Banc One's Earnings Climb 23%
Banc One Corp. on Tuesday reported a record third-quarter profit of $133.9 million, representing a 23% increase over the year-earlier period.
Meanwhile, First Chicago Corp. said earnings fell 32% to $24.6 million, and C&S/Sovran Corp. posted a $50 million loss.
In the profitable category, NCNB Corp. announced Monday that its net income more than doubled, to $131.1 million. But rival First Union Corp. reported a 10% slump in profits, to $67.7 million, as bad loans continue to put a drag on earnings.
Banc One said continuing retail loan growth and a widening interest margin fueled its performance. Average residential mortgages were up 29% from a year ago, average net installment loans were up 9.24%, and average credit card outstandings were up 48%, the company said.
The net interest margin in the latest period was 6.13%, compared with 5.28% in the 1990 period.
The Columbus, Ohio, company reported that nonperforming assets rose $26 million increase in the third quarter to $513.3 million, a development that analysts largely attributed to the purchase of four Ohio-based affiliates from PNC Financial Corp. Still, only 1.58% of its loans were troubled at Sept. 30.
Dennis Shea, a banking analyst with Morgan Stanley, said the extraordinarily low concentration of problem credits at Banc One gives the company great flexibility in pursuing additional acquisitions.
First Chicago announced in late July that it would take a $35 million special provision during the quarter stemming for an overhaul of its corporate and institutional banking division. Roughly 1,000 jobs are being eliminated in the unit.
The company's overall performance remained anemic during the third quarter.
By midday Tuesday, investors had driven up the trading values of First Chicago common shares by $1.375 to $25.375. That compares with a Sept. 30 book value of $35.80.
Analysts attributed the mild rally to an alleviation of concerns that First Chicago would suffer a substantial increase in nonperforming assets, especially realty assets.
But the depletion of capital through chargeoffs, unaccompanied by substantial earnings, may force First Chicago to cut its quarterly common dividend of roughly $35 million, some analysts believe.
Atlanta-based C&S/Sovran previously announced it would take a $300 million loan-loss provision in the quarter and post a loss up to $55 million. The actual provision totaled $304.7 million, up 80% from the previous quarter.
Nonperforming assets increased by $327 million, or 26%, to $1.6 billion. $265 million of that was real estate-related, and $140 million was directly attributed to the bank's troubled portfolio in the Washington area.
Third-quarter noninterest expenses totaled $445.3 million, including $5.1 million in merger and restructuring costs related to its pending merger with NCNB.
NCNB and FIRST UNION
Analysts attributed much of the difference in performance between NCNB and First Union to NCNB's more aggressive reserve-building in previous quarters. At $801.3 million, NCNB's reserve now covers 94% of nonperforming loans, compared with 71% at First Union. Both banking companies are based in Charlotte, N.C.
"There's no question First Union is not as far along in the recognition process as NCNB," said John Mason, an analyst with Interstate/Johnson Lane in Atlanta. "It would have been nicer if First Union had a larger reserve going in. But they're only one quarter behind."
NCNB reported a loan-loss provision of $125 million, unchanged from the second quarter. Nonperforming assets rose 5% to $1.11 billion.
First Union's provision surged 28% to $145.7 million, compared with $114 million in the previous quarter. Nonperforming assets, linked to commercial real estate in Florida and some out-of-market corporate lending, jumped 8.5% to $1.27 billion, from $1.17 billion.
Securities gains, which have helped NCNB in previous quarters this year, contributed $69.8 million to the third-quarter income statement, but were party offset by a $9.6 million loss on futures and options.
First Union's third-quarter results included $9.9 billion in assets acquired from the failed Southeast Banking Corp., Miami. First Union purchased Southeast last month in a government-assisted takeover.
Table : First Chicago Corp. Chicago Dollar amounts in millions (except per share)Third Quarter 3Q91 3Q90Net Income $24.6 $36.2Per share 0.19 0.45ROA 0.19% 0.27%ROE 2.20% 4.80%Net interest margin 2.56% 2.63%Net interest income 280.9 298.3Noninterest income 312.3 312.6Noninterest expense 445.3 410.9Loss provision 105.0 155.0Net chargeoffs 167.0 80.0Year to Date 1991 1990Net Income $131.4 $192.2Per share 1.55 2.57ROA 0.33% 0.49%ROE 5.70% 9.80%Net interest margin 2.55% 2.80%Net interest income 847.4 946.6Noninterest income 888.3 906.4Noninterest expense 1,222.1 1,185.5Loss provision 290.0 388.0Net chargeoffs 408.0 722.0Balance Sheet 9/30/91 9/30/90Assets $49,222.0 $51,226.0Deposits 32,694.0 34,431.0Loans 26,101.0 29,277.0Reserve/nonp. loans 98.0% 118.0%Nonperf. loans/loans 3.40% 2.70%Nonperf. asset/asset 2.93% 2.61%Leverage Cap. Ratio 5.90% 5.10%Tier 1 Cap. Ratio 5.60% 4.80%Tier 1+2 Cap. Ratio 9.30% 8.10%
NCNB Corp. Charlotte, N.C. Dollar amounts in millions (except per share)Third Quarter 3Q91 3Q90Net Income $131.1 $57.0Per share 1.07 0.51ROA 0.80% 0.34%ROE 13.85% 6.99%Net interest margin 3.49% 3.13%Net interest income 513.6 467.9Noninterest income 246.9 208.2Noninterest expense 555.4 464.3Loss provision 125.0 146.4Net chargeoffs 86.1 79.1Year to Date 1991 1990Net Income $401.7 $334.5Per share 3.44 3.06ROA 0.81% 0.71%ROE 15.67% 15.02%Net interest margin 3.47% 3.23%Net interest income 1,540.6 1,365.8Noninterest income 720.4 635.4Noninterest expense 1,594.3 1,334.1Loss provision 400.0 319.3Net chargeoffs 273.2 197.6Balance Sheet 9/30/91 9/30/90Assets 69,887 69,224Deposits 50,745 48,505Loans 38,061 36,660Reserve/nonp. loans 93.52% 89.86%Nonperf. loans/loans NA NANonperf. asset/asset 1.66% 1.29%Leverage Cap. Ratio NA NATier 1 Cap. Ratio 6.73% 5.17%Tier 1+2 Cap. Ratio NA NA
Banc One Corp. Columbus, Ohio Dollar amounts in millions (except per share)Third Quarter 3Q91 3Q90Net Income $133.9 $109.1Per share 0.81 0.68ROA 1.73% 1.55%ROE 15.74% 15.45%Net interest margin 6.13% 5.28%Net interest income 402.1 311.8Noninterest income 210.2 185.1Noninterest expense 346.0 275.2Loss provision 85.0 76.2Net chargeoffs 73.5 66.6Year to Date 1991 1990Net Income $385.2 $314.9Per share 2.35 2.08ROA 1.71% 1.54%ROE 16.06% 16.76%Net interest margin 6.13% 5.28%Net interest income 1,176.1 905.3Noninterest income 589.9 505.3Noninterest expense 980.5 802.2Loss provision 270.3 189.5Net chargeoffs 205.0 NABalance Sheet 9/30/91 9/30/90Assets $33,180.0 27,830.0Deposits 24,595.0 21,137.0Loans 22,786.0 19,436.0Reserve/nonp. loans 110.0% 85.0%Nonperf. loans/loans 1.58% 1.77%Nonperf. asset/asset 1.55% 1.46%Leverage Cap. Ratio NA NATier 1 Cap. Ratio NA NATier 1+2 Cap. Ratio NA NA
First Union Corp. Charlotte, N.C. Dollar amounts in millions (except per share)Third Quarter 3Q91 3Q90Net Income $67.7 $75.5Per share 0.61 0.70ROA 0.74% 0.87%ROE 11.19% 3.53%Net interest margin 4.29% 4.16%Net interest income 387.3 356.0Noninterest income 234.6 129.3Noninterest expense 352.6 310.1Loss provision 145.7 35.0Net chargeoffs 122.8 37.0Year to Date 1991 1990Net Income $229.8 $248.8Per share 1.89 2.09ROA 0.77% 0.87%ROE 11.87% 13.99%Net interest margin 4.19% 4.06%Net interest income 1,040.0 949.2Noninterest income 593.4 392.9Netinterest expense 998.3 924.6Loss provision 356.3 95.1Net chargeoffs 248.7 102.5Balance Sheet 9/30/91 9/30/90Assets $49,024.0 $39,053.0Deposits 37,489.0 26,601.0Loans 32,611.0 26,682.0Reserve/nonp. loans 71.0% 77.0%Nonperf. loans/loans 2.73% 2.08%Nonperf. asset/asset 3.84% 2.55%Leverage Cap. Ratio NA 5.02%Tier 1 Cap. Ratio NA 6.24%Tier 1+2 Cap. Ratio NA 10.49%