Crediting loan growth and better asset management, Bank of Boston Corp. posted a 21% first-quarter increase in profits, earning $125 million, while BayBanks Inc. showed a whopping 48% improvement to $30.5 million.
Meanwhile, Bridgeport, Conn.-based People's Bank saw its profits drop marginally to $15.7 million. The $6.4 billion-asset company said it would have shown a substantial increase on a pretax basis.
The biggest surprise, at least for executives at Bank of Boston, was that turmoil in Mexico and Argentina did not negatively affect the bank's profitable Latin American operations. "Argentina had a good quarter, better than we expected, especially given the fallout from Mexico," said William J. Shea, the bank's vice chairman and chief financial officer.
Analysts said they believed problems in Latin America in the wake of the devaluation of the Mexican peso have actually helped the $43.4 billion- asset bank. "Normally when you have turmoil in a foreign market, there's a flight to quality and foreign-owned banks like Citicorp and Bank of Boston benefit from that," said Sanford C. Bernstein & Co.'s Ronald Mandle.
Bank of Boston also showed improvement domestically, particularly in high-margin consumer lending and because of a downsizing in less profitable corporate loans.
The bank used proceeds from the sale of its Vermont and Maine banks to boost the loan loss provision by $50 million to $90 million, and to eliminate goodwill.
The bank also showed improvement in its efficiency ratio, which was 59% at March 31, compared with 62% in 1994's first quarter.
BayBanks credited growth in commercial lending for its results. Total loans in the first quarter were $6.8 billion, up $126 million from Dec. 31. The company's net interest margin jumped 16 basis points from the same period last year.
People's Bank said its managed credit card portfolio grew 6% during the first quarter, while commercial loans were up 4.3%. +++ Bank of Boston Corp. Boston Dollar amounts in millions (except per share) First Quarter 1Q95 1Q94 Net income $125.3 $96.1 Per share 1.04 0.79 ROA 1.19% 0.95% ROE 17.43% 14.47% Net interest margin 4.56% 3.80% Net interest income 425.9 340.7 Noninterest income 293.2 235.1 Noninterest expense 383.2 346.7 Loss provision 90.0 45.0 Net chargeoffs 42.0 151.1 Balance Sheet 3/31/95 3/31/94 Assets $43,461.9 $42,423.7 Deposits 28,274.7 28,153.3 Loans 30,438.6 28,554.2 Reserve/nonp. loans 198.0% 166.0% Nonperf. loans/loans 1.2% 1.4% Nonperf. assets/assets 1.0% 1.1% Nonperf. assets/ loans + OREO NA NA Leverage cap. ratio 7.2%* 6.9% Tier 1 cap. ratio 7.6%* 7.4% Tier 1+2 cap. ratio 13.0%* 12.7% * Estimated ===
