A bevy of large banking companies and one big thrift reported generally positive fourth-quarter and yearend results Thursday, boosted by strength in fee-based businesses.
Most of the eight major companies that reported earnings met expectations despite sluggish loan growth and, in some cases, higher expenses.
"It's the fee side that continues to be the earnings driver," said Joseph Duwan, an analyst at Keefe, Bruyette & Woods Inc.
But intense competition for lending continues to put margins under pressure, said Diana Yates of A.G. Edwards & Sons in St. Louis. Banks also continue to lose deposits, which means the loans they make are funded by more expensive means, including borrowing.
The largest of the big Midwest banks, $114 billion-asset First Chicago NBD Corp., reported quarterly income of $382 million, a 1% gain over a year ago. Its earnings per share of $1.28 met analysts' estimates.
Norwest Corp. of Minneapolis slightly exceeded estimates as quarterly earnings rose 16% from the year before, to $356 million.
The two big Boston companies, Fleet Financial Group and BankBoston Corp., reported double-digit gains in quarterly profits. Fleet's earnings in the period rose 11%, to $335 million, missing consensus estimates by a penny, while BankBoston reported a 16% gain, to $235 million, topping expectations by 1 cent.
KeyCorp of Cleveland said earnings rose 14%, to $248 million, when compared with fourth-quarter 1996 results adjusted for a restructuring charge. Earnings were up 64% when the year-ago charge is included.
PNC Bank Corp. of Pittsburgh said quarterly earnings decreased nearly 2%, to $266 million, due to high expenses, while Minneapolis-based U.S. Bancorp's profits jumped 15% if a merger-related charge in the fourth quarter is subtracted. Including the charge, earnings declined 1%, to $289 million.
Fourth-quarter earnings at Irwindale, Calif.-based H.F. Ahmanson & Co., the nation's second-largest thrift, rose 9%, to $100 million.
First Chicago chairman and chief executive officer Verne G. Istock said earnings per share grew "despite a challenging market environment and significant technology investments." He said strong fee income across all business lines drove the modest earnings increase.
First Chicago's earnings were dampened by a $15 million trading loss in the fourth quarter. That caused market-driven revenue to plunge 46% from the same period a year ago to $45 million.
Analysts noted that First Chicago reduced its provision for loan losses by 12% despite anticipated losses from its exposure in Southeast Asia. First Chicago was a lead lender to Hong Kong-based Peregrine Investment Holdings, which collapsed Monday. Analysts have estimated First Chicago's loan exposure to Peregrine at about $50 million. Despite that, First Chicago lowered its provision as a result of fewer chargeoffs.
Net interest income at First Chicago declined 2% to $888 million, while noninterest income rose 7% to $727 million. Credit card revenues and investment management fees fell slightly.
Noninterest expenses were up 7% for the quarter to $872 million, mostly due to technology spending.
Norwest, with $88.5 billion of assets, showed some improvement in net interest income. Modest loan growth and expense control helped Norwest report an 11% gain in net interest income to $1.1 billion. Strong gains in service charges and mortgage banking helped Norwest to report $768 million in quarterly noninterest income, a 4% gain over a year ago.
For the year, Norwest benefited more from its banking and mortgage operations than from its consumer finance business.
Earnings at the consumer finance arm, Norwest Financial, were down 8% to $66 million due to higher loan provisions related to increased chargeoffs. However, analysts say the subprime unit has scaled back solicitations.
Mortgage banking was a huge earnings driver for Norwest in both the fourth quarter and for the year. Mortgage banking earned $151 million in 1997, a 21% increase over 1996. Banking operations earned $957 million, a 23% gain from a year ago. +++
H.F. Ahmanson & Co. Irwindale, Calif. Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $99.5 $91.2 Per share 0.89 0.74 ROA 0.85% 0.73% ROE 16.59% 14.71% Net interest margin 2.76% 2.68% Net interest income 306.4 317.7 Noninterest income 64.8 71.1 Noninterest expense 188.2 188.2 Loss provision 10.0 29.3 Net chargeoffs 13.0 38.5 Year to Date 1997 1996 Net income $413.8 $145.3 Per share 3.59 0.92 ROA 0.87% 0.29% ROE 17.27% 5.26% Net interest margin 2.68% 2.63% Net interest income 1,230.0 1,250.0 Noninterest income 272.0 244.9 Noninterest expense 737.5 761.3 Loss provision 67.1 144.9 Net chargeoffs 78.9 151.4 Balance Sheet 12/31/97 12/31/96 Assets $46,678.8 $49,902.0 Deposits 32,268.4 34,773.9 Loans 30,470.0 30,45.0 Reserve/nonp. loans 87.17% 65.00% Nonperf. loans/loans 1.42% 1.88% Nonperf. assets/assets 1.28% 1.70% Nonperf. assets/loans + OREO 1.94% 2.64% Leverage cap. ratio NA 5.55% Tier 1 cap. ratio NA 8.67% Tier 1+2 cap. ratio NA 10.78%
BankBoston Corp. Boston Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $234.7 $201.5 Per share 1.56 1.24 ROA 1.37% 1.31% ROE 21.74% 17.71% Net interest margin 4.20% 4.47% Net interest income 621.5 611.2 Noninterest income 408.4 339.5 Noninterest expense 600.5 547.9 Loss provision 40.0 60.0 Net chargeoffs 60.0 75.0 Year to Date 1997 1996 Net income $879.2 $650.2 Per share 5.65 3.93 ROA 1.35% 1.09% ROE 20.05% 14.47% Net interest margin 4.25% 4.42% Net interest income 2,428.6 2,339.6 Noninterest income 1,563.1 1,344.2 Noninterest expense 2,323.9 2,319.5 Loss provision 200.0 231.0 Net chargeoffs 279.0 230.0 Balance Sheet 12/31/97 12/31/96 Assets $69,268.0 $62,306.0 Deposits 45,761.0 42,831.0 Loans 43,980.0 41,061.0 Reserve/nonp. loans 222% 220% Nonperf. loans/loans 0.70% 1.00% Nonperf. assets/assets 0.50% 0.70% Nonperf. assets/loans + OREO 0.80% 1.10% Leverage cap. ratio 7.30%* 8.20% Tier 1 cap. ratio 7.90%* 9.20% Tier 1+2 cap. ratio 12.00%* 13.60%
* Estimated
Capital One Financial Corp. Falls Church, Va. Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $58.2 $40.3 Per share 0.86 0.60 ROA 1.42% 1.11% ROE 26.12% 21.95% Net interest margin 9.24% 8.29% Net interest income 361.6 282.6 Noninterest income 230.4 154.3 Noninterest expense 177.4 148.4 Year to Date 1997 1996 Net income $189.4 $155.3 Per share 2.80 2.32 ROA 1.22% 2.79% ROE 22.98% 22.94% Balance Sheet 12/31/97 12/31/96 Assets $7,078.3 $6,467.4 Deposits 6,087.4 5,727.1 Loans 4,678.7 4,225.4
First Chicago NBD Corp. Chicago Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $382.0 $377.0 Per share 1.28 1.14 ROA 1.38% 1.46% ROE 19.50% 17.20% Net interest margin 3.71% 4.11% Net interest income 888.0 907.0 Noninterest income 727.0 682.0 Noninterest expense 872.0 813.0 Loss provision 167.0 190.0 Net chargeoffs 167.0 191.0 Year to Date 1997 1996 Net income $1,525.0 $1,436.0 Per share 4.90 4.33 ROA 1.41% 1.28% ROE 18.60% 17.00% Net interest margin 3.95% 3.83% Net interest income 3,667.0 3,722.0 Noninterest income 2,751.0 2,548.0 Noninterest expense 3,332.0 3,271.0 Loss provision 725.0 735.0 Net chargeoffs 724.0 670.0 Balance Sheet 12/31/97 12/31/96 Assets $114,096.0 $104,619.0 Deposits 68,489.0 63,669.0 Loans 67,316.0 65,007.0 Reserve/nonp. loans 453% 537% Nonperf. loans/loans 0.50% 0.40% Nonperf. assets/assets 0.30% 0.30% Nonperf. assets/loans + OREO 0.50% 0.40% Leverage cap. ratio 7.80% 9.30% Tier 1 cap. ratio 7.90% 9.20% Tier 1+2 cap. ratio 11.70% 13.30%
Fleet Financial Group Boston Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $335.0 $302.0 Per share 1.23 1.05 ROA 1.62% 1.40% ROE 19.23% 17.67% Net interest margin 5.19% 5.00% Net interest income 923.0 910.0 Noninterest income 517.0 529.0 Noninterest expense 796.0 857.0 Loss provision 90.0 65.0 Net chargeoffs 90.0 124.0 Year to Date 1997 1996 Net income $1,303.0 $1,139.0 Per share 4.74 3.98 ROA 1.59% 1.37% ROE 19.53% 17.43% Net interest margin 5.21% 4.81% Net interest income 3,667.0 3,439.0 Noninterest income 2,247.0 2,013.0 Noninterest expense 3,381.0 3,272.0 Loss provision 322.0 213.0 Net chargeoffs 376.0 370.0 Balance Sheet 12/31/97 12/31/96 Assets $85,535.0 $85,518.0 Deposits 63,735.0 67,071.0 Loans 61,179.0 58,844.0 Reserve/nonp. loans 365.31% 213.79% Nonperf. loans/loans 0.64% 1.18% Nonperf. assets/assets 0.49% 0.85% Nonperf. assets/loans + OREO 0.68% 1.23% Leverage cap. ratio 7.72% 7.14% Tier 1 cap. ratio 7.34% 7.67% Tier 1+2 cap. ratio 10.94% 11.36%
KeyCorp Cleveland, Ohio Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $248.0 $151.0 Per share 1.13 0.67 ROA 1.38% 0.92% ROE 19.16% 12.53% Net interest margin 4.50% 4.80% Net interest income 716.0 695.0 Noninterest income 366.0 285.0 Noninterest expense 630.0 700.0 Loss provision 76.0 57.0 Net chargeoffs 76.0 57.0 Year to Date 1997 1996 Net income $919.0 $783.0 Per share 4.19 3.37 ROA 1.33% 1.21% ROE 18.89% 15.73% Net interest margin 4.62% 4.78% Net interest income 2,838.0 2,767.0 Noninterest income 1,306.0 1,087.0 Noninterest expense 2,435.0 2,464.0 Loss provision 320.0 197.0 Net chargeoffs 293.0 195.0 Balance Sheet 12/31/97 12/31/96 Assets $73,699.0 $67,621.0 Deposits 45,073.0 45,317.0 Loans 53,380.0 49,235.0 Reserve/nonp. loans 236.22% 249.28% Nonperf. loans/loans 0.71% 0.71% Nonperf. assets/assets 0.58% 0.59% Nonperf. assets/loans + OREO 0.81% 0.81% Leverage cap. ratio 6.44%* 6.93% Tier 1 cap. ratio 6.86%* 7.98% Tier 1+2 cap. ratio 11.12%* 13.01% *Estimated
Norwest Corp. Minneapolis Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $356.1 $308.1 Per share 0.46 0.41 ROA 1.66% 1.55% ROE 21.40% 22.00% Net interest margin 5.85% 5.60% Net interest income 1,064.9 955.1 Noninterest income 767.9 738.1 Noninterest expense 1,148.8 1,103.0 Loss provision 146.2 113.6 Net chargeoffs 147.4 113.6 Year to Date 1997 1996 Net income $1,351.0 $1,153.9 Per share 1.75 1.54 ROA 1.63% 1.51% ROE 22.10% 21.90% Net interest margin 5.74% 5.63% Net interest income 4,077.9 3,733.5 Noninterest income 2,962.3 2,564.6 Noninterest expense 4,421.3 4,089.7 Loss provision 524.7 394.7 Net chargeoffs 499.7 382.4 Balance Sheet 12/31/97 12/31/96 Assets $88,540.2 $80,175.4 Deposits 55,457.1 50,130.2 Loans 42,521.6 39,381.0 Reserve/nonp. loans 692.5% 664.4% Nonperf. loans/loans 0.42% 0.40% Nonperf. assets/assets 0.26% 0.25% Nonperf. assets/loans + OREO 0.54% 0.51% Leverage cap. ratio 6.63% 6.15% Tier 1 cap. ratio 9.09% 8.63% Tier 1+2 cap. ratio 11.01% 10.42%
PNC Bank Corp. Pittsburgh Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $265.5 $271.9 Per share 0.85 0.79 ROA 1.49% 1.56% ROE 20.28% 18.58% Net interest margin 3.95% 3.92% Net interest income 638.9 625.6 Noninterest income 504.0 388.6 Noninterest expense 701.2 586.5 Loss provision 25.0 0.0 Net chargeoffs 80.0 57.0 Year to Date 1997 1996 Net income $1,052.5 $992.2 Per share 3.28 2.88 ROA 1.49% 1.40% ROE 20.01% 17.18% Net interest margin 3.94% 3.83% Net interest income 2,524.2 2,478.6 Noninterest income 1,808.2 1,395.1 Noninterest expense 2,614.8 2,311.9 Loss provision 70.0 0.0 Net chargeoffs 272.0 164.0 Balance Sheet 12/31/97 12/31/96 Assets $75,120.0 $73,260.0 Deposits 47,649.0 45,676.0 Loans 54,245.0 51,798.0 Reserve/nonp. loans 351.79% 334.40% Nonperf. loans/loans 0.51% 0.67% Nonperf. assets/assets 0.44% 0.63% Nonperf. assets/loans + OREO 0.61% 0.88% Leverage cap. ratio 7.30%* 7.70% Tier 1 cap. ratio 7.40%* 8.29% Tier 1+2 cap. ratio 11.00%* 11.65%
*Estimated
U.S. Bancorp Minneapolis Dollar amounts in millions (except per share) Fourth Quarter 4Q97 4Q96 Net income $288.9 $292.1 Per share 1.16 1.15 ROA 1.64% 1.71% ROE 20.00% 20.10% Net interest margin 4.99% 5.09% Net interest income 784.7 778.1 Noninterest income 420.5 360.8 Noninterest expense 644.2 586.9 Loss provision 90.0 75.5 Net chargeoffs 103.3 71.2 Year to Date 1997 1996 Net income $838.5 $1,218.7 Per share 3.34 4.72 ROA 1.22% 1.81% ROE 14.60% 21.10% Net interest margin 5.04% 5.04% Net interest income 3,106.0 3,034.7 Noninterest income 1,615.2 1,783.1 Noninterest expense 2,812.3 2,538.1 Loss provision 460.3 271.2 Net chargeoffs 449.7 261.5 Balance Sheet 12/31/97 12/31/96 Assets $71,295.0 $69,749.0 Deposits 49,027.0 49,356.0 Loans 53,699.0 51,362.0 Reserve/nonp. loans 340% 369% Nonperf. loans/loans 0.54% 0.51% Nonperf. assets/assets 0.48% 0.46% Nonperf. assets/loans + OREO 0.62% 0.61% Leverage cap. ratio 7.30% 7.50% Tier 1 cap. ratio 7.40% 7.60% Tier 1+2 cap. ratio 11.60% 11.90% ===
