Thanks to cost-cutting measures, Providence, R.I.-based Fleet Financial Group posted net income this quarter ors 152 million, up 28% from $119 million in the same period last year.
This quarter marked the first full quarter of the $48 billion-asset bank's Focus '94, a cost-cutting plan analysts have called the most severe in the industry.
Fleet's executive vice president and chief financial officer, Eugene McQuade, said Focus '94, in which 5,500 employees were laid off, has raised $135 million this quarter, "on our way to our annualized goal of $350 million."
Analysts, including Merrill Lynch's Livia Asher, called Fleet's results "encouraging."
Nonperforming assets at Fleet dropped to $560 million from $852 million in the second quarter of 1993. Nonperforming assets as a percentage of total loans dropped to 2.12% this quarter from 3.24% in the same period last year.
Analysts said they were most impressed by the 13% annualized increase in Fleet's loan volume.
Decline for CoreStates
In Philadelphia, $25.6 billion-asset CoreStates Financial Corp., earned only $63 million in the second quarter, a 31% drop from the $91.3 million it earned during the same period last year.
Had it not taken a $39.7 million charge for its first-quarter acquisition of Independence Bancorp, the bank would have earned $102.7 million, an 11.7% increase from the second quarter of 1993.
Analysts said CoreStates had a solid quarter despite the earnings drop. "I think that restructuring charge is clearly built into the stock and now we have an opportunity to buy a stock at seven times earnings," said Merrill Ross of Wheat First Butcher & Singer.
Analysts said the solid earnings were fueled by a net interest income increase of 5%, reflecting a 26 basis point increase in the net interest margin to 5.86%.
CoreStates' fee income for international services was up 13%. Total nonperforming assets were down to $352 million, a 33% drop from $501 million in the same period last year.
Meridian Posts 6% Increase Reading, Pa.-based Meridian Bancorp reported second-quarter net income of $40.8 million, down 6% from last year's $43.5 million.
Chairman and chief executive Samuel A. McCullough said the drop came from the bank's efforts to consolidate its mortgage operations.
Back in New England, Boston-based BayBanks Inc. exceeded analysts expectations, earning net income of $26.4 million, an 86% increase from last year's second-quarter earnings of $14.2 million.
Analysts attributed the growth to the bank's net interest income, which jumped this quarter to $114.8 million, an 8% improvement from $106 million in the same period last year.
Dennis Shea, an analyst at Morgan Stanley, also pointed to a near 50% reduction in the bank's loan loss provision and a 15% reduction in nonperforming assets.
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