Six major Midwest banks posted solid operating earnings for the fourth quarter on Thursday, though special charges skewed results at several outfits.
Most of the institutions said healthy loan growth and firming credit quality helped offset margin declines. But charges for balance sheet overhauls, consolidations, and problem asset disposition dampened results.
Meanwhile, Pittsburgh-based PNC Bank Corp. reported fourth-quarter net income of $28.5 million, or 12 cents per share, down 83% from the year- earlier period.
The $64.1 billion-asset bank's results reflect the bank's efforts to reduce its exposure to interest rate risk and costs related to a consolidation of its retail system, said Thomas O'Brien, chairman and chief executive officer.
At Cleveland-based Keycorp quarterly earnings of $193.8 million were up 58.5% from year-ago results, which were depressed by a hefty merger charge.
In St. Louis, Boatmen's Bancshares said earnings rose by 19% to $92 million, with its annualized return on assets rising by 13 basis points to 1.31%. Kansas City-based Commerce Bancshares posted $24.3 million of fourth-quarter net income, a 5.3% increase. Its ROA rose 4 basis points to 1.2%.
In Milwaukee, Firstar Corp. said net income rose by 6.91% to $56.15 million, though its ROA fell 5 basis points to 1.53%.
Michigan National Corp., Farmington Hills, said consolidation and portfolio cleanup charges provoked a quarterly loss of $19.9 million. The company earned $32.6 million a year earlier.
In Chicago, Harris Bankcorp said earnings rose 38% to $38.9 million, with an ROA of 0.96%, up 19 basis points.
Keycorp's fourth-quarter results were depressed by a $119 million pretax charge taken in preparation for the merger with Society Corp., while fourth quarter 1994 results were lowered by securities losses.
Revealing details on a previously announced balance sheet overhaul, Keycorp said it incurred $24 million of pretax losses on securities sales in the fourth quarter.
James Wert, Keycorp's chief financial officer, said the bank incurred an additional $49 million of pretax losses on securities sales in early January. Mr. Wert said he expected KeyCorp's net interest margin to stabilize at roughly 4.5% over the next two quarters. He said the outlook on loan yields remains somewhat cautious, but that Keycorp's funding was not of particular concern.
Boatmen's, a $28.9 billion-asset banking company, said annualized quarterly returns equaled 16.67% on average equity, up 176 basis points from a year ago. For the full year, Boatmen's earned $355.3 million, or $3.40 per share, versus 1993 earnings of $317.4 million, or $3.07 per share.
Meanwhile, $15 billion-asset Firstar said its annualized quarterly returns equaled 17.34% on average common equity, down 71 basis points from a year ago. For the full year, Firstar earned $207.7 million, or $3.22 per share, versus 1993 earnings of $204.3 million, or $3.15 per share.
The $8 billion-asset Commerce Bancshares said annualized quarterly returns equaled 13.22% on total equity, up 14 basis points from a year ago. For the full year, Commerce earned $96.1 million, or $2.85 per share, versus 1993 earnings of $86.9 million, or $2.61 per share.
Results at the $8.7 billion-asset Michigan National were depressed by special charges for consolidations and a portfolio cleanup. The company took a $28.4 million aftertax charge for severance expenses, and it booked an additional $16.2 million after-tax charge to accelerate disposition of problem assets.
For the full year, Michigan National earned $171.7 million, or $10.94 per share, versus 1993 earnings of $23.8 million, or $1.56 per share.
Harris, based in Chicago, said an earlier special charge provoked by its securities lending unit caused full-year earnings to fall 17%, to $109.6 million. +++ KeyCorp Cleveland, OH Dollar amounts in millions (except per share) Fourth Quarter 4Q94 4Q93 Net income $193.8 $122.3 Per share 0.79 0.49 ROA 1.19% 0.83% ROE 16.61% 11.09% Net interest margin 4.60% 5.21% Net interest income 680.3 693.1 Noninterest income 205.3 237.1 Noninterest expense 555.6 689.5 Loss provision 26.2 46.4 Net chargeoffs 20.8 44.2 Full Year 1994 1993 Net income $853.5 709.9 Per share 3.45 2.89 ROA 1.36% 1.24% ROE 18.87% 17.27% Net interest margin 4.83% 5.31% Net interest income 2,752.1 2,742.1 Noninterest income 882.6 1,001.7 Noninterest expense 2,167.2 2,385.1 Loss provision 125.2 211.7 Net chargeoffs 109.2 212.8 Balance Sheet 12/94 12/93 Assets $66,798.1 $59,631.2 Deposits 48,564.2 46,499.1 Loans 46,224.7 40,071.3 Reserve/nonp. loans 324.27% 238.68% Nonperf. loans/loans 0.55% 0.84% Nonperf. assets/assets 0.51% 0.84% Nonperf. assets/loans
+ OREO 0.73% 1.24% Leverage cap. ratio 6.67% 6.72% Tier 1 cap. ratio 8.41% 8.73% Tier 1+2 cap. ratio 11.53% 12.22% ===