As a battery of earnings reports rolled in Tuesday, rising fee income and share buyback programs helped the largest U.S. banks notch solid gains in third-quarter profits.

Credit card delinquencies and payments to shore up the Savings Association Insurance Fund did take a toll, in the form of higher provisions and one-time charges to earnings. But banking analysts said the "Super Tuesday" showing by eight of the top 25 banks were largely in line with their expectations.

"You're looking at an industry where year over year gains are still good, even if on a linked quarter basis there's no question that momentum is slowing," said Lawrence Cohn, a banking analyst with PaineWebber Inc.

Added Michael Mayo, a banking analyst with Lehman Brothers: "The story this quarter was not one of revenue growth; it was one of share buybacks and expense control."

Earnings rose 12% to $858 million at Chase Manhattan Corp., the nation's biggest bank, while at second-place Citicorp, net income climbed 6% to $935 million.

NationsBank Corp., of Charlotte, N.C., credited cost control and a restructuring of the balance sheet for its 18% rise to $625 million.

At Banc One Corp., where earnings jumped nearly 8% to $356 million from the same period a year ago, net chargeoffs were up 66% to $182 million.

Fred Cummings, an analyst with Cleveland-based McDonald & Company Securities, said the Columbus, Ohio-based bank was struggling with many of the same problems as other banks are: revenue challenges and credit quality.

Earnings at San Francisco-based Wells Fargo & Co. suffered from its April acquisition of First Interstate Bancorp. and a $22 million payment the bank had to make to the SAIF. But because the bank has not adjusted its results to account for the merger, it is impossible to tell exactly how much damage was done.

Wells said it earned $321 million in the third quarter, a 23% gain over last year's same period, but that was also a 12% decline from this year's second quarter.

At Chase Manhattan, net interest income remained flat, at slightly more than $2 billion, despite a 7% increase in interest earning assets. Yields fell to 3.14% from 3.36% for the same quarter a year ago.

Trading revenues were up only 2.5% to $479 million, but fee income surged. Fees related to credit cards soared 32% to $277 million. Corporate finance and syndication fees rose 11% to $234 million, and trust and investment management fees jumped 14% to $295 million.

The bank reported $180 million in merger related expense savings, and a slight decline in noninterest related expenses to $2.3 billion.

At Citicorp, worldwide net earnings from consumer operations fell 10% to $466 million. Most of the decline came from a $40 million after-tax charge for the payment to SAIF, as well as a $47 million decline in earnings from worldwide card operations due to higher credit card-related expenses.

In contrast, net income from corporate banking jumped 34% to $520 million, driven by strong increases in banking for U.S. multinationals and companies in emerging markets. Trading revenues rose 3% to $445 million.

Meanwhile, NationsBank Corp. said noninterest income rose 14% from a year ago to $886 million, driven by service charges on deposits and fees from mortgage servicing and investment banking.

"They're getting very good core service fees out of the bank," said Dennis Shea, an analyst with Morgan Stanley & Co., who added that NationsBank continues to control expenses splendidly. "They've been beating people's expense numbers quarter in and quarter out."

The company has also been restructuring its balance sheet, shedding low- yielding securities, such as U.S. Treasuries, and replacing them with higher-yielding investments, such as mortgage-backed securities, and focusing on loan growth.

Hugh L. McColl Jr. credited his $188 billion-asset company's management of its balance sheet for earnings growth."These results demonstrate the financial power which is the foundation for the next phase of our growth through the acquisition of Boatmen's Bancshares in 1997," said Mr. McColl.

Net interest income was $1.6 billion, a 14% increase over a year ago. The improvement was due to a 9% increase in total loans to $121 billion, driven by the consumer portfolio.

Net chargeoffs were $135 million, up 36% from the year-ago quarter, but were down from the second quarter. Chargeoffs were balanced between consumer and commercial loans.

The $106.7 billion-asset First Chicago NBD Corp. reported earnings increased by only $1 million from the year-ago quarter to $358 million.

Earnings were flat because of an $18 million charge for its payment to the Savings Association Insurance Fund and a $12 million trading loss. "Improving the execution in the capital markets businesses is a top priority in the refocusing of the corporate and institutional banking segment," the company said.

Despite the shortfall in its market-driven revenue, First Chicago showed healthy loan growth, said Keefe, Bruyette & Woods analyst Joseph Duwan. Total loans increased 9% to $67 billion, fueled by increases in credit card, consumer and corporate lending. Net interest income was $967 million, up 17% from a year ago. Net interest margin improved 26 basis points to 4.00%.

The efficiency ratio improved to 51%, compared with 54% a year ago. Operating expenses were flat from a year ago at $798 million.

First Chicago also announced it would buy back up to 40 million shares of its common stock over the next three years. Other balance sheet restructuring moves included a runoff of low-yielding securities, which helped the bank reduce assets by more than $17 billion over the past year.

Per share earnings at Wells Fargo were $3.23, almost 60 cents less than the mean estimate of the 18 brokers that follow the bank, as compiled by First Call.

"There is a tremendous amount of work being done relative to the merger," said Cynthia A. Koehn, manager of investor relations for Wells Fargo. "We are busy and will continue to be busy."

In the quarter, the bank converted the California customer base of First Interstate into Wells. It still intends to complete the rest of the conversion process, spanning nine other states, by the end of the year, Ms. Koehn said.

She estimated the third-quarter integration costs slightly exceeded those from the previous quarter, which were $62 million.

The First Interstate merger is taking its toll in other ways as well. Notably, Wells Fargo's loan portfolio shrank 2% from the second quarter, evidence that other companies are taking advantage of customer fallout from the deal.

"People at Wells are too busy right now to book new business, and so they're losing market share as others are attacking their customer base," said David Berry, research director at Keefe, Bruyette & Woods in New York.

"It serves as a reminder that Wells lives and works in the same world as everyone else, and there are issues when you put two banks together," Mr. Berry added.

Another factor in the loan falloff was the bank's divestiture of 61 branches and $1.1 billion of loans to H.F. Ahmanson & Co., in conjunction with its purchase of First Interstate.

Ms. Koehn said the bank had not boosted loan-loss provisions in the recent past because it has high reserves to cushion against losses. However, it expects to add to loss provisions going forward, she said.

"The fourth quarter will be the big hurdle as far as customer retention, but by early 1997 the bank should be hitting its stride once again," said Joseph K. Morford 3d, analyst with Alex. Brown & Sons, in San Francisco.

Despite a high provision and a $34 million charge for the SAIF, Banc One benefited from $56 million in securities gains, which was $49 million higher than a year ago.

Net interest income of $1.2 billion was 15.5% higher than a year ago. Noninterest income of $569 million was 20% higher, and noninterest expense of $1 billion was 17% higher than a year ago. Expenses are due to the acquisition of Premier Bancorp and restructuring costs in conjunction with its Project One reengineering program.

"We were very pleased with our strong financial results during the third quarter in spite of the one-time assessment to fund SAIF and continued deterioration of consumer credit," said chairman and chief executive John McCoy.

Earnings at Bank of New York Co. rose 6% to $249 million, although net interest spreads fell to 3.29% from 3.4% and net interest income fell 8.6% $476 million. Part of the decline was directly related to the bank's sale of the $3.4 billion AFL-CIO Union Privilege affinity credit card portfolio earlier this year.

The decline in net interest revenues was largely offset by a strong improvement in fees and revenues in other areas. Fees from securities processing rose 60% to $164 million, fees from other processing operations rose 115 to $54 million, and fees from trust and investment operations rose 28% to $42 million. The bank also benefited from $33 million in payments from Slovenia and Croatia as part of a settlement on overdue loans made by the bank to the former Yugoslavia.

Net earnings at Pittsburgh-based Mellon Bank Corp. rose 3% to $181 million. Net interest revenues fell 5% to $372 million, while fee revenues rose 13% to $476 million.

Mellon said much of the decline in net interest revenue stemmed from credit card and home equity loan securitizations, while much of the increase in fees was attributable to higher mortgage servicing fees, higher institutional trust fees and higher mutual fund management revenues.

Total nonperforming assets declined to $209 million from $261 million a year ago.

"Mellon turned in a pretty solid performance," said Mr. Duwan of Keefe Bruyette & Woods.

Detroit-based Comerica Inc. posted quarterly income of $122 million, a 15% earnings increase over a year ago. The $34 billion-asset Comerica credited loan growth, expense control and good credit quality contributing to its gain. Comerica did take a $5 million charge for SAIF, but that was offset by a $6 million gain on the sale of its Illinois bank subsidiary to ABN Amro North America.

Results came in broadly in line with a consensus of analysts expectations as compiled by Boston-based First Call Corp. Earnings per share at Chase Manhattan, excluding a 5 cent charge for merger related expenses, came in at $1.83 versus a forecast for $1.82. Earnings per share at Citicorp came in a $1.85 versus a forecast for $1.87. They reached 60 cents at Bank of New York, in line with estimates, and $1.31 at Mellon, versus a consensus forecast for $1.29.

Analysts observed that there appeared to be few, if any, unusual items distorting results during the third quarter.

"Results at Chase and Citicorp were pretty much in line with street expectations," remarked Raphael Soifer, a banking analyst at Brown Brothers Harriman. "Neither one showed any significant surprises."

"Results are unusually clear in the case of Chase and Citi," said Mr. Berry of Keefe, Bruyette & Woods. "This is about as clean as it gets."

Analysts noted that increasingly, much of the improvement in earnings per share is coming from ongoing share buyback programs at banks.

"You can see the impact right across the board in how growth in earnings per share is substantially more than total net earnings," Mr. Cohn observed.

On Tuesday, Chase announced plans to purchase a further 2.5 billion shares and analysts predicted that Citicorp is likely to soon follow suit.

Citicorp has so far repurchased 3.8 billion in shares out of a 4.5 billion buyback program since June last year.

"They're running out of room," observed Mr. Berry, predicting Citicorp will soon reauthorize further share buybacks.

NationsBank, First Chicago and Banc One all benefited from letting low- yielding securities and loans mature and redeploying capital elsewhere.

"What you're seeing at these banks is they're trying to rid themselves of low-spread assets from the balance sheet and either buy back stock or re-invest in higher-margin businesses," said Mr. Mayo, the Lehman Brothers analyst.

"People are managing balance sheets more effectively," said Mr. Cummings, of McDonald & Co. "They're rolling out of securities and residential mortgages and replacing them with high-margin consumer and commercial loans."

"There's a much sharper focus on the return on equity," Mr. Cummings said. "In the past, banks leveraged the balance sheet by putting lower- earning assets on it. Today banks are more focused on profitability."

The drive for profitability is illustrated by the stock repurchases. NationsBank said it repurchased 13 million shares in the third quarter, while Banc One said it repurchased 7 million shares. First Chicago announced it would repurchase 40 million shares over the next three years, a higher number than analysts expected.

This article was written by Jacqueline S. Gold, based on reporting by James R. Kraus, Brett Chase, and Christopher Rhoads. +++

Wells Fargo & Co. San Francisco Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $321.0 $261.0 Per share 3.23 5.23 ROA 1.18% 2.07% ROE 8.64% 30.13% Net interest margin 6.15% 5.90% Net interest income 1,299.0 663.0 Noninterest income 643.0 339.0 Noninterest expense 1,305.0 542.0 Loss provision 35.0 0.0 Net chargeoffs 171.0 75.0 Year to Date 1996 1995 Net income $948.0 $726.0 Per share 11.42 14.14 ROA 1.43% 1.89% ROE 11.36% 27.91% Net interest margin 6.11% 5.72% Net interest income 3,278.0 1,987.0 Noninterest income 1,636.0 890.0 Noninterest expense 3,149.0 1,638.0 Loss provision 35.0 0.0 Net chargeoffs 462.0 210.0 Balance Sheet 9/30/96 9/30//95 Assets $109,176.0 $49,934.0 Deposits 83,737.0 38,948.0 Loans 69,233.0 34,298.0 Reserve/nonp. loans 293.5% 312.0% Nonperf. loans/loans 1.10% 1.80% Nonperf. assets/assets 0.90% 1.70% Nonperf. assets/loans + OREO 1.40% 2.40% Leverage cap. ratio 6.10% 6.90% Tier 1 cap. ratio 7.10% 8.60% Tier 1+2 cap. ratio 11.15% 12.30%

NationsBank Corp. Charlotte, N.C. Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $625.0 $530.0 Per share 2.12 1.95 ROA 1.26% 1.10% ROE 19.00% 18.29% Net interest margin 3.69% 3.35% Net interest income 1,616.0 1,420.0 Noninterest income 886.0 776.0 Noninterest expense 1,400.0 1,245.0 Loss provision 145.0 100.0 Net chargeoffs 135.0 99.0 Year to Date 1996 1995 Net income $1,820.0 $1,440.0 Per share 6.07 5.26 ROA 1.20% 1.03% ROE 18.36% 17.02% Net interest margin 3.58% 3.31% Net interest income 4,811.0 4,122.0 Noninterest income 2,688.0 2,232.0 Noninterest expense 4,199.0 3,821.0 Loss provision 455.0 240.0 Net chargeoffs 447.0 265.0 Balance Sheet 9/30/96 9/30//95 Assets $187,671.0 $182,138.0 Deposits 108,132.0 97,870.0 Loans 120,829.0 113,343.0 Reserve/nonp. loans 236% 256% Nonperf. loans/loans 0.81% 0.75% Nonperf. assets/assets 0.61% 0.57% Nonperf. assets/loans + OREO 0.93% 0.90% Leverage cap. ratio 6.30% 5.96% Tier 1 cap. ratio 7.05% 7.16% Tier 1+2 cap. ratio 12.05% 11.23%

Mellon Bank Corp. Pittsburgh Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $181.0 $175.0 Per share 1.31 1.15 ROA 1.71% 1.70% ROE 20.60% 18.00% Net interest margin 4.20% 4.56% Net interest income 372.0 392.0 Noninterest income 476.0 422.0 Noninterest expense 536.0 506.0 Loss provision 25.0 30.0 Net chargeoffs 34.0 39.0 Year to Date 1996 1995 Net income $539.0 $517.0 Per share 3.81 3.52 ROA 1.72% 1.74% ROE 20.20% 17.70% Net interest margin 4.28% 4.68% Net interest income 1,107.0 1,166.0 Noninterest income 1,454.0 1,226.0 Noninterest expense 1,636.0 1,501.0 Loss provision 75.0 70.0 Net chargeoffs 88.0 111.0 Balance Sheet 9/30/96 9/30//95 Assets $43,676.0 $41,907.0 Deposits 32,555.0 29,311.0 Loans 28,229.0 28,073.0 Reserve/nonp. loans 365% 314% Nonperf. loans/loans 0.46% 0.65% Nonperf. assets/assets 0.47% 0.62% Nonperf. assets/loans + OREO 0.74% 0.93% Leverage cap. ratio 6.70% 8.20% Tier 1 cap. ratio 6.80% 8.80% Tier 1+2 cap. ratio 11.30% 12.00%

Citicorp New York Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $935.0 $877.0 Per share 1.85 1.62 ROA 1.39% 1.31% ROE NA 17.91% Net interest margin 5.12% 5.04% Net interest income 3,330.0 3,114.0 Noninterest income 2,301.0 2,159.0 Noninterest expense 3,078.0 2,793.0 Loss provision 449.0 576.0 Net chargeoffs 399.0 501.0 Year to Date 1996 1995 Net income $2,801.0 $2,559.0 Per share 5.45 4.72 ROA 1.40% 1.27% ROE NA 18.25% Net interest margin NA NA Net interest income 9,944.0 8,888.0 Noninterest income 6,709.0 6,498.0 Noninterest expense 8,916.0 8,284.0 Loss provision 1,422.0 1,460.0 Net chargeoffs 1,272.0 1,225.0 Balance Sheet 9/30/96 9/30//95 Assets $271,930.0 $257,536.0 Deposits 179,319.0 163,827.0 Loans 169,127.0 160,695.0 Reserve/nonp. loans 146.40% 123.10% Nonperf. loans/loans 2.20% 2.70% Nonperf. assets/assets 1.80% 2.40% Nonperf. assets/loans + OREO 2.90% 3.70% Leverage cap. ratio NA NA Tier 1 cap. ratio 8.40%* 8.40% Tier 1+2 cap. ratio 12.40%* 12.30%


First Chicago NBD Corp. Chicago Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $358.0 $357.0 Per share 1.08 1.06 ROA 1.29% 1.14% ROE 16.70% 17.40% Net interest margin 4.00% 3.03% Net interest income 967.0 824.0 Noninterest income 597.0 702.0 Noninterest expense 816.0 827.0 Loss provision 185.0 125.0 Net chargeoffs 182.0 60.0 Year to Date 1996 1995 Net income $1,059.0 $1,024.0 Per share 3.19 3.03 ROA 1.22% 1.12% ROE 16.90% 17.30% Net interest margin 3.74% 3.11% Net interest income 2,815.0 2,447.0 Noninterest income 1,866.0 1,936.0 Noninterest expense 2,458.0 2,447.0 Loss provision 545.0 300.0 Net chargeoffs 480.0 157.0 Balance Sheet 9/30/96 9/30//95 Assets $106,694.0 $124,056.0 Deposits 63,679.0 66,934.0 Loans 66,602.0 61,076.0 Reserve/nonp. loans 468% 416% Nonperf. loans/loans 0.50% 0.50% Nonperf. assets/assets 0.30% 0.30% Nonperf. assets/loans + OREO 0.50% 0.50% Leverage cap. ratio 8.10% 6.90% Tier 1 cap. ratio 8.30% 8.20% Tier 1+2 cap. ratio 12.30% 12.40%

Chase Manhattan Corp. New York Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $858.0 $764.0 Per share 1.80 1.58 ROA 1.06% 0.99% ROE 17.90% 16.17% Net interest margin 3.14% 3.36% Net interest income 2,069.0 2,069.0 Noninterest income 1,856.0 1,710.0 Noninterest expense 2,320.0 2,332.0 Loss provision 220.0 192.0 Net chargeoffs 220.0 225.0 Year to Date 1996 1995 Net income $1,625.0 $2,132.0 Per share 3.28 4.47 ROA 0.68% 0.93% ROE 10.99% 15.73% Net interest margin 3.25% 3.41% Net interest income 6,258.0 6,124.0 Noninterest income 5,656.0 4,993.0 Noninterest expense 8,737.0 7,026.0 Loss provision 715.0 572.0 Net chargeoffs 817.0 654.0 Balance Sheet 9/30/96 9/30//95 Assets $322,604.0 $307,843.0 Deposits 165,042.0 166,221.0 Loans 150,333.0 151,031.0 Reserve/nonp. loans 270% 219% Nonperf. loans/loans 0.91% 1.15% Nonperf. assets/assets 0.47% 0.61% Nonperf. assets/loans + OREO 1.01% 1.25% Leverage cap. ratio 7.0% 6.6% Tier 1 cap. ratio 8.3%* 8.0% Tier 1+2 cap. ratio 12.1%* 12.1%


Bank of New York Co.

New York Dollar amounts in millions (except per share) Third Quarter 3Q96 3Q95 Net income $249.0 $234.0 Per share 0.60 0.55 ROA 1.92% 1.78% ROE 19.63% 19.28% Net interest margin 4.28% 4.61% Net interest income 476.0 521.0 Noninterest income 432.0 405.0 Noninterest expense 455.0 424.0 Loss provision 40.0 113.0 Net chargeoffs 65.0 86.0 Year to Date 1996 1995 Net income $770.0 $673.0 Per share 1.81 1.60 ROA 1.92% 1.70% ROE 20.14% 19.69% Net interest margin 4.35% 4.52% Net interest income 1,499.0 1,538.0 Noninterest income 1,689.0 1,073.0 Noninterest expense 1,355.0 1,265.0 Loss provision 555.0 225.0 Net chargeoffs 354.0 258.0 Balance Sheet 9/30/96 9/30//95 Assets $52,389.0 $51,087.0 Deposits 36,561.0 33,743.0 Loans 36,030.0 37,564.0 Reserve/nonp. loans 488.3% 320.6% Nonperf. loans/loans 0.60% 0.60% Nonperf. assets/assets 0.50% 0.60% Nonperf. assets/loans + OREO 0.70% 0.80% Leverage cap. ratio 8.17% 8.96% Tier 1 cap. ratio 7.65% 8.89% Tier 1+2 cap. ratio 12.25% 13.62% ===

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