Several large regional banks reported strong earnings Wednesday, although credit quality showed signs of slipping.

Analysts said the results - from BankAmerica Corp., Norwest Corp., and Fleet Financial Group, among others - were broadly in line with expectations as the banks reaped the benefits of cost reduction programs.

However, the slight rise in consumer loan losses did serve to boost provisions at several institutions. Regional banks had more trouble in this regard than their money-center counterparts, many of which reported record earnings Tuesday.

"We are seeing higher credit card losses and higher losses related to exposure to the retail sector, but nothing out of line with expectations," said Mary Quinn, a regional banking analyst with Keefe, Bruyette & Woods Inc.

"Margins remained strong, and while we have seen some uptick in consumer credit deterioration, it's not so great the companies don't have the ability through improvements in productivity and revenues to compensate for some of that deterioration," said Chip Dickson, a bank analyst at Smith Barney.

BankAmerica Corp. boosted fourth-quarter earnings 19% over the year- earlier period to $704 million, capping what chief executive David A. Coulter called "a very successful year."

In the quarter, average loans grew $3.1 billion, while noninterest expenses rose by only $3 million. Trading income for the year rose 47% to $527 million, while venture capital income more than doubled to $337 million.

The country's second-largest banking company was also aided by a one- time gain of $36 million from a previously announced divestiture of institutional trust and securities services businesses.

Analysts detected signs of weakness in both revenues and credit quality at BankAmerica that led many to have a decidedly mixed opinion about the quarter.

David Berry, research director for Keefe Bruyette said the quarter was "O.K., but I'm not enthused."

Net credit losses rose to 0.6% of total loans outstanding, from 0.4% in the third quarter, and 0.1% last year. Net interest income after provisions for loan losses declined slightly to $2.007 billion, from $2.046 billion. BankAmerica's net interest margin dropped eight basis points to 4.44%. Meanwhile, noninterest income was up only $1 million to $1.158 billion.

In a news briefing, BankAmerica chief financial officer Michael E. O'Neill sought to minimize credit quality worries.

"As we look out over the horizon, we don't see anything to give us significant cause for concern about credit quality," he said.

BankAmerica expects loan losses to "creep up" over the next 12 months, but to be low by historical standards, he said.

He added that BankAmerica has opportunities to improve earnings simply by doing a better job of managing its business.

"We think over the next couple of years the highest potential for increasing shareholder value is improving the way we allocate capital to businesses, (including) taking away capital from businesses that aren't achieving return expectations," he said.

Meanwhile, in the Midwest, Minneapolis-based Norwest reported its eighth consecutive year of record earnings boosted by double-digit growth from two nonbank subsidiaries.

The $72 billion-asset Norwest reported quarterly income of $260 million, a 27% increase over the fourth quarter of 1994. Norwest reported annual income of $956 million, a 19% increase.

Norwest reported record income of $602 million in its banking operations for the full year, up 19%. Norwest Mortgage Inc. also hit a record, with 1995 earnings of $105 million, a 48% jump from 1994. Norwest Financial Inc., also reporting its best year ever, had income of $249 million in 1995, up 12%. At the same time, Norwest continued its conservative practice of building large loan-loss provisions. Despite an increase in nonperforming items, analysts praised Norwest's asset quality.

Joan Goodman, an analyst with Pershing Division, Donaldson, Lufkin & Jenrette in Chicago, said Norwest is the most conservative bank she covers in terms of providing loan-loss reserves. Norwest's fourth quarter loan- loss reserve of $917 million was four and a half times larger than its nonperforming assets. Ms. Goodman said Norwest's conservative approach is prudent and will ensure no earnings glitches in the future.

Nonperforming assets totaled $206 million at Dec. 31, or 0.57% of loans, leases, and other real estate owned. The nonperformers were $46 million higher than at yearend 1994, principally due to acquisitions of the $1.1 billion-asset State National Bank of El Paso and three other banks in Texas. All four deals were closed in the fourth quarter.

"There are no bumps in the road for future earnings," Ms. Goodman said.

In other earnings news, Integra Financial Corp., a $14.3 billion-asset Pittsburgh company, reported fourth-quarter income of $8.4 million, a 79% decrease compared with the same period in 1994. Integra, which has agreed to be acquired by $36 billion-asset National City Corp. of Cleveland, reported full-year income of $128 million, a 24% decrease.

Integra officials attributed the decline to $41 million in merger- related expenses taken in the fourth quarter.

Fourth quarter and full-year results at Providence, R.I.-based Fleet also suffered from merger-related charges. Fleet reported a fourth-quarter loss of $138 million and a nearly one-third decline in net earnings for the year to $610 million.

The bank took a charge of $317 million related to its merger with Shawmut National Corp. and a $112 million charge for the sale of its Atlanta-based consumer finance subsidiary, which the bank officially put on the block Wednesday.

The downward cycle in credit quality is also affecting Fleet, which is in the process of acquiring National Westminster Bank PLC's $32 billion- asset U.S. banking unit. Fleet increased its provision for loan losses by 55% for the full year 1995, and by 53% for the fourth quarter.

Fleet experienced an 18-basis-point decline in its net interest margin for the full year and a 13.5% rise in noninterest expenses for the fourth quarter.

Terrence Murray, Fleet's president and chief executive, termed the results a "watershed" for the bank but said acquisitions and pending dispositions would strengthen the bank's franchise.

Net fourth-quarter income rose 6% at Republic New York Corp. to $94.9 million, but declined 15% for the full year, mainly as a result of a $120 million pretax provision for restructuring charges in the second quarter.

However, some analysts said they were slightly disappointed that net interest income fell 3.7% in the fourth quarter to $207 million, and other operating income increased only 7% to $97 million.

Keefe Bruyette's Ms. Quinn noted that although Republic's earnings were broadly in line with expectations, much of the improvement came from gains on securities and changes in accounting, while trading income remained weak.

Other analysts said they saw no reason for concern about Republic's decline in net interest income.

"Republic typically takes advantage of yield curve opportunities and they saw less of them because the yield curve has been flat," said Lawrence R. Vitale, a bank analyst with Bear Stearns & Co.

On Wednesday, Republic's board authorized the purchase of up to 500,000 shares of the bank's common stock. The bank said the purchases would help lessen the dilutive impact on per-share earnings from an anticipated issue of common stock under employee benefit programs.

This article was reported by James R. Kraus, Barton Crockett, and Brett Chase. +++

BankAmerica Corp. San Francisco Dollar amounts in millions (except per share) Fourth Quarter 4Q95 4Q94 Net income $704.0 $591.0 Per share 1.74 1.41 ROA 1.20% 1.09% ROE 14.96% 13.24% Net interest margin 4.44% 4.53% Net interest income 2,137.0 2,012.0 Noninterest income 1,158.0 1,048.0 Noninterest expense 1,966.0 1,966.0 Loss provision 130.0 100.0 Net chargeoffs 231.0 36.0 Year to Date 1995 1994 Net income $2,664.0 $2,176.0 Per share 6.49 5.36 ROA 1.17% 1.08% ROE 14.58% 13.20% Net interest margin 4.51% 4.50% Net interest income 8,462.0 7,542.0 Noninterest income 4,546.0 4,135.0 Noninterest expense 8,001.0 7,500.0 Loss provision 440.0 460.0 Net chargeoffs 589.0 470.0 Balance Sheet 12/31/95 12/31/94 Assets $232,446.0 $215,475.0 Deposits 160,494.0 154,394.0 Loans 155,373.0 140,912.0 Reserve/nonp. loans 177.61% 169.58% Nonperf. loans/loans 1.29% 1.54% Nonperf. assets/assets 0.86% 1.01% Nonperf. assets/loans + OREO 1.28% 1.54% Leverage cap. ratio 6.92% 6.74% Tier 1 cap. ratio 7.30% 7.27% Tier 1+2 cap. ratio 11.40% 11.69%

Republic New York Corp.

New York Dollar amounts in millions (except per share) Fourth Quarter 4Q95 4Q94 Net income $94.9 $89.4 Per share 1.54 1.46 ROA 0.79% 0.74% ROE 14.56% 15.88% Net interest margin 2.50% 2.65% Net interest income 210.1 218.1 Noninterest income 97.0 91.1 Noninterest expense 169.2 181.6 Loss provision 3.0 3.0 Net chargeoffs 15.8 2.6 Year to Date 1995 1994 Net income $288.6 $340.0 Per share 4.59 5.61 ROA 0.61% 0.74% ROE 11.73% 15.20% Net interest margin 2.61% 2.64% Net interest income 818.9 846.5 Noninterest income 412.9 386.4 Noninterest expense 821.7 721.5 Loss provision 12.0 19.0 Net chargeoffs 31.3 11.4 Balance Sheet 12/31/95 12/31/94 Assets $43,882 $41,068 Deposits 24,920.0 22,726.0 Loans 9,844.0 8,913.0 Reserve/nonp. loans 442.90% 549.19% Nonperf. loans/loans 0.69% 0.65% Nonperf. assets/assets 0.23% 0.20% Nonperf. assets/loans + OREO NA NA Leverage cap. ratio 6.10%* 5.87% Tier 1 cap. ratio 14.90%* 16.17% Tier 1+2 cap. ratio 25.30%* 27.49%


Fleet Financial Group Boston Dollar amounts in millions (except per share) Fourth Quarter 4Q95 4Q94 Net income $(138.0) $258.0 Per share (1.17) 0.97 ROA (0.66)% 1.31% ROE (9.10)% 19.41% Net interest margin 4.00% 4.29% Net interest income 747.0 758.0 Noninterest income 526.0 410.0 Noninterest expense 1,429.0 728.0 Loss provision 26.0 17.0 Net chargeoffs 95.0 58.0 Year to Date 1995 1994 Net income $610.0 $849.0 Per share 1.57 3.09 ROA 0.74% 1.07% ROE 9.32% 15.66% Net interest margin 4.12% 4.30% Net interest income 3,065.0 3,099.0

Noninterest income 1,850.0 1,543.0 Noninterest expense 3,735.0 3,145.0 Loss provision 101.0 65.0 Net chargeoffs 302.0 240.0 Balance Sheet 12/31/95 12/31//94 Assets $84,432.0 $81,026.0 Deposits 57,122.0 55,528.0 Loans 51,525.0 46,035.0 Reserve/nonp. loans 300.52% 224.56% Nonperf. loans/loans 0.85% 1.45% Nonperf. assets/assets 0.59% 0.94% Nonperf. assets/loans + OREO 0.97% 1.65% Leverage cap. ratio 6.40% 7.15% Tier 1 cap. ratio 7.80% 9.10% Tier 1+2 cap. ratio 11.50% 12.90%

Norwest Corp. Minneapolis Dollar amounts in millions (except per share) Fourth Quarter 4Q95 4Q94 Net income $259.7 $204.9 Per share 0.72 0.62 ROA 1.42% 1.43% ROE 22.00% 21.50% Net interest margin 5.60% 5.73% Net interest income 896.1 741.9 Noninterest income 527.7 437.9 Noninterest expense 940.3 807.8 Loss provision 95.9 63.3 Net chargeoffs 95.9 72.6 Year to Date 1995 1994 Net income $956.0 $800.4 Per share 2.73 2.41 ROA 1.44% 1.45% ROE 22.30% 21.40% Net interest margin 5.58% 5.66% Net interest income 3,302.8 2,832.6 Noninterest income 1,865.0 1,638.3 Noninterest expense 3,399.1 3,096.4 Loss provision 312.4 164.9 Net chargeoffs 304.2 193.2 Balance Sheet 12/31/95 12/31/94 Assets $72,134.4 $59,315.9 Deposits 42,028.8 36,424.0 Loans 36,153.1 32,576.0 Reserve/nonp. loans 542.9% 606.2% Nonperf. loans/loans 0.47% 0.40% Nonperf. assets/assets 0.29% 0.27% Nonperf. assets/loans + OREO 0.57% 0.49% Leverage cap. ratio 5.69% 6.94% Tier 1 cap. ratio 8.16% 9.89% Tier 1+2 cap. ratio 10.23% 12.23% ===

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