Fueled by fat trading gains at big New York banks, strong loan growth at several companies in the Southeast and the Midwest, and signs of a credit rebound in the West, banks released another round of strong second-quarter earnings Tuesday.

Citicorp, the nation's biggest company, netted $446 million in its second quarter, a 212% jump from the year-earlier period, on spectacular trading revenue of almost $575 million and improved credit quality. Chemical Banking Corp.'s profits surged 59% on similarly strong trading results to $381 million.

In North Carolina, Nations-Bank Corp. earned $306 million in the second quarter, up 22%, boosted largely by strong loan growth and improved asset quality.

Loans Up at Banc One

Ohio-based Banc One Corp. reported $281.9 million of second-quarter earnings, off only slightly from first-quarter results but up 16.06% from 1992's second period. Net loans grew 2.28% during the second quarter, reversing the trend at most other banks.

Pittsburgh's Mellon Bank Corp. boosted second-quarter earnings by 10% to $99 million, reflecting some big interest-margin gains from its purchase of the Boston Co.

Two major California bank companies issued one of the strongest signals yet of a banking recovery in the recession-bound state. Wells Fargo & Co. said earnings climbed 82% from a year ago, to $149 million, thanks mainly to a sharply lower loan-loss provision.

At First Interstate Bancorp, net income rocketed up 111% to $136 million, fueled by a combination of reduced credit costs, lower expenses, and modest revenue gains.

Despite the good earnings news, most bank stocks fell moderately on Tuesday after comments made to Congress by Federal Reserve Board Chairman man Alan Greenspan raised the specter of higher short-term interest rates.

NORTHEAST

Analysts cheered Citicorp's report, saying it demonstrated that the nation's largest bank company is finally seeing a real diminution in credit problems and reaping profits from its core businesses.

For the first time in many quarters, Citicorp did not record any unusual one-time gains from the sale of assets.

"The general trend of earnings is sustainable," said Diane B. Glossman, an analyst at Salomon Brothers Inc. "There is nothing in this quarter that we're going to extract out as a nonreusable item."

Citicorp's results, which translated into 82 cents a share, far exceeded Wall Street's expectations of 59 cents a share, according to Zacks Investment Research.

On Tuesday, shares of the nation's biggest bank company lost 50 cents to $31.50.

Citicorp's trading revenue of $572 million -- sparked by $352 million of foreign exchange Profits -- even surpassed the $520 million reported last week by J.P. Morgan & Co., one of the preeminent trading banks. Analysts predicted that the company will be able to reap quarterly gains of at least $300 million from trading activities in more normal periods.

Investors also took heart from a more fundamental statistic -- the recovering company's sixth consecutive quarterly decline in commercial credit costs. The total, which includes net writeoffs, net carrying costs, and expenses for maintaining foreclosed real estate assets, plummeted to $297 million from $380 million during the first three months of this year.

Commercial real estate writeoffs declined 18.6% since the first quarter to $172 million, though consumer writeoffs climbed slightly to $367 million from $336 million.

Citicorp, unlike many competitors that have been drawing down reserves as credit quality improves, redeployed some of its revenues into its loan-loss allowance. It took a provision of $176 million, up from $127 million in the first quarter. Its allowance for credit losses covered 2.94% of total loans at the end of the quarter, up from 2.92% on March 31.

Citicorp said expenses rose 4% from the second quarter of 1992, noting that the company increased its spending for domestic advertising and consumer banking. The expenditures indicate that the company "is beginning to lift up its head a bit," said Arthur P. Soter, an analyst at Morgan Stanley & Co. -- Yvette D. KantrowCiticorpNew York-- Dollar amounts in millions (except per share) --Second Quarter 2Q93 2Q92Net income $446.0 $143.0Per share 0.82 0.25ROA 0.79% 0.26%ROE 16.90% 4.80%Net interest margin 3.78% 3.71%Net interest income 1,856.0 1,828.0Noninterest income 2,115.0 1,991.0Noninterest expense 2,494.0 2,553.0Loss provision 176.0 127.0Net chargeoffs 659.0 962.0Year to Date 1993 1992Net income $1,116.0 $326.0Per share 2.26 0.69ROA 0.86% 0.30%ROE 19.20% 6.00%Net interest margin 3.80% 3.73%Net interest income 3,707.0 3,658.0Noninterest income 4,153.0 4,160.0Noninterest expense 5,020.0 4,587.0Loss provision 326.0 453.0Net chargeoffs 1,173.0 1,959.0Balance Sheet 6/30/93 6/30/92Assets $216,285.0 $219,342.0Deposits 145,378.0 151,124.0Loans 139,193.0 147,941.0Reserve/nonp. loans NA 36.00%Nonperf. loans/loans NA 6.70%Nonperf. asset/asset NA 6.50%Leverage cap. ratio 5.50% 4.29%Tier 1 cap. ratio 5.70% 4.25%Tier 1+2 cap. ratio 10.30% 8.50%

Chemical Banking Corp.'s second quarter repeated the pattern of its money-center peers -- hefty trading profits and improved credit quality.

The nation's third-largest bank company also bulked up its quarter with $118 million of venture capital gains a $44 million nonrecurring boost in Brazilian bond payments.

Chemical's profits of $1.35 a share exceeded analysts' consensus estimate by 32 cents. The company's stock was unchanged at $30.75 on Tuesday.

Though some analysts dismissed the bank's trading profits and venture capital gains as unsustainable, they were impressed with the trend in credit quality at Chemical.

The company's nonperforming assets have decreased 15% since the end of the first quarter to $4.9 billion. About half of the nonperformers, excluding $900 million of developing-country debt, involve commercial real estate assets.

However, Chemical's loan-loss provision -- which had declined over the previous seven quarters -- rose 16% from the first-quarter level to $363 million. The company said it added $55 million to its reserves to accelerate the sale of $162 million of problem residential mortgage loans and foreclosed properties. The loans were several years ago under a "reduced documentation" program.

On the revenue side, Chemical's trading gain of $298 million was up 18% from the first quarter and 75% better than one year-earlier. Fee revenues also rose, driven by an 18% gain in corporate finance and syndication fees since the first quarter.

Although net interest income rose, Chemical's interest margin slipped six basis points since the first quarter to 3.76%.

Noninterest expenses climbed 10% from the year-earlier quarter to $1.3 billion, reflecting "significantly" higher incentive compensation, Chemical said. -- Karen GulloChemical Banking Corp.New York-- Dollar amounts in millions (except per share) --Second Quarter 2Q93 2Q92Net income $381.0 $240.0Per share 1.35 0.83ROA 1.04% 0.70%ROE 15.97% 10.48%Net interest margin 3.76% 3.69%Net interest income 1,175.0 1,099.0Noninterest income 1,042.0 737.0Noninterest expense 1,312.0 1,184.0Loss provision 363.0 345.0Net chargeoffs 361.0 398.0Year to Date 1993 1992Net income $755.0 $500.0Per share 2.70 1.83ROA 1.05% .73%ROE 16.22% 11.80%Net interest margin 3.79% 3.70%Net interest income 2,324.0 2,214.0Noninterest income 1,967.0 1,542.0Noninterest expense 2,588.0 2,378.0Loss provision 675.0 720.0Net chargeoffs 724.0 774.0Balance Sheet 6/30/93 6/30/92Assets $145,522 $142,405Deposits 94,592.0 92,787.0Loans 79,200.0 84,953.0Reserve/nonp. loans 79.46% 65.47%Nonperf. loans/loans 4.75% 5.79%Nonperf. asset/asset 3.34% 4.61%Leverage cap. ratio 6.60% 6.50%Tier 1 cap. ratio 7.60% 7.00%Tier 1+2 cap. ratio 11.90% 11.10%

SOUTHEAST

NationsBank Corp. recorded unexpected securities gains of $22 million to help it exceed analysts' consensus expectations of $1.16 a share by 3 cents. But analysts were still impressed by fundamentals at the nation's fifth-biggest bank company, one of the few to experience good revenue growth.

"The quality of earnings was very good," said Moshe Orenbuch, who follows NationsBank for Sanford C. Bernstein & Co.

The company continued to enjoy a wide gap between its funding and lending costs, even as many of its southeastern competitors experienced compressed margins. Its net interest margin inched up 1 basis point since the first quarter to 4.17% and 6 basis points from the year-earlier second quarter. Net interest income climbed 11% since last year to $1.1 billion.

Analysts were particularly heartened by a surge in loans in May and June -- primarily in the bank's consumer and factoring portfolios -- predicting that growth has continued into this quarter. NationsBank's loan balances surged by $2.8 billion, representing a 16% annualized growth rate, between March 30 and June 30.

Improving credit quality also boosted the bottom line. The company's loan-loss provision of $110 million fell 9% from the first-quarter level, while chargeoffs of $93 million declined 10.7% from three months earlier. Both the provision and chargeoffs improved substantially from the second quarter of 1992.

Noninterest expense rose by 5% from the year-earlier quarter, reflecting the company's recent acquisition of Chrysler Corp.'s consumer loan subsidiary. Excluding that purchase, expenses inched up by only 2%. Analysts, however, noted that the expansionist company's efficiency ratio -- which measures expenses as a percent of operating revenue -- remains high at 63%.

"NationsBank had revenue growth, which is something most banks are killing for, but it's the efficiencies that are missing," said analyst Susan Leadem, an analyst at Robinson-Humphrey Co. "Ideally, you'd like to see both."

NationsBank, which is expected to close on its deal to acquire Baltimore-based MNC Financial Inc. this quarter, should get a quick earnings boost from the purchase, analysts said. -- Kenneth ClineNationsbank Corp.Charlotte, N.C.-- Dollar amounts in millions (except per share) --Second Quarter 2Q93 2Q92Net income $306 $251Per share 1.19 0.98ROA 1.00% 0.91%ROE 14.65% 14.21%Net interest margin 4.17% 4.11%Net interest income 1,131 1,021Noninterest income 481 467Noninterest expense 1,019 968Loss provision 110 150Net chargeoffs 93 141Year to Date 1993 1992Net income $787 $561Per share 3.05 2.22ROA 1.31% 0.99%ROE 19.45% 16.34%Net interest margin 4.16% 4.00%Net interest income 2,229 2,033Noninterest income 962 938Noninterest expense 2,017 1,922Loss provision 230 415Net chargeoffs 177 355Balance Sheet 6/30/93 6/30/92Assets $123,784 $110,678Deposits 80,028 82,518Loans 78,187 68,412Reserve/nonp. loans 139% 95%Nonperf. loans/loans 1.46% 2.57%Nonperf. asset/asset 1.36% 2.28%Leverage cap. ratio 6.34% 6.08%Tier 1 cap. ratio 7.63% 7.46%Tier 1+2 cap. ratio 11.75% 11.43%

MIDWEST

George Meiling, treasurer of Banc One Corp., said that gains in mortgage and consumer loans accounted for most of the company's portfolio expansion, with the strongest growth coming in Arizona, Indiana, Kentucky, West Virginia, and Wisconsin. Colorado and Texas units grew at about half the consolidated pace, he said, and the Ohio portfolio mildly shrank as the annual flood of tax refund loans ran off the books.

The company's net interest margin is 6.3%, one of the highest in the banking industry. It fell from 6.57% in the first quarter when tax refund loans lifted the number. Mr. Meiling said he believed the margin would hold fairly steady for the rest of the year.

Kenneth Puglisi, an analyst with Chicago Corp., said Banc One's earnings of $1.01 a share were slightly ahead of his expectations, mostly because of the high net interest margin. "Prudence dictates that we remain wary about margin deterioration, but so far it hasn't shown up," he said.

Shares of the Columbus, Ohio-based bank company, the nation's eighth largest, lost $1 to $54.50 on Tuesday. Banc One declared a 5-for-4 common stock split and increased its cash dividend by 10.7% Tuesday morning.

A sharp credit quality improvement also contributed heavily to second-quarter results, as nonperforming assets fell by 10.6% to $738.5 million, or a modest 1.48% of gross loans. The company's loan-loss provision of $58.4 million was down 52.3% from the first quarter. -- Steve KlinkermanColumbus, Ohio-- Dollar amounts in millions (except per share) --Second Quarter 2Q93 2Q92Net income $281.9 $242.9Per share 1.01 0.87ROA 1.53% 1.36%ROE 17.91% 17.25%Net interest margin 6.30% 5.96%Net interest income 1,025.1 954.7Noninterest income 372.6 355.1Noninterest expense 886.0 809.3Loss provision 58.4 122.5Net chargeoffs 81.8 115.4Year to Date 1993 1992Net income $568.8 $425.3Per share 2.04 1.53ROA 1.55% 1.19%ROE 18.42% 15.23%Net interest margin 6.44% 6.02%Net interest income 2,089.7 1,928.5Noninterest income 714.5 704.2Noninterest expense 1,763.9 1,604.1Loss provision 164.0 347.7Net chargeoffs 155.3 293.0Balance Sheet 6/30/93 6/30/92Assets $75,466.4 $72,604.7Deposits 59,253.9 59,006.0Loans 49,533.4 45,258.1Reserve/nonp. loans 184.23% 145.09%Nonperf. loans/loans 1.01% 1.41%Nonperf. asset/asset 0.98% 1.38%Leverage cap. ratio 8.42% NATier 1 cap. ratio 10.42% NATier 1+2 cap. ratio 14.04% NA

Mellon Bank Corp. said the Boston Co. contributed $11.2 million of net income during the six weeks it owned the company in the second quarter. The amount was ahead of expectations, indicating that the bank probably will exceed the projected $35 million of income from the Boston Co. this year, said Anthony Davis, an analyst with Dean Witter Reynolds Inc., New York.

In late trading Tuesday, Mellon's shares lost 50 cents to $55.75.

The Pittsburgh-based company completed the $1.45 billion purchase of the money management and trust giant, which has $6.3 billion of assets, on May 21. Without the deal, Mellon's 12% gain in net interest income would have been 7%, while its 39% increase in fee revenues would have fallen to 20%.

But Mellon said it incurred $457 million of goodwill and other intangible assets as part of the premium paid for the Boston Co. The goodwill will be amortized over a number of years.

Excluding some special charges related to the purchase and tax breaks in the year-earlier quarter, Mellon's second-quarter income was up 6.45 $93 million in the first quarter and up 54.7% from $64 million a year ago.

Also in Pittsburgh, Integra Financial Corp. posted second-quarter earnings of $38.5 million, up 48% from year-ago results as restated for the acquisition of Equimark Corp.

The company's shares gained 25 cents to $47.125 on Tuesday. -- Steve KlinkermanPittsburgh-- Dollar amounts in millions (except per share) --Second Quarter 2Q93 2Q92Net income $99.0 $90.0Per share 1.32 1.40ROA 1.16% 1.22%ROE 13.69% 17.78%Net interest margin 4.30% 4.37%Net interest income 317.0 284.0Noninterest income 281.0 206.0Noninterest expense 391.0 333.0Loss provision 35.0 50.0Net chargeoffs 40.0 66.0Year to Date 1993 1992Net income $133.0 $176.0Per share 1.63 2.76ROA 0.80% 1.17%ROE 8.71% 17.70%Net interest margin 4.43% 4.25%Net interest income 636.0 567.0Noninterest income 600.0 451.0Noninterest expense 924.0 700.0Loss provision 70.0 110.0Net chargeoffs 89.0 133.0Balance Sheet 6/30/93 6/30/92Assets $36,200.0 $29,200.0Deposits 27,300.0 22,100.0Loans 23,800.0 17,500.0Reserve/nonp. loans 208.00% 129.00%Nonperf. loans/loans 1.18% 2.47%Nonperf. asset/asset 1.32% 2.82%Leverage cap. ratio 7.00% 6.98%Tier 1 cap. ratio 7.40% 7.96%Tier 1+2 cap. ratio 10.60% 12.02%

WEST

Wells Fargo & Co., the nation's 11th-largest bank company, significantly exceeded analysts expectations as it recorded its best performance since the first quarter of 1991.

The San Francisco-based company said nonperforming assets fell for the third consecutive quarter, ending at $2.319 billion, or 4.52% of assets, on June 30.

Wells' ability to boost profits sharply despite a continued high level of problem loans "is a testament to [its] enormous earnings power," said Campbell K. Chaney, an analyst with Dakin Securities in San Francisco.

The company's stock rose $2 to $109.25 on Tuesday. Despite the strong credit trends, Wells said it remains cautious about future provision levels because of California's weak economy. Indeed, new nonaccrual loans tallied $264 million, up from $249 million in the March period, representing the first quarterly increase in nonperformers in 12 months.

Wells trimmed its addition to loan-loss reserves to $140 million by 33% from the 1993 first quarter. Net chargeoffs of $138 million about equaled the company's provision.

The California economy, however, is not robust. Wells reported that loans dropped 14.5% from the second quarter of 1992 and 2.3% from the end of March. Net interest income fell 2% from a year ago, despite a fat 5.71% net interest margin.

In Los Angeles, First Interstate surpassed analysts forecasts as it reported its sixth consecutive operating earnings increase and seventh consecutive drop in nonperforming assets. For the first time in years, First Interstate's results also reflected gains in revenue.

Nonperformers fell 15.1% from this year's first quarter and 53.3% from the second period of 1992 to $567 million, or a slim 1.15% of total assets.

Results at two other California institutions showed that the economic turnaround remains uneven.

San Francisco-based Union Bank said quarterly profits slipped 21% from a year ago to $26.1 million. And Great Western Financial Corp., Chatsworth, reported second-quarter earnings of $52.6 million, down 24% from a year ago.

In Utah, First Security Corp. reported second-quarter net income of $26.2 million, a 26% increase over the same period a year ago. The result equaled a return on assets of 1.33%. -- Sam ZuckermanSan Francisco-- Dollar amounts in millions (except per share) --Second Quarter 2Q93 2Q92Net income $149.0 $82.0Per share 2.46 1.33ROA 1.18% 0.63%ROE 16.73% 9.55%Net interest margin 5.71% 5.69%Net interest income 658 671Noninterest income 275 271Noninterest expense 531 506Loss provision 140 300Net chargeoffs 138 184Year to Date 1993 1992Net income $257.0 $201.0Per share 4.18 3.42ROA 1.02% 0.77%ROE 14.46% 12.44%Net interest margin 5.81% 5.70%Net interest income 1,337.0 1,351.0Noninterest income 534.0 516.0Noninterest expense 1,070.0 1,000.0Loss provision 350.0 515.0Net chargeoffs 293.0 334.0Balance Sheet 6/30/93 6/30/92Assets $51,329 $52,111Deposits 40,934 42,210Loans 34,353 40,195Reserve/nonp. loans 112% 79.%Nonperf. loans/loans 5.5% 5.8%Nonperf. asset/asset 4.5% 5.7%Leverage cap. ratio 6.95% 5.86%Tier 1 cap. ratio 9.30% 7.01%Tier 1+2 cap. ratio 14.35% 12.02%First Interstate BancorpLos Angeles-- Dollar amounts in millions (except per share) --Second Quarter 2Q93 2Q92Net income $136.0 $64.5Per share 1.60 0.75ROA 1.11% 0.53%ROE 16.83% 9.12%Net interest margin 4.99% 5.06%Net interest income 526.6 523.3Noninterest income 230.0 223.3Noninterest expense 508.3 565.7Loss provision 26.1 87.8Net chargeoffs 41.3 77.2Year to Date 1993 1992Net income $440.2 $125.1Per share 5.40 1.48ROA 1.06% 0.52%ROE 16.24% 9.12%Net interest margin 4.94% 5.03%Net interest income 1,030.2 1,037.7Noninterest income 476.5 476.4Noninterest expense 1,017.2 1,142.6Loss provision 71.7 197.7Net chargeoffs 102.1 181.9Balance Sheet 6/30/93 6/30/92Assets $49,488.0 $49,499.4Deposits 42,895.1 41,852.9Loans 24,117.2 25,397.4Reserve/nonp. loans 240.3% 141.3%Nonperf. loans/loans 1.79% 3.50%Nonperf. asset/asset 1.15% 2.45%Leverage cap. ratio 6.70% 5.60%Tier 1 cap. ratio 10.40% 7.91%Tier 1+2 cap. ratio 14.30% 12.79%

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