Earnings of Banc One Corp. and Fourth Financial Corp. were hurt in the second quarter by customers who moved funds from transaction accounts into higher-cost time deposits.
Banc One Corp., Columbus, with $86.8 billion of assets, reported a 7% decline in net income for the quarter, to $307.5 million. Likewise Fourth Financial Corp. of Wichita, Kan., said its second-quarter net fell 9%, to $19.1 million.
Meanwhile Chicago's Northern Trust Corp. recorded a 9% gain in second- quarter earnings, to a record $53.1 million. And two large Midwest thrifts also reported strong earnings gains: Minneapolis-based TCF Financial Corp., said its $23.4 million second-quarter net was a record. And St. Louis-based Roosevelt Financial Group Inc. recorded net income for the quarter of $21.1 million.
For Banc One, net income fell 7.2% to $610 million during the six months ended June 30.
Joseph Duwan, an analyst with Keefe, Bruyette and Woods, said the results reflected funding pressures caused by customers chasing higher returns.
"They are dealing with a deposit-mix issue as consumers move away from lower-yielding transaction accounts and try to lock in higher-yielding accounts," he said.
While the net interest margin registered a 6 basis point rise from the first quarter, excluding 13 basis points for seasonal tax refund loans, it fell 17 basis points compared with a year ago. Offsetting this was a 7% rise in loan volume over last year.
During the quarter, the bank made a $92.6 million provision for loan losses, even though net charge-offs amounted to $86.4 million.
"I was very happy to see that they provided more for loan losses than they charged off," said Carole Berger, a regional bank analyst with Salomon Brothers Inc. "That was one of the things I thought was going to create difficulties for 1996 bank earnings."
Competition for deposits and loans also hurt Fourth Financial's net interest margin. Despite a 19.5% increase in loans, the $7.5 billion-asset bank recorded a 34 basis point reduction in net yield from the same time last year. Northern Trust's record earnings of $102.4 million represented an 8.8% increase over the same period a year ago.
The company credited results to increases in both interest and noninterest income. While noninterest income still generates 63% of total revenues for Northern Trust, the company reported a 7.6% increase in net interest income during the quarter, due largely to a 7 basis point gain over the last year.
Roosevelt Financial's earnings were a reversal of last year's second quarter, when acquisition-related expenses caused a net loss of $37.7 million.
Earnings for the first six months of 1995 were reduced to $26.7 million after the company recorded a $27.1 million pretax loss on certain mortgage- backed securities in the first quarter. Earnings per share for the period were 58 cents, compared with a net loss of 54 cents a share a year ago.
"You're looking at a transition year for Roosevelt where they are digesting the acquisitions of last year and getting to a more traditional thrift franchise," said Frank Anderson, an analyst with Stephens Inc. in Dallas.
TCF Financial Corp. took advantage of strong consumer loan demand and a 27 basis point rise in net interest margin to post its record results for the quarter.
Earnings in the first half of 1995 were hurt by $32.8 million in after- tax charges relating to the company's acquisition of Great Lakes Bancorp. As a result, net income for the 1995 period amounted to $10.8 million, compared with $34 million a year ago.
Cincinnati-based Fifth Third Bancorp reported net income of $68.5 million, compared with earnings of $59.1 million in the same period last year. For the first half of 1995, the bank reported net income of $134.6 million, versus $117 million last year.
Grand Rapids, Mich.-based Old Kent Financial Corp. reported a slight increase in net income for the quarter to $37.4 million. The $11.9 billion- asset bank reported earnings of $72.1 million for the six months ended June 30, up 3.4% from a year ago.
Marshall & Ilsley Corp., Milwaukee, reported net income of $46.2 million, compared with a net loss of $37.1 million for the same period last year. In the year-ago quarter, the $12.8 billion-asset bank recorded $76.6 million in pretax charges related to its merger with Valley Bancorp.
For the first six months of this year, Marshall & Ilsley reported net income of $92.4 million. During the same period a year ago, the company had net income of $1.5 million. +++ Banc One Corp. Columbus, Ohio Dollar amounts in millions (except per share) Second Quarter 2Q95 2Q94 Net income $307.5 $330.6 Per share 0.77 0.80 ROA 1.43% 1.50% ROE 16.03% 17.44% Net interest margin 5.26% 5.43% Net interest income 998.1 1,054.7 Noninterest income 467.5 372.9 Noninterest expense 910.2 882.6 Loss provision 93.6 50.5 Net chargeoffs 86.4 72.1 Year to Date 1995 1994 Net income $610.0 $657.5 Per share 1.52 1.59 ROA 1.42% 1.53% ROE 16.16% 17.45% Net interest margin 5.25% 5.73% Net interest income 2,001.7 2,157.4 Noninterest income 929.7 744.5 Noninterest expense 1,838.3 1,768.3 Loss provision 159.1 130.7 Net chargeoffs 160.8 148.9 Balance Sheet 6/30/95 6/30//94 Assets $86,783.3 $89,812.7 Deposits 65,612.9 66,218.5 Loans 63,335.0 60,512.5 Reserve/nonp. loans 249.1% 225.7% Nonperf. loans/loans 0.57% 0.70% Nonperf. assets/assets 0.50% 0.58% Nonperf. assets/loans + OREO 0.68% 0.86% Leverage cap. ratio 8.71%* 8.44% Tier 1 cap. ratio 10.19%* 10.31% Tier 1+2 cap. ratio 13.52%* 13.81% *Preliminary data for 1995 ===