BankAmerica Corp. on Wednesday posted $525 million of second quarter earnings, up nearly 8% from a year ago, while Bancorp Hawaii said earnings of $34.2 million rose a modest 1.2%.
Analysts said the $197.5 billion-asset BankAmerica appears to have halted what had been a trend of revenue declines.
"It is not yet time to break out champagne, but this definitely was an encouraging quarter for BankAmerica," said David S. Berry, a banking analyst with Keefe, Bruyette & Woods Inc.
Sharply lowered credit costs from a year ago helped BankAmerica offset loan shrinkage and revenue declines. The company's loan-loss provision fell by $102 million, or about 45%, from a year ago.
Further cleansing its balance sheet, BankAmerica cut nonperforming assets 11.3% from the first quarter and 45.6% from a year ago.
Period-end problem credits equaled 1.43% of total assets - half the ratio of a year ago.
Average loans rose by about 0.8% from the first quarter, BankAmerica said, and the company's net interest margin widened by 4 points, to 4,49%.
Net interest income rose 2.12%. Figures in all three categories were down from a year ago.
BankAmerica said fee revenues were up 1.5% from the first quarter but down 3.8% from a year ago.
A swing factor was trading revenue, which rose 43.2% from the first quarter but was down 38.8% from a year ago.
Previously disclosed capital infusions on troubled proprietary mutual funds added $68 million to noninterest expense, holding it constant from a year ago.
In a press conference, BankAmerica officials did not comment on whether the company faces further exposure on mutual funds, but they did say senior management oversight of those operations had been strengthened.
The banking company reported an unrealized net deficit of $77 million on derivatives contracts at June 30, compared with an unrealized net surplus of $312 million at March 31.
Unrealized losses on securities investments classified as held for sale totaled $210 million at June 30, BankAmerica said, compared with a $252 million deficit at March 31.
In preparation for the cashand-stock acquisition of Chicago's Continental Bank Corp., BankAmerica said it completed previously announced plans to repurchase 11.8 million of its common shares. This helped earnings per share rise at a faster rate than net income.
Bancorp Hawaii, a $12.6 billion-asset bank and thrift holding company, said annualized returns equaled 1.1% on average assets, up 4 basis points from a year ago; and 14.4% on average equity, down 115 basis points.
A loss provision of $6 million was down more than 50% from a year ago. Net interest income rose 0.5% as the net interest margin rose 5 basis points to 3.96%. Fee revenues rose by 6.54%, or $2 million, but expenses rose by 8.5%, or $7 million.
Problem assets fell by 50% to $53.3 million, or 0.71% of gross loans.
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