Two Southern banking companies released largely different profit reports for the fourth quarter on Wednesday.

Wachovia Corp., headquartered in Winston-Salem, N.C., reported net income of $244.7 million, a decline of 6.9% from the year before. The drop was partially fueled by more than $25 million of charges taken during the quarter, the company said. Excluding this and other charges, operating earnings dropped 3.5%, to $257.4 million.

Still, the $70 billion-asset company met analysts' estimate of operating earnings, which excludes nonrecurring charges, of $1.26 per diluted share.

Meanwhile, the smaller SouthTrust Corp. of Birmingham, Ala., said its net income grew 5.9%, to $122.7 million, thanks to increased revenue derived from fee-income-generating business lines.

Noninterest income, excluding securities transactions, rose 12%, to $126 million, boosting fourth-quarter earnings at the $45 billion-asset company. For the year, the company attributed growth in fee income to a 46% rise in debit card revenue and a 14% rise in service charge revenue. Net interest income, on the other hand, fell 5% from the year earlier, to $342.8 million. Though total assets crept up 4% for the year, total loans and leases dropped 1%, to $31.4 billion, the result of $1.5 billion of "one- to four-family" mortgage securitizations, most of which occurred in the fourth quarter. SouthTrust beat analysts' consensus earnings estimate of 72 cents a share by a penny.

Depressing its fourth-quarter results, Wachovia took the second part of a $100 million restructuring charge related to a companywide reorganization announced in August that eliminated 1,800 jobs. With this so-called "performance project," which tacked on $19.5 million of charges during the fourth quarter, the company is hoping to cut annual expenses and lift pretax earnings by $425 million by the end of 2002.

The North Carolina company had already swallowed $87.9 million of expenses in the third quarter, and on Wednesday it indicated that it anticipates additional restructuring charges this quarter. Also affecting the fourth-quarter results were $5.7 million of integration charges.

"Fourth-quarter and year-to-date results give evidence of the steps taken to manage credit risk and control expenses while growing revenue," said Wachovia chairman and chief executive L.M. Baker Jr., in a statement.

Though loan growth remained steady, with average loans picking up 11.7% year-on-year, to $55 billion, fee income derived from managing assets fell by 3%, and capital markets income fell by 18% from the year-earlier peak.

The downturn in investment management, an area that Wachovia has been seeking to expand, was somewhat of a surprise, said Friedman Billings Ramsey analyst Matthew Snowling.

The company's credit quality results, on the other hand, may have acted as an unexpected boon to many investors who feared another big shock, Mr. Snowling said.

Loan-loss provisions of $117.5 million were 77% higher than a year earlier but 5% lower than in the third quarter.

The amount of nonperforming loans increased 12% from the third quarter and were a whopping 145% higher than the year-earlier quarter. On Wednesday, Wachovia's shares rose by 3.5%, to $66.625. SouthTrust rose 3.43%, to $41.4375.


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