Fee income-from credit cards, deposit accounts, mortgage banking, and trust-helped a group of large regional banks post double-digit profit gains for the fourth quarter.

Of the banks that reported earnings Wednesday, only Republic New York Corp. felt the sting of last year's market turbulence, suffering a 10% decline, to $104.4 million. Other banks from around the country credited the vibrant national economy with fueling strong results.

Fleet Financial Group, which posted a 24.5% rise, to $416 million, and other regionals continued to attract loan customers scared off from the volatile capital markets.

Net income at U.S. Bancorp rose 21%, to $349 million, while SouthTrust Corp.'s profits climbed 20%, to $98 million.

Special items drove Washington Mutual Inc.'s fourth-quarter results down 115%, to $157 million. But the nation's largest thrift earned $430 million, up 26%, when $473 million in merger and other charges are excluded.

"Mortgage banking was simply off the charts," said R. Jay Tejera, an analyst with Dain Rauscher in Minneapolis. "Not only was volume huge, but pricing was very attractive as well."

(Nonbank finance companies also reported strong quarterly results. See story on page 4.)

"Asset quality generally held stable," said Joseph K. Morford, an analyst with Van Kasper & Co. in San Francisco. "Loan growth was strong, particularly in the commercial area, as companies turned to banks during the periods of market turmoil."

Fleet Financial Group

Fleet credited fee businesses and lending for pushing its earnings per share to 69 cents, beating consensus estimates by a penny.

Profits in the year-ago period were dampened by $22 million in merger- related charges.

For the full year, net income jumped 12%, to $1.53 billion, or $2.52 per share.

Boston-based Fleet, with $104.4 billion of assets, said it benefited from recent acquisitions that have built up fee-related consumer businesses such as credit cards, brokerage, and asset management.

In addition, the bank said, limited exposure to overseas markets helped shield earnings from roiling markets.

"With our domestic business focus, we appear poised to continue to reap the benefits of a strong national and regional economy," said Terrence Murray, chairman and chief executive officer.

Fee income surged 42% in the quarter, to $890 million. Capital markets revenue rocketed up 82%, to $161 million. Credit card revenues soared sevenfold, to $120 million, because of its first-quarter acquisition of Advanta Corp.'s credit card portfolio.

Commercial loans grew 15%, the bank said.

"The commercial side of the business is reaping the rewards of many years of integrating acquisitions," said Gerard Cassidy, an analyst at Tucker Anthony Inc. in Portland, Maine.

Quarterly expenses rose 18%, to $1.1 billion.

U.S. Bancorp

Noninterest income at the $76 billion-asset U.S. Bancorp increased 47% in the fourth quarter, to $620 million. The year-ago figures did not include results from investment firm Piper Jaffray Cos., which it acquired last May. Excluding Piper and nonrecurring charges, noninterest income would have risen 12%.

Earnings per share at the Minneapolis-based company matched analysts' estimate of 74 cents.

U.S. Bancorp had a 17% increase in credit card fees, but warned that the business would have more modest growth in 1999 because of the loss of a portion of a contract for the U.S. government purchasing card. The business loss would result in about a 5 cent reduction of earnings this year.

The company also reported a 19% jump in trust and investment management fees, and substantially increased investment product fees and trading account revenues.

Net interest income was $787 million, flat compared with the same period a year ago. Commercial loans grew 10%, to $36.9 billion. Consumer loans, excluding residential, grew 7%, to $17.5 billion. Residential mortgage loans declined 26%, to $3.2 billion, part of a planned de-emphasis on those credits. The net interest margin declined 21 basis points from last year's fourth quarter, to 4.78%.

U.S. Bancorp had profits for the year of $838 million, a 58% gain. Earnings per share were $1.11.

Analyst Joseph Duwan of Keefe, Bruyette & Woods Inc. in New York noted that U.S. Bancorp's return on equity and overhead expense ratios were among the best in the industry. It earned 25.5% on equity in the quarter and had an expense-to-revenue ratio of 49.8%.

"We are well-positioned to make the most of our new opportunities during 1999 and beyond," said chairman and chief executive officer John F. Grundhofer.

Republic New York Corp.

Republic's earnings per share of 92 cents beat analysts' consensus estimates by 2 cents.

For the year, profits sank 45%, to $248 million, or $2.07 per share.

Republic's trading-related activities suffered from market volatility in the second half of 1998. The $50.4 billion-asset bank posted a third- quarter loss of $92.7 million because of heavy losses in Russian securities.

The bank rebounded somewhat in the fourth quarter, analysts said. Of the $50.7 million in third-quarter chargeoffs from Russian exposure, $20.9 million was recovered, the bank said.

Republic is restructuring its businesses to focus on private banking, scaling back more esoteric trading activities. "Banks are looking a lot harder at expenses because they can control them better," said Marni Pont O'Doherty, an analyst at Keefe, Bruyette & Woods.

The restructuring program, which will be unveiled in the coming weeks, is to include annual cost savings of 5%, or about $50 million, the bank said Wednesday.

Mr. Cassidy from Tucker Anthony said "1999 is a rebuilding year for Republic.

"It is an institution held prisoner by the overseas markets in which it serves," he added.

Fourth-quarter fee income slipped 17%, to $122 million. Net interest income fell 6.8%, to $255.9 million, largely because of efforts to reduce credit exposure in emerging markets, the bank said. Expenses fell 6%, to $239.3 million.

SouthTrust Corp.

Earnings per share of 59 cents at Birmingham, Ala.-based SouthTrust met consensus estimates.

The $38.1 billion-asset company had strong interest and noninterest revenue. Net interest income jumped 14%, to $314 million. Commercial loans, which make up 35% of total loans, grew 27% to $9.8 billion.

"We continue to experience good growth in loans while maintaining strong asset quality," said SouthTrust chairman and chief executive officer Wallace D. Malone Jr.

Mr. Jones said the company benefited from high-growth in its markets, which covers eight southern states.

"They pursue loan business like you wouldn't believe," said Michael Ancell, an analyst with Edwards Jones in St. Louis.

But aggressive pricing pushed SouthTrust's net interest margin down 16 basis points, to 3.74%.

SouthTrust posted a 32% jump in fees from service charges on deposit accounts, to $47 million, and a 47% increase in fees from mortgage banking, to $11 million. Both helped boost noninterest income 39%, to $104 million, when securities gains are excluded.

SouthTrust's net income for the year was $369 million, up 20%. Full-year earnings per share reached $2.03.

Washington Mutual

The Seattle-based thrift company matched analysts' consensus estimates with earnings per share of 74 cents.

For the full year, Washington Mutual earned a record $1.5 billion, up 68%, or $2.56 per share.

"Wamu posted a very impressive performance in a tough environment and during a complicated period internally," said Thomas O'Donnell, an analyst with Salomon Smith Barney in New York. "In 1999 all the pieces have been put together, and we're going to start seeing some benefits from that."

Fee income at the $165.5 billion-asset thrift climbed 30% during the fourth quarter, to $164 million. The company posted strong growth in fee- generating checking accounts, signing up 550,000 new accounts during 1998, a 16% increase.

Additionally, mortgage banking revenue climbed 78% in the fourth quarter, to $31 million.

Net interest income increased 8%, to $1.1 billion, driven by an 11% jump in interest-earning assets, to $153.3 billion.

Low interest rates on residential mortgages pushed originations up 59%, to a record-high of $15.5 billion, the thrift said.

Because of its Oct. 1 purchase of H.F. Ahmanson & Co., Washington Mutual was authorized to pay an unusually low tax rate in the fourth quarter. However, to avoid distorting its results, the company elected to pay the effective tax rate for the entire year, a spokeswoman said.

Golden West Financial Corp.

Shrinking loan loss provisions and a widening spread boosted Golden West's net income 20%, to $112 million.

The Oakland, Calif.-based thrift company earned $1.95 per share in the fourth quarter, beating analysts' consensus estimates by 13 cents. For the year, Golden West earned $435 million, or $7.52 per share, a 23% increase.

Fourth-quarter net interest income at the thrift rose 6%, to $246 million. Golden West cited a bigger spread between the yield on earning assets and the rate paid on savings accounts and other liabilities. The yield on earning assets climbed 22 basis-points, to 2.34%.

The $38 billion-asset thrift also credited its strong results to a greatly reduced loan loss provision, down 82%, to $2.5 million.

"The continuing strong economy and low unemployment rate, especially in California, led to a reduction in our provision for loan losses," said Golden West chairman and chief executive officer Marion O. Sandler.

Loan volume totaled $2.5 billion in the fourth quarter, a 27% increase over the year-earlier period.

Slightly hampering overall net income was a $21 million pretax charge for penalties related to prepaying $4.4 billion in Federal Home Loan Bank advances. +++

SouthTrust Corp. Birmingham, Ala. Dollar amounts in millions (except per share) Fourth Quarter 4Q98 4Q97 Net income $98.0 $82.0 Per share 0.59 0.53 ROA 1.07% 1.09% ROE 14.46% 15.21% Net interest margin 3.74% 3.90% Net interest income 313.8 276.1 Noninterest income 103.7 74.4 Noninterest expense 242.2 199.0 Loss provision 29.4 21.7 Net chargeoffs 18.8 17.0 Year to Date 1998 1997 Net income $368.6 $306.7 Per share 2.25 2.03 ROA 1.08% 1.08% ROE 14.47% 15.72% Net interest margin 3.76% 3.94% Net interest income 1,180.6 1,056.2 Noninterest income 381.6 268.8 Noninterest expense 914.4 748.2 Loss provision 94.8 90.6 Net chargeoffs 58.3 51.8 Balance Sheet 12/31/98 12/31/97 Assets $38,133.8 $30,906.4 Deposits 24,839.9 19,586.6 Loans 27,317.5 22,474.8 Reserve/nonp. loans 383.98% 263.16% Nonperf. loans/loans 0.36% 0.53% Nonperf. assets/assets 0.43% 0.58% Nonperf. assets/loans + OREO 0.60% 0.80% Leverage cap. ratio 6.10% 6.61% Tier 1 cap. ratio 6.70%* 7.72% Tier 1+2 cap. ratio 10.79%* 12.07%

* Estimated

Washington Mutual Inc. Seattle, Wash. Dollar amounts in millions (except per share) Fourth Quarter 4Q98 4Q97 Net income $157.1 $337.4 Per share 0.27 0.59 ROA 0.39% 0.95% ROE 6.61% 17.78%

Net interest margin 2.85% 2.94% Net interest income 1,078.4 999.1 Noninterest income 321.3 280.4 Noninterest expense 1,153.9 675.9 Loss provision 33.2 55.4 Net chargeoffs 43.3 54.6 Year to Date 1998 1997 Net income $1,486.9 $885.1 Per share 2.56 1.52 ROA 0.96% 0.63% ROE 16.62% 11.73% Net interest margin 2.88% 2.89% Net interest income 4,291.7 3,915.5 Noninterest income 1,524.1 996.2 Noninterest expense 3,284.4 3,126.7 Loss provision 162.0 246.6 Net chargeoffs NA NA Balance Sheet 12/31/98 12/31/97 Assets $165,493.3 $143,522.4 Deposits 85,492.1 83,429.4 Loans 108,370.9 97,624.3 Reserve/nonp. loans 114% 101% Nonperf. loans/loans 0.87% 1.06% Nonperf. assets/assets 0.73% 0.96% Nonperf. assets/loans + OREO 1.00% 1.00% Leverage cap. ratio - - Tier 1 cap. ratio - - Tier 1+2 cap. ratio - -

U.S. Bancorp Minneapolis, Minn. Dollar amounts in millions (except per share) Fourth Quarter 4Q98 4Q97 Net income $349.2 $288.9 Per share 0.48 0.39 ROA 1.88% 1.64% ROE 23.60% 20.00% Net interest margin 4.78% 4.99% Net interest income 787.1 784.7 Noninterest income 620.1 420.5 Noninterest expense 745.3 644.2 Loss provision 101.0 90.0 Net chargeoffs 118.2 103.3 Year to Date 1998 1997 Net income $1,327.4 $838.5 Per share 1.78 1.11 ROA 1.85% 1.22% ROE 21.90% 14.60% Net interest margin 4.87% 5.04% Net interest income 3,111.9 3,106.0 Noninterest income 2,256.6 1,615.2 Noninterest expense 2,844.3 2,812.3 Loss provision 379.0 365.3 Net chargeoffs 434.2 449.7 Balance Sheet 12/31/98 12/31/97 Assets $76,438.0 $71,295.0 Deposits 50,034.0 49,027.0 Loans 58,121.0 53,699.0 Reserve/nonp. loans 359% 340% Nonperf. loans/loans 0.47% 0.54% Nonperf. assets/assets 0.40% 0.48% Nonperf. assets/loans + OREO 0.51% 0.62% Leverage cap. ratio 6.80% 7.30% Tier 1 cap. ratio 6.50% 7.40% Tier 1+2 cap. ratio 10.90% 11.60%

Republic New York Corp. New York Dollar amounts in millions (except per share) Fourth Quarter 4Q98 4Q97 Net income $104.4 $116.1 Per share 0.92 1.01 ROA 0.78% 0.77% ROE 15.15% 14.66% Net interest margin 2.36% 2.37% Net interest income 255.9 274.6 Noninterest income 121.6 147.3 Noninterest expense 239.3 254.3 Loss provision 0.0 4.0 Net chargeoffs (16.3) 3.1 Year to Date 1998 1997 Net income $248.0 $449.1 Per share 2.07 3.94 ROA 0.41% 0.77% ROE 7.78% 14.69% Net interest margin 2.31% 2.36% Net interest income 1,062.1 1,060.1 Noninterest income 288.6 528.3 Noninterest expense 978.6 903.8 Loss provision 8.0 16.0 Net chargeoffs 48.2 11.3 Balance Sheet 12/31/98 12/31/97 Assets $50,424.0 $55,638.0 Deposits 33,220.0 33,390.0 Loans 13,355.0 12,033.0 Reserve/nonp. loans 363.60% 348.00% Nonperf. loans/loans 0.59% 0.76% Nonperf. assets/assets 0.18% 0.20% Nonperf. assets/loans + OREO 0.68% 0.91% Leverage cap. ratio 6.50%* 5.60% Tier 1 cap. ratio 14.15%* 12.97% Tier 1+2 cap. ratio 23.40%* 21.58%

* Estimated

Fleet Financial Group Boston Dollar amounts in millions (except per share) Fourth Quarter 4Q98 4Q97 Net income $416.0 $334.0 Per share 0.69 0.57 ROA 1.62% 1.51% ROE 18.62% 17.98% Net interest margin 4.61% 4.95% Net interest income 1,007.0 944.0 Noninterest income 890.0 624.0 Noninterest expense 1,073.0 912.0 Loss provision 140.0 90.0 Net chargeoffs 140.0 90.0 Year to Date 1998 1997 Net income $1,532.0 $1,367.0 Per share 2.52 2.30 ROA 1.56% 1.58% ROE 18.07% 19.30% Net interest margin 4.63% 5.01% Net interest income 3,905.0 3,739.0 Noninterest income 3,237.0 2,631.0 Noninterest expense 4,129.0 3,715.0 Loss provision 470.0 322.0 Net chargeoffs 470.0 376.0 Balance Sheet 12/31/98 12/31/97 Assets $104,382.0 $91,047.0 Deposits 69,678.0 63,735.0 Loans 69,396.0 62,565.0 Reserve/nonp. loans 585.66% 365.31% Nonperf. loans/loans 0.38% 0.63% Nonperf. assets/assets 0.27% 0.46% Nonperf. assets/loans + OREO 0.41% 0.66% Leverage cap. ratio 7.49% 7.66% Tier 1 cap. ratio 6.98% 7.26% Tier 1+2 cap. ratio 11.08% 10.71% ===

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