A flurry of regional banks reported upbeat third-quarter earnings Wednesday marked by securities gains, generally improving credit quality, and continuing lackluster loan demand.
First Chicago Corp.'s earnings soared to $284 million during the third quarter after a loss of $372 million in the year-earlier period. In the 1992 third quarter, the nation's 12th-largest bank company took a $625 million provision related to its program to sell impaired real estate.
Profits last quarter were fueled by lush equity trading gains, which supplied 42% of the quarterly gain. In late afternoon trading Wednesday, the bank company's shares rose 62.5 cents, to $50.
In New England, Shawmut National Corp. said it netted $71.1 million in the third quarter, up 27.3% from the year-earlier quarter. The results reflected greatly improved credit quality and expense control.
Wednesday's report also contained better-than-expected improvements in asset quality, as well as $13.5 million of tax-related gains and $11.2 million of securities profits.
Shares of Shawmut, which has $25.8 billion of assets, rose 50 cents, to $24.25, in late trading Wednesday.
St. Louis-based Boatmen's Bancshares Inc. reported earnings of $77.9 million, up 7% from the third quarter of 1992, when it booked an extraordinary gain from securities sales. The company has $25.3 billion of assets. Its share price rose 62.5 cents, to $33.375, Wednesday afternoon.
Michigan's First of America Bank Corp. netted $63.4 million in the September period, up 10.6% from a year earlier. The company, which has $21.1 billion of assets, said it benefited from gains in efficiency and fee revenues.
The Kalamazoo-based company's stock fell 62.5 cents, to $41.25 a share, Wednesday afternoon. The stock may have been reacting to the bank's announcement Tuesday that it would buy LGF Bancorp, a La-Grange, Ill.-based thrift with $409 million of assets, in a stock deal valued at about $67 million.
Ohio's Huntington Bancshares Inc. netted $59.4 million in the third quarter, up 51.2% from 1992. The company, which has $16.8 billion of assets, cited firm credit quality, loan growth, and growing fee revenue for its strong results.
The showing came despite a drop in Huntington's net interest margin, to 5.17%, from 5.34% in the second quarter. The bank's stock inched up 12.5 cents late Wednesday, to $25.50 a share.
Virginia's Central Fidelity Banks Inc., which has $9.1 billion in assets, earned $26.7 million in the third quarter, up 29% from a year earlier. But the Richmond-based company said credit problems increased during the third quarter. Its stock was unchanged Wednesday afternoon, at $29.50 a share.
In Cincinnati, Star Banc Corp. reported third-quarter earnings of $23.5 million, up 16.4% from 1992 but down from this year's second quarter because of a $2.3 million pretax charge on the writedown of purchased mortgage servicing rights. Shares of Star, which has $7.6 billion of assets, fell 87.5 cents, to $36.125.
New Orleans-based Hibernia Corp. earned $12.2 million in the third quarter, compared to a $58 million loss in the year-ago period. Louisiana's second-largest bank holding company, with $4.6 billion of assets, took a one-time debt restructuring charge in the 1992 quarter. Its shares fell 37.5 cents, to $8.375, in late trading Wednesday.
The company, which has $53.2 billion of assets, recognized $117 million of after-tax income from venture capital investments and a $24 million after-tax gain on the sale of Brazilian bonds. Its annualized return on assets of 1.98% would have dropped to a less spectacular 1% without the extraordinary gains.
But First Chicago said its quarterly improvement was broad-based, characterized by a 15.4% reduction in problem assets and earnings growth in each of its major business lines.
Most of its earnings were attributed, however, to noninterest income. "Market-driven revenue," including the equity securities gains and $77 million of trading profits, totaled $305 million, almost triple the company's year-ago level.
Robert Albertson, an analyst at Goldman, Sachs & Co., said First Chicago may continue to book substantial equity gains but not at the "overwhelming" level of the third quarter. He said he raised his 1994 earnings estimates for the company because of its burgeoning credit card operation. -- Steve Klinkerman
The company indicated in September that nonperforming assets would total about $460 million in the third quarter. But New England's third-largest bank said Wednesday that non-accruing loans and foreclosed real estate fell 15%, to $436.9 million, during the quarter.
"It reflects that Shawmut's asset-quality problems are truly behind them," said Michael Mayo, an analyst at UBS Securities in New York.
Net chargeoffs dropped to $32.0 million at Sept. 30, from $39.9 million at the end of the second quarter. Shawmut further signaled confidence in its credit-quality outlook by reducing its provision for loan losses and foreclosed properties to $13.6 million, from $18.5 million in the second quarter.
Shawmut booked securities gains of $11.2 million and tax benefits totaling $13.5 million during the quarter. But it said core earnings - before credit costs, taxes, and special items - rose to $99.2 million, up 5% from three months earlier and 30% from the same quarter last year. -- Yvette Kantrow
Citing sluggish loan demand but improving credit quality, Boatmen's said its return on assets fell to 1.26%, from 1.30% in the 1992 third quarter, while return on equity declined to 16.14% from 16.69% a year earlier.
"While we see some pickup in the consumer sector, growth in wholesale loans remains slow," said Boatmen's chairman and chief executive Andrew B. Craig 3d in a prepared statement.
The Missouri-based company, which has 400 outposts in nine states, said net interest income grew 12% from the year-earlier quarter, to $241.7 million, but fell slightly from the second-quarter level. Loans outstanding grew 13% from the previous year's level, primarily because of acquisitions, the company said.
Credit quality continued to improve at Boatmen's, which reported a 26% decline in nonperforming assets, to $297.7 million, from $310.8 million at June 30 and $401.5 million a year earlier.
"It's an extremely strong report," said Joseph Stieven, a senior bank analyst at Stifel, Nicolaus & Co., St. Louis. "We think Boatmen's is in their best fundamental position in over a decade." -- John Racine
FIRST of AMERICA
The Michigan banking company said noninterest income jumped 8.5% from the 1992 quarter, to $73.5 million, driven by gains from sales of mortgage loans.
However, it suffered a decline in net interest margin, to 4.86%, from 5% a year earlier, reflecting the August purchase of higher-cost thrift deposits. -- Steve Klinkerman
Ohio's Huntington Bancshares maintained its stratospheric profitability ratios, reporting an annualized return on average assets of 1.43% during the quarter, flat with the previous three months and up from 1.05% a year ago.
Huntington's loss provision of $15.2 million was down 33.6% from a year ago, while its problem assets of $149 million fell to $1.49% of gross loans.
Cincinnati's Star Banc said its third quarter was influenced by a $2.3 million pretax charge on the writedown of purchased mortgage servicing rights. It nevertheless posted a return on assets of 1.23%, down from 1.36% in the second quarter but up strongly from 1.05% a year ago.
Marshall & Ilsley Corp. said Tuesday that it had earned $31 million in the third quarter, up 8.3% from the same period of 1992. -- Steve Klinkerman
In Virginia, Central Fidelity said nonperforming assets rose to $135.2 million, or 1.48% of total assets, from $112.4 million at the end of the second quarter. The rise reflected "continued weakness in real estate sales and values, primarily in the Northern Virginia markets," the company said in a statement.
Hibernia, which has been recovering from severe credit problems, said its return on assets reached 1.06% annualized, while return on equity climbed to 12.17%. The company attributed its improved earnings primarily to lower credit expenses. -- Kenneth ClineFirst Chicago Corp.ChicagoDollar amounts in millions (except per share)Third Quarter 3Q93 3Q92Net income $284.1 ($372.4)Per share 2.97 -4.74ROA 1.98% -2.69%ROE 33.80% -52.10%Net interest margin 2.79% 2.49%Net interest income 340.6 293.7Noninterest income 685.4 384.8Noninterest expense 474.0 485.4Loss provision 66.5 780.4Net chargeoffs 37.0 113.0 Year to Date 1993 1992Net income $631.7 ($43.1)Per share 6.94 -1.02ROA 1.49% -0.11%ROE 26.50% -3.70%Net interest margin 2.64% 2.57%Net interest income 957.1 890.8Noninterest income 1,679.4 1,052.2Noninterest expense 1,373.2 1,303.2Loss provision 203.0 1,025.4Net chargeoffs 143.0 339.0 Balance Sheet 9/30/93 9/30/92Assets $53,154.0 $49,241.0Deposits 29,379.0 30,567.0Loans 21,969.0 22,064.0Reserve/nonp. loans 276.00% 161.00%Nonperf. loans/loans 1.40% 2.09%Nonperf. asset/assets 0.66% 1.05%Leverage cap. ratio 8.00% 6.10%Tier 1 cap. ratio 8.60% 7.10%Tier 1+2 cap. ratio 13.40% 10.90%Shawmut National Corp.Hartford, Conn., and BostonDollar amounts in millions (except per share)Third Quarter 3Q93 3Q92Net income $71.1 $13.0Per share 0.72 0.14ROA 1.09% 0.23%ROE 18.62% 3.88%Net interest margin 4.05% 4.16%Net interest income 236.7 207.4Noninterest income 87.9 94.3Noninterest expense 225.4 225.3Loss provision 13.6 74.0Net chargeoffs 32.0 73.8 Year to Date 1993 1992Net income $163.7 $64.9Per share 1.63 0.75ROA 0.88% 0.39%ROE 14.63% 7.08%Net interest margin 4.05% 4.11%Net interest income 682.0 599.5Noninterest income 279.6 385.0Noninterest expense 798.6 756.8Loss provision 24.2 160.8Net chargeoffs 229.7 268.6 Balance Sheet 9/30/93 9/30/92Assets $26,960.0 $23,230.0Deposits 14,590.0 15,060.0Loans 15,270.0 13,060.0Reserve/nonp. loans 182.00% 121.00%Nonperf. loans/loans 2.37% 5.38%Nonperf. asset/assets 1.62% 4.60%Leverage cap. ratio 6.05% 5.51%Tier 1 cap. ratio 7.76% 7.38%Tier 1+2 cap. ratio 12.01% 11.30%