Five of the nation's largest banks reported solid third-quarter earnings Monday, with several beating estimates though two fell short of year-ago results.

NationsBank Corp., the nation's fourth-largest bank company, earned $341 million, down 3%, largely because of nonrecurring items and a higher tax rate.

At Chase Manhattan Corp., large trading profits boosted net income 52% to $267 million, while Pittsburgh-based PNC Bank Corp. cited higher loan volume and growth in its core businesses as the reason for a 64% rise in earnings to $217.7 million.

The greatest improvement, however, came from Los Angeles-based First Interstate Bancorp, which earned $150.5 million - doubling the results of a year earlier. The bank also reported that nonperforming loans have slipped below 1% of total assets, a benchmark of stellar credit quality.

Net Slips of Comerica

At Detroit-based Comerica Inc., executives said profits fell 3% to $83.7 million, citing a contracting net interest margin and unexpected expenses from its merger activity.

Despite good earnings reports, the five banks were not immune from a backlash against bank stocks. NationsBank dropped $1.875 to close at $48.87; Chase was off $1.75 to $34.125; PNC was down 50 cents to $29.125; First Interstate was off $3.25 to $60.75; and Comerica was down $1 at $27.


Even though earnings dropped from a year ago, Charlotte, N.C.-based NationsBank's per-share earnings of $1.32 came in 10 cents above analysts' estimates as compiled by First Call. They were lifted by stronger-than-expected net interest income, which gained 10% to reach $1.2 billion.

"All in all, it was a very solid quarter," said Moshe Orenbuch of Sanford C. Bernstein & Co. in New York. "One of the things people have been selling banks on is the lack of revenue growth. But this is a company that has positive revenue growth."

As is typical of NationsBank, comparisons between the third quarter and year-ago period are made difficult by the need to account for acquisitions, nonrecurring items, and securities gains. The bank also experienced a higher tax rate this year, 34% versus 18% in 1992.

In the third quarter, NationsBank took a one-time preta restructuring expense of $30 million, representing 8 cents a share after taxes, relating to the acquisition of Baltimore-based MNC Financial Inc.

Since NationsBank acquired MNC on Oct 1, however, MNC's results were not included in its own third-quarter numbers, which do incorporate two other recent acquisitions: Chicago Research and Training Group, an options trading firm, and Chrysler First Inc., a consumer finance company.

NationsBank's credit quality continues to improve. Nonperforming assets have fallen to $1.4 billion, down 14% from $1.7 billion at the end of the second quarter.

The improving credit picture allowed NationsBank to drop its loan-loss provision to $100 million, down 33% from the year-earlier period. Net chargeoffs were down 30% to $99 million during the period.

Another big boost to earnings came from loans, which grew at a 13% annualized rate in the second quarter. A company spokesman said the growth was distributed about equally between the commercial and consumer portfolios.

NationsBank's net interest margin declined 34 basis points to 3.83% from 4.17% in the second quarter. The company attributed the drop to the securities dealer inventory held by Chicago Research and Trading. Excluding that acquisition, the bank said its margin would have gained 5 basis points from the second quarter.NationsBank Corp.Charlotte, N.C.Dollar amounts in millions (except per share) Third Quarter 3Q93 3Q92 Net income 341.0 350.0Per share 1.32 1.36ROA 0.99% 1.22%ROE 15.60% 18.97%Net interest margin 3.83% 4.16%Net interest income 1,168.0 1,059.0Noninterest income 524.0 514.0Noninterest expense 1,095.0 1,022.0Loss provision 100.0 150.0Net chargeoffs 99.0 141.0 Year to Date 1993 1992 Net income $1,128.0 $911.0Per share 4.37 3.59ROA 1.19% 1.06%ROE 18.10% 17.27%Net interest margin 4.04% 4.05%Net interest income 3,397.0 3,092.0Noninterest income 1,486.0 1,452.0Noninterest expense 3,157.0 3,055.0Loss provision 330.0 565.0Net chargeoffs 276.0 496.0 Balance Sheet 9/30/93 9/30/92 Assets $139,453.0 $117,926.0Deposits 79,594.0 80,447.0Loans 80,539.0 70,260.0Reserve/nonp. loans 164.00% 98.00%Nonperf loans/loans 1.78% 3.46%Nonperf asset/asset 1.03% 2.08%Leverage cap ratio 5.88% 6.20%Tier 1 cap ratio 7.60% 7.54%Tier 1+2 cap ratio 12.15% 11.68%


A strong $186 million in trading revenues, primarily tied to customer demand for derivative products, and improved credit quality helped boost profits.

Chase's earnings translated into $1.25 a share, exceeding the 96-cent consensus estimate of 19 analysts compiled by Zacks Investment Research Co., Chicago.

Analysts said that the nation's sixth-largest bank, which has struggled to build its trading operation over the past few years, appears to be demonstrating sustainable profits from this business.

"I'd find it hard to believe that this level is not sustainable," said Diane Glossman, an analysts at Solomon Brothers Inc. "They've already shown last quarter and last year that they can do it.'

Ms. Glossman increased her 1993 earnings-per-share estimates for Chase to $4.35 from $3.65 and upped her 1994 estimate to $5.05 from $4.80.

Chase's provision for possible loan losses dropped $10 million, to $215 million, this quarter compared with the second quarter and was $105 million lower than for the same period last year. Domestic chargeoffs were down $22 million, while total chargeoffs were down $6 million to $216 million from the previous quarter.

Nonperforming assets, excluding assets set aside earlier this year for accelerated disposition, were down $342 million, to $2 billion, from the previous quarter. Nonperforming realty assets declined $242 million from the previous quarter, but foreclosed property expense was up $194 million, to $966 million, from June 30.

Assets held for accelerated disposition were down $162 million, to $722 million, compared with the previous quarter. Chase has reduced the held-for-sale portfolio by 30% since it was established in March. The bank is carrying these assets on its books for 37% of their original value.

Chase said that it has accepted bids for the sale of assets with a carrying value of $260 million; the sales are expected to close during the fourth quarter.

"The company has been able to work down the portfolio much quicker than management expected," said Ms. Glossman. "The speed at which they are disposing of the assets and the average price they're getting is better than expected."Chase Manhattan Corp.New YorkDollar amounts in millions (except per share) Third Quarter 3Q93 3Q93 Net income $267.0 $176.0Per share 1.25 0.94ROA 1.01% 0.71%ROE 15.10% 11.90%Net interest margin 3.99% 408%Net interest income 926.0 898.0Non interest income 720.0 609.0Noninteresst expense 1,025.0 957.0Loss provision 215.0 320.0Net chargeoffs 216.0 321.0 Year Date 1993 1992 Net income $653.0 $470.0Per share 3.23 2.59ROA 0.86% 0.63%ROE 13.30% 11.20%Net interest margin 4.33% 4.01%Net interest income 2,884.0 2,637.0Noninterest income 2,072.0 1,778.0Noninterest expense 3,321.0 2,849.0Loss provision 800.0 915.0Net chargeoffs 658.0 912.0 Balance Sheet 9/30/93 9/30/92 Assets $100,595.0 $97,073.0Deposits 70,229.0 65,406.0Loans 62,638.0 63,507.0Reserve/nonp. loans 96.00% 45.00%Nonperf. loans/loans NA NANonperf. asset/asset 1.96% 4.39%Leverage cap. ratio 7.48% 6.48%Tier 1 cap. ratio 7.94% 6.50%Tier 1+2 cap ratio 12.63% 10.84%


The company attributed its 91-cent-a-share profit to an after-tax securities gain of $47 million, as well as a surge in loan demand and growing core business.

Total loans were up $1.3 billion to $25.5 billion from the same period a year ago. Commercial loans were $885 million, while consumer loans were up $338 million. Net interest income was nearly flat, at $467.9 million, compared with a year ago, while the net interest margin dropped to 3.93% from 3.96%.

Excluding net securities gains, noninterest income totaled $191.7 million, up 3% from a year ago. Trust income increased 7.6% to $68.2 million, while service charges, fees and commissions were up 8.3% to $99.4 million.

Asset quality improved for the 11th consecutive quarter. Nonperformers were down $54 million, to $621 million, from the previous quarter. Foreclosed assets were down $65 million to $201 million. The provision for possible loan losses was $50 million, down $3.8 million from the previous quarter.PNC Bank Corp.PittsburghDollar amounts in millions (except per share) Third Quarter 3Q93 3Q92 Net income $217.7 $132.8Per share 0.91 0.59ROA 1.72% 1.17%ROE 21.59% 15.29%Net interest margin 3.93% 4.06%Net interest income 467.9 432.1Noninterest income 264.2 203.2Noninterest expense 345.9 362.9Loss provision 50.0 69.9Net chargeoffs 35.0 53.0 Year to Date 1993 1992 Net income $554.4 $283.4Per share 2.33 1.28ROA 1.50% 0.87%ROE 19.07% 11.27%Net interest margin 4.01% 4.02%Net interest income 1,397.6 1,236.0Noninterest income 738.9 663.8Noninterest expense 1,078.1 1,039.7Loss provision 165.3 260.5Net chargeoffs 130.0 203.0 Balance Sheet 9/30/93 9/30/92 Assets $52,280.0 $46,633.0Deposits 28,266.0 27,410.0Loans 27,385.0 24,374.0Reserve/nonp. loans 223.87% 145.00%Nonperf. loans/loans 1.53% 2.46%Nonperf. asset/asset 1.19% 1.90%Leverage cap. ratio 8.10% 7.75%Tier 1 cap. ratio 10.50% 10.48%Tier 1+2 cap ratio 13.20% 12.46%


Adding fuel to its newfound reputation as a banking star, First Interstate said its year-to-date operating income also doubled, rising to $406 million, up 103%, from the first nine months of 1992.

The nation's 13th-largest bank company also announced a 25% dividend boost to 50 cents a share, its second payout increase this year.

The quarterly profit was above analysts' forecasts and reflected sharply lower credit costs, declining overhead, and a significant rise in revenue from a year ago.

First Interstate was one of the first bank companies to recognize California's economic slump and has aggressively managed or sold off problem assets.

As a result, nonperforming assets fell for the eighth straight quarter and now total $449 million, achieving the company's goal of reducing nonperformers to less than 1% of total assets. The provision for loan losses was $21.9 million, down 64% from a year ago.

Noninterest expenses totaled $507.5 million, down 5.6% from a year ago. Lower expenses stemmed in part from a 67% drop in the cost of managing foreclosed property.

Both interest and noninterest income rose in the third quarter despite flat loan volume. A 6.2% gain in net interest income over the 1992 third quarter reflected a slightly wider margin and an increase in the company's securities portfolio.

First Interstate's ability to keep its loan portfolio steady over the last year was itself an achievement, given the company's 35% drop in credits outstanding since the end of 1989.First Interstate BancorpLos AngelesDollar amounts in millions (except per share) Third Quarter 3Q93 3Q92Net income $150.5 $75.1Per share 1..80 0.82ROA 1.21% 0.61%ROE 17.92% 9.66%Net interest margin 4..92% 4.79%Net interest income 528.1 497.4Non interest income 239.0 216.7Noninterest expense 507.5 537.8Loss provision 21.9 60.1Net chargeoffs 57.8 101.1 Year to Date 1993 1992 Net income $590.7 $200.2Per share 7.20 2.31ROA 1.11% 0.55%ROE 16.83% 9.31%Net interest margin 4.93% 494%Net interest income 1,558.3 1,535.1Non interest income 715.5 693.1Noninterest expense 1,524.7 1,680.4Loss provision 93.6 257.8Net chargeoffs 159.9 283.0 Balance Sheet 9/30/93 9/30/92 Asset $50,090.3 $49,598.8Deposits 43,365.2 41,937.5Loans 24,748.0 24,733.9Reserve/nonp. loans 282.60% 137.60%Nonperf. loans/loans 1.44% 3.49%Nonperf. asset/asset 0.90% 2.23%Leverage cap ratio 6.90% 6.01%Tier 1 cap. ratio 10.60% 8.67%Tier 1+2 cap. ration 14.40% 13.60%


The Michigan-based company said profits were slowed by rising noninterest expenses of $253.8 million, up 7.11% from a year ago. Also, the bank's net interest margin of 4.66% was down 12 basis points.

The $28.5 billion-asset company is behind schedule in assimilating Manufacturers National Corp., the former Detroit rival that it merged with a year ago. Unexpected expenses have hurt the company's results for several quarters.

Eugene A. Miller, chairman and chief executive, in a statement said Comerica is "nearing the end of merger-related investments in system conversions and technology."

Period-end total loans of $18.8 billion rose 6.7% from a year ago, as commercial loan growth more than outweighed shrinkage in residential mortgages. But net interest income stayed flat as the maturation of certain mortgage-backed securities depressed the banking company's net interest margin.

Further refinements in credit quality cushioned other setbacks, as the loan-loss provision fell 44.5% from a year ago.Comerica Inc.DetroitDollar amounts in millions (except per share) Third Quarter 3Q93 3Q92 Net income $83.7 $86.7Per share 0.70 0.72ROA 1.25% 1.32%ROE 15.44% 17.84%Net interest margin 4.66% 4.78%Net interest income 279.9 280.6Noninterest income 110.0 104.4Noninterest expense 253.8 237.0Loss provision 15.0 27.0Net chargeoffs 17.2 23.1 Year Date 1993 1992 Net income $250.5 $152.7Per share 2.08 1.25ROA 1.25% 0.76%ROE 15.73% 10.33%Net interest margin 4.72% 4.69%Net interest income 845.4 838.1Noninterest income 331.2 307.9Noninterest expense 761.5 846.0Loss provision 55.0 87.5Net chargeoffs 57.1 74.2 Balance Sheet 9/30/93 9/30/92Assets $28,469.9 $27,610.06Deposits 20,194.4 20,675.5Loans 18,751.9 17,579.6Reserve/ 164.24% 134.88%Nonperf. loans/loans 0.99% 124%Nonperf. asset/asset 0.85% 0.91%Leverage cap. ratio 7.80% 7.24%Tier 1 cap. ratio 8.70% 8.86%Tier 1+2 cap. ratio 11.56% 11.28%


Net income was $46.3 million for the third quarter, up from $41.9 million a year ago.

The Boston-based company, which services and manages financial assets, said revenues grew 17% in the quarter. Assets under custody increased 19% to $1.5 trillion, while assets under management hit $133 billion, another 19% gain.


The Richmond-based company reported third-quarter earnings Monday of $45.8 million, up 60% from the year-earlier period. Signet, which has $11.7 billion in assets, attributed its gains largely to net interest income and fees derived from its rapidly growing credit card portfolio.


The Chicago-based bank earned $42.8 million in the third quarter, a 12% increase from a year ago. But its profitability fell.

Annualized, the company's 1.05% return on average assets was down from 1.13% a year ago.

One factor was a 39-basis-point drop in the net interest margin, to 2.56% from 2.95%. Northern said the maturation of certain fixed-rate assets accounted for the drop.

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