SAN FRANCISCO - Two of the West Coast's top financial institutions reported sharply differing first-quarter results on Wednesday.
Lifted by robust loan growth, San Francisco-based BankAmerica Corp. reported that net income had grown 19% from a year earlier, to $611 million.
Chatsworth, Calif.-based Great Western Financial Corp., owner of the country's second-largest thrift, also made more loans. But as at other thrifts, its margins on those loans fell, pushing net income down 12%, to $43.5 million.
"We think these were pretty good earnings," said Lewis W. Coleman, BankAmerica's vice chairman and chief financial officer.
Analysts said the most notable development in the quarter was BankAmerica's loan growth. Total loans at the end of quarter stood at $144 billion, 2% more than on Dec. 31.
Robert B. Albertson, bank stock research director at Goldman, Sachs & Co., New York, said loans by California banks normally slump in the first quarter. But BankAmerica appeared to buck that trend. He added that if BankAmerica continues lending at its current pace, it would show healthy growth of nearly 8% in its portfolio for the year.
But even stronger growth is likely, since lending normally picks up as the year goes on.
Furthermore, BankAmerica managed a 10-basis-point increase in its net interest margin, to 4.55%, compared with the first quarter of 1994. (The margin is the difference between the interest rate BankAmerica pays for deposits and borrowings and the average rate it charges on loans.)
The growth in loan volumes and net interest margins pushed net interest income up 14%, to $2 billion.
Noninterest income rose 8%, to $1.1 billion, primarily because of the acquisition of Chicago-based Continental Bank and the boost this deal gave to BankAmerica's corporate banking business in the Midwest.
Noninterest expense rose $205 million from last year's first quarter, primarily because of acquisitions. Expenses rose $20 million from the fourth quarter, primarily because of higher personnel costs, including bigger bonuses paid to traders.
BankAmerica's first-quarter trading income rebounded, to $129 million, from $54 million in the fourth quarter. Analysts credited the increase to volatility in foreign exchange markets. BankAmerica is a leader in global currency trading and collects more fees as trading volume rises.
Great Western officials also sought to highlight positive developments in their quarter, though net interest income fell by 9% from last year's first quarter, to $307 million.
Underlying the decline was a squeeze on the company's net interest margin, which fell 76 basis points, from 3.66% in the 1994 period. Company officials attributed the drop to a portfolio of adjustable-rate mortgages, most of whose interest charges trail changes in market rates by about two months.
On the positive side, Great Western made $3 billion of new loans in the quarter, compared to $2.2 billion last year. Nonperforming assets fell to 1.87% of total assets, from 2.95% last year. Expenses fell to 2.34% of assets, from 2.67% last year.
"We are very encouraged by recent signs of a stabilization of the interest rate environment," said chairman James F. Montgomery. "As interest rates stabilize, Great Western's net interest margin can be expected to improve swiftly and significantly, benefiting earnings during the remainder of 1995." +++ BankAmerica Corp. San Francisco Dollar amounts in millions (except per share) First Quarter 1Q95 1Q94 Net income $611.0 $513.0 Per share 1.46 1.27 ROA 1.14% 1.07% ROE 13.86% 13.00% Net interest margin 4.55% 4.45% Net interest income 2,046.0 1,794.0 Noninterest income 1,093.0 1,003.0 Noninterest expense 1,989.0 1,784.0 Loss provision 100 125 Net chargeoffs 77 174 Balance Sheet 3/31/95 3/31/94 Assets $223,188 $197,212 Deposits 152,268 142,589 Loans 144,159 123,544 Reserve/nonp. loans 192.5 137.9 Nonperf. loans/loans 1.34 2.02 Nonperf. assets/assets 0.87 1.27 Nonperf. assets/
loans + OREO 1.34 2.01 Leverage cap. ratio 6.84% 6.31% Tier 1 cap. ratio 7.20% 7.57% Tier 1+2 cap. ratio 11.60% 12.15% ===
