Minneapolis-based First Bank System on Tuesday posted fourth quarter earnings of $110.5 million, a 15.2% increase over the same period in 1993, while Cincinnati-based Star Banc Corp. said earnings rose 14.8% to $30.4 million.
Acquisitions influenced results at both Midwest outfits. First Bank posted stellar profitability, while Star Banc saw its return on assets slip.
First Bank posted $419.8 million in net income for the full year, or $3.52 a share, compared to $298 million, or $2.38 a share, for 1993.
The $26.2 billion-asset First Bank said annualized returns equaled 1.69% on average assets, up 24 basis points from a year ago; and 19.9% on average common equity, up 116 basis points.
Dean Witter analyst Anthony Davis termed the results "incredibly good."
Mr. Davis said First Bank's profitability would temporarily sag following a pending major thrift acquisition, but he said it still would deliver an ROA exceeding 1.6% in 1995.
John F. Grundhofer, chairman, president, and chief executive, cited a wider net interest margin, fee revenue growth, expense controls, and firming credit quality in First Bank's fourth quarter results.
First Bank said a 129 basis-point leap in loan yields, to 8.77%, helped boost the net interest margin by 42 basis points, to 5.42%. Repricing of variable-rate loans enhanced yields, the company said, as did an asset shift away from mortgages and into commercial and consumer loans.
Fee revenues rose by 11.8% to $163.1 million, First Bank said. Expenses rose by 6%, to $270.7 million, and the loss provision fell by 14.8%, to $23 million.
Yearly comparisons were influenced by the March 1994 purchase of Boulevard Bancorp, Chicago, and by the September 1994 purchase of J.P. Morgan & Co.'s domestic corporate trust business. First Bank said it intends to complete the acquisition of the $8 billion-asset Metropolitan Financial Corp. on Jan. 24.
The $9.4 billion-asset Star Banc said it had earned $116.6 million in 1994, or $3.86 a share, compared to 1993's $100.3 million, or $3.30 a share. Star Banc's annualized returns equaled 1.31% on average assets, down 7 basis points from a year ago; and 16.68% on average equity, up 95 basis points.
The company bought $1.1 billion of deposits and 47 branches from the Resolution Trust Corp. in the fourth quarter. It said the newly acquired operations of the former TransOhio Federal Savings Bank in the "near term" would depress its ROA, net interest margin, and efficiency ratio.