come from the securities processing sector, where the bank has made several large acquisitions so far this year.
Meanwhile, First Fidelity Bancorp., which recently agreed to be acquired by First Union Corp., posted a 3% rise in net earnings for the quarter to $115.3 million.
The Lawrenceville, N.J.-based bank had a 3% drop in taxable equivalent net interest income, mainly as a result of a reduced securities portfolio, lower levels of savings and a shift of consumer deposits into CDs. +++ BANK OF NEW YORK CO. New York Dollar amounts in millions (except per share) Second Quarter 2Q95 2Q94 Net income $226.0 $176.0 Per share 1.09 0.87 ROA 1.68% 1.42% ROE 19.85% 17.67% Net interest margin 4.45% 3.98% Net interest income 514.0 421.0 Noninterest income 350.0 321.0 Noninterest expense 425.0 410.0 Loss provision 62.0 39.0 Net chargeoffs (87) (77) Year to Date 1995 1994 Net income $438.0 $355.0 Per share 2.11 1.74 ROA 1.67% 1.46% ROE 19.92% 18.10% Net interest margin 4.47% 3.94% Net interest income 883.0 708.0 Noninterest income 668.0 671.0 Noninterest expense 841.0 812.0 Loss provision 112.0 84.0 Net chargeoffs (172) (160) Balance Sheet 6/30/95 6/30/94 Assets $53,464.0 $52,347.0 Deposits 36,878.0 34,443.0 Loans 36,187.0 33,051.0 Reserve/nonp. loans 307.3% 214.3% Nonperf. loans/loans 0.64% 1.25% Nonperf. assets/assets 0.60% 0.92% Nonperf. assets/loans + OREO 0.88% 1.45% Leverage cap. ratio 8.17% 7.66% Tier 1 cap. ratio 8.56% 8.29% Tier 1+2 cap. ratio 13.12% 12.76% J.P. MORGAN & CO. New York Dollar amounts in millions (except per share) Second Quarter 2Q95 2Q94 Net income $315.0 $350.0 Per share 1.56 1.73 ROA 0.72% 0.81% ROE 13.40% 14.80% Net interest margin 1.67% 1.70% Net interest income 535.0 570.0 Noninterest income 941.0 926.0 Noninterest expense 984.0 936.0 Loss provision 0.00 0.00 Net chargeoffs 0.0 (3.0) Year to Date 1995 1994 Net income $570.0 $695.0 Per share 2.83 3.43 ROA 0.66% 0.80% ROE 12.30% 14.80% Net interest margin 1.62% 1.48% Net interest income 1,064.0 996.0 Noninterest income 1,829.0 1,920.0 Noninterest expense 1,986.0 1,788.0 Loss provision 0.00 0.00 Net chargeoffs 1.0 (17.0) Balance Sheet 6/30/95 6/30//94 Assets $166,560.0 $157,817.0 Deposits 45,316.0 43,755.0 Loans 24,043.0 25,938.0 Reserve/nonp. loans 608.6% 463.8% Nonperf. loans/loans 0.8% 0.9% Nonperf. assets/assets 0.11% 0.16% Nonperf. assets/loans + OREO NA NA Leverage cap. ratio 6.00% 6.20% Tier 1 cap. ratio 8.7% 9.3% Tier 1+2 cap. ratio 12.9% 13.5% ===
