Fee gains and expense controls helped a slew of big banks beat their consensus earnings estimates for the first quarter.

Among those reporting Monday, NationsBank Corp. cited cost management and fee-income growth for a 38% earnings jump, to $709 million.

First Chicago NBD Corp. also cited cost controls for a 12% increase, to $380 million.

Norwest Corp. of Minneapolis said profits rose 19% to $322 million, while Bank of New York Co. recorded a 9% improvement, to $265 million.

National City Corp. of Cleveland, reported an 11% gain to $196 million.

"The mix of earnings shows the shift in favor of high-return, high-value businesses," said Judah S. Kraushaar, an analyst at Merrill Lynch & Co. "Banks are getting away from being just plain vanilla."

At $239 billion-asset NationsBank, earnings per share totaled 94 cents, beating the analysts' consensus by 2 cents.

Chairman Hugh L. McColl Jr. said the quarter was marked by a focus on productivity initiatives as well as further progress in the integration of Boatmen's Bancshares

Analysts were generally pleased with the Charlotte, N.C., company's performance. They pointed to NationsBank's aggressive cost-cutting at Boatmen's as the primary reason for exceeding projections.

"Overall the quarter was very solid, with more expense reduction than anticipated," said R. Harold Schroeder, an analyst with Keefe, Bruyette & Woods.

After taking over Boatmen's in January, NationsBank cut 10% from the St. Louis acquisition's noninterest expense base, company officials said. Since the merger was announced last fall, the full-time head count fell by 1,400. Compared to the 1996 first quarter, full-time equivalents are down about 20,000.

NationsBank reported fee income in the latest quarter of $1.11 billion, a 26% gain. Officials said income from asset management and fiduciary services provided the growth.

Trading revenues, sparked by market turbulence, were particularly strong, totaling about $97 million in the first quarter, compared to $85 million in the fourth quarter of 1996.

Net interest income rose 25% to $1.98 billion, as average loans and leases increased 19% and the net interest margin expanded by 40 basis points. But analysts were still disappointed by a decline of 5% in the managed loan portfolio from the fourth quarter.

First Chicago NBD had earnings per share of $1.17, 2 cents more than analysts' consensus.

The fact that earnings are hitting targets is "important with the uncertainty in the market," said Joseph Duwan, an analyst with Keefe Bruyette. "Cost control is a factor, and other than credit card portfolios, loan quality looks pretty good."

Credit quality could be increasingly important as the economy is expected to weaken, Mr. Duwan said.

With $109 billion of assets and relatively high exposure to credit card volatility, First Chicago had net chargeoffs in the quarter of $187 million, mostly due to credit card losses. The company also reported a $187 million provision for bad loans, up from $175 million a year ago but down from $190 million in the fourth quarter.

Mr. Duwan believes credit losses industrywide will tick up each quarter this year, especially for companies with a significant credit card and other consumer loans.

"The rate will continue to increase, but I think at a slower pace," Mr. Duwan said. "I think you're beginning to see some benefit from a tightening of credit standards over the last year."

Norwest reported earnings per share of 84 cents, a penny over the consensus.

The $84 billion-asset company has low credit card exposure, but its large consumer finance business recorded chargeoffs of $67 million, 20% higher than a year earlier but 3% lower than the fourth quarter. The overall credit loss provision $109 million was 24% higher than a year ago, but company officials said the higher provision was linked to chargeoffs at recently acquired banks.

Analysts said nonbank operations have helped Norwest. Mortgage banking fees, for example, jumped 33% from the 1996 first quarter, to $228 million. That and other fee businesses helped boost noninterest income 25%, to $691 million.

"Fee income businesses continue to do quite well, led by the mortgage banking operation," said Fred Cummings, an analyst with McDonald & Company Securities. "The business mix gives them much more flexibility in terms of meeting expectations."

Norwest, which garners its revenue from three major areas-banking, mortgage banking and consumer finance-realized a 25% gain in its banking operations, to $227 million. Expenses were higher, however, attributed to acquisitions. Norwest Financial, the finance company, reported a 3% income increase, to $62 million, while mortgage banking earned $34 million, up 11% from a year earlier.

Bank of New York Co., citing strong revenues in securities processing, reported first quarter earnings per share of 65 cents, outpacing estimates by 2 cents.

Revenues from securities processing jumped 16% from the first quarter of 1996, to $185 million. Analysts said strong internal growth and key acquisitions bolstered the unit, which includes mutual fund processing, government securities clearing, corporate trust, and stock transfer.

Other fee businesses boosted earnings at the $58.4 billion-asset bank, said analysts. Cash management rose 13%, trade finance 11%, funds transfer 10%, and trust and investment fees 16%.

Expenses climbed less than 1%, to $446 million, but were 7.2% lower than in the fourth quarter.

Net interest income declined 5%, to $496 million, partially due to two separate sales of credit card receivables.

Bank of New York could weather a market downturn better than banks that have a heavier concentration on trading, analysts said.

"Their revenues should stay strong, since transaction volumes in corporate trust and other processing businesses tend to go up in a bear market," said Mr. Kraushaar of Merrill Lynch.

The $50 billion-asset National City said net interest income declined 1% from a year earlier, to $477 million. That reflected the sale of its $400 million private label credit card portfolio in late November, and the sale of another $75 million portfolio.

All told, the Cleveland holding company sold about one-third of its credit card receivables over the past year. The sale of the two portfolios helped contribute to a 9-basis-point drop in the net interest margin.

Noninterest income, excluding securities gains, rose 11% to $289 million. Gains were reported on fee businesses including item processing, trust, and mortgage banking.

National City also raised its provision for credit losses 12.5%, to $36 million, but analysts said it has a lower exposure to consumer credit losses than many other regional banks. Noninterest expenses were down 1%, to $451 million.

The 87 cents that Nat City earned per share was a cent better than the consensus estimate. +++

SunTrust Banks Inc. Atlanta Dollar amounts in millions (except per share) First Quarter 1Q97 1Q96 Net income $161.1 $150.4 Per share 0.74 0.66 ROA 1.33% 1.38% ROE 20.23% 18.87% Net interest margin 4.25% 4.35% Net interest income 472.0 433.7 Noninterest income 225.8 213.7 Noninterest expense 414.0 401.0 Loss provision 26.2 25.0 Net chargeoffs 17.5 12.7 Balance Sheet 3/31/97 3/31/96 Assets $53,733.0 $46,585.0 Deposits 36,661.0 34,477.0 Loans 36,428.0 31,786.0 Reserve/nonp. loans 385% 374% Nonperf. loans/loans 0.52% 0.60% Nonperf. assets/assets 0.44% 0.54% Nonperf. assets/loans + OREO 0.64% 0.78% Leverage cap. ratio NA 6.69% Tier 1 cap. ratio NA 7.92% Tier 1+2 cap. ratio NA 10.69%

Norwest Corp. Minneapolis Dollar amounts in millions (except per share) First Quarter 1Q97 1Q96 Net income $321.9 $271.4 Per share 0.84 0.74 ROA 1.63% 1.51% ROE 22.70% 22.70% Net interest margin 5.62% 5.69% Net interest income 967.2 898.3 Noninterest income 690.6 552.8 Noninterest expense 1,047.5 943.2 Loss provision 109.0 87.8 Net chargeoffs 112.0 85.5 Balance Sheet 3/31/97 3/31/96 Assets $83,580.3 $73,942.1 Deposits 52,025.5 43,104.9 Loans 40,369.4 37,393.7 Reserve/nonp. loans 612.3% 539.1% Nonperf. loans/loans 0.43% 0.48% Nonperf. assets/assets 0.27% 0.29% Nonperf. assets/loans + OREO 0.55% 0.58% Leverage cap. ratio 6.07% 5.96% Tier 1 cap. ratio 8.42% 8.21% Tier 1+2 cap. ratio 10.19% 10.25%

National City Corp. Cleveland Dollar amounts in millions (except per share) First Quarter 1Q97 1Q96 Net income $196.1 $176.9 Per share 0.87 0.79 ROA 1.61% 1.46% ROE 17.71% 17.82% Net interest margin 4.26% 4.35% Net interest income 477.4 480.8 Noninterest income 289.0 261.0 Noninterest expense 451.3 457.8 Loss provision 35.9 32.0 Net chargeoffs 32.6 31.0 Balance Sheet 3/31/97 3/31/96 Assets $50,380.90 $48,776.3 Deposits 35,066.4 34,708.4 Loans 36,382.9 34,775.0 Reserve/nonp. loans 469.53% 363.09% Nonperf. loans/loans 0.41% 0.56% Nonperf. assets/assets 0.34% 0.45% Nonperf. assets/loans + OREO 0.47% 0.63% Leverage cap. ratio 7.86% 7.48% Tier 1 cap. ratio 9.70% 9.80% Tier 1+2 cap. ratio 14.74% 14.70%

NationsBank Corp. Charlotte, N.C. Dollar amounts in millions (except per share) First Quarter 1Q97* 1Q96 Net income $709.0 $513.0 Per share 0.97 0.85 ROA 1.19% 0.99% ROE 13.96% 15.71% Net interest margin 3.83% 3.43% Net interest income 1,978.0 1,584.0 Noninterest income 1,113.0 885.0 Noninterest expense 1,810.0 1,512.0 Loss provision 190.0 155.0 Net chargeoffs 184.0 155.0 Balance Sheet 3/31/97 3/31/96 Assets $238,958.0 $194,375.0 Deposits 136,807.0 109,622.0 Loans 147,508.0 123,169.0 Reserve/nonp. loans 265% 268% Nonperf. loans/loans 0.71% 0.68% Nonperf. assets/assets 0.51% 0.51% Nonperf. assets/loans + OREO 0.82% 0.79% Leverage cap. ratio 6.20% 6.19% Tier 1 cap. ratio 7.06% 7.35% Tier 1+2 cap. ratio 11.58% 11.71%

*Reflects acquisition of Boatmen's Bancshares Inc. on Jan. 7 ===

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