5 Big Banking Companies Post Higher Profits
Five major banking firms, including Security Pacific Corp. and Wells Fargo & Co. in California and Citicorp in New York, posted increases in fourth-quarter profits on Tuesday. But San Francisco-based Crocker National Corp., as expected, reported a $216.1-million deficit.
Los Angeles-based Security Pacific, the nation’s eighth-largest bank holding company, reported a 13% profit increase for the final three months of 1984, while 12th-ranked Wells Fargo & Co. of San Francisco said its earnings in the quarter rose 10%.
Citicorp, the nation’s largest banking company, reported a 30% increase, while fourth-ranked Manufacturers Hanover Corp. posted a 23% gain. Ninth-ranked Bankers Trust New York Corp. had a 19% increase.
Crocker, which said two weeks ago that it expected to post a $215-million loss for the fourth quarter because of provisions that it planned to make for potential loan losses, said the actual deficit gave it a yearly loss of $324.4 million. That is expected to become the third-largest annual banking loss in U.S. history, behind an expected loss exceeding $1 billion in 1984 for Continental Illinois Corp. and a $456-million deficit in 1983 at Seattle-based Seafirst Corp.
The double-digit gains by the other banks stem partly from declining interest rates, which reduced the rates that banks paid for deposits faster than the rates they collected as interest on loans, analysts said.
Most banks reported sizable gains from trading in bonds and foreign exchange. The bond market had rallied and the dollar had continued to strengthen during the quarter.
Finally, some banks received overdue interest payments from Argentine creditors, who agreed during the period to take out more loans.
Security Pacific said its fourth-quarter profit rose to $79.7 million from $70.6 million a year earlier, generally in line with analysts’ expectations. For the year, the company said its earnings rose to $291 million, up 10% from $264.3 million.
Richard J. Flamson III, chairman and chief executive of the Los Angeles-based firm, said strength in its specialized financial-services group and California retail banking business “offset continued weakness on the wholesale side, reflecting well-known circumstances in some domestic and international lending sectors.”
The firm also announced a 2-for-1 stock split, designed to make the stock more accessible to small investors.
Wells Fargo said its quarterly profit rose to $44.5 million from $40.5 million a year earlier. For the year, its earnings rose to $169.3 million from $154.9 million in 1983.
Chairman Carl E. Reichardt said the company’s earnings performance was chiefly the result of higher net interest income and effective management of non-interest expense.
Crocker National blamed its loss on a provision for possible loan losses of $326.5 million, up from $119 million a year earlier. It finished the year with a loan-loss reserve of $300.4 million, or 1.9% of total loans, one of the highest among major banks.
In 1983, the bank company had a fourth-quarter loss of $57.2 million and a loss of $10.4 million for the year.
The bank company also announced that its board had formally approved a previously announced plan by Midland Bank PLC of London to buy the 43% of Crocker’s stock that it does not already own.
Citicorp said its fourth-quarter profit rose to $261 million from $201 million a year earlier. For the full year, Citicorp posted earnings of $890 million, up 3% from $860 million in 1983.
The banking company said its results reflected particularly strong performances in its domestic, corporate and consumer businesses and a rebound in revenue from securities trading.
It said these gains were offset somewhat by continuing high levels of problem loans to foreign creditors, mainly in Latin America, and expected losses for the year from its new savings and loan networks in Florida and Illinois.
Manufacturers Hanover said its fourth-quarter profit rose to $106.2 million from $86.3 million a year earlier. For the year, the company reported net income of $352.5 million, up 4.6% from $337 million a year earlier. Per-share income fell to $7.12 from $8.37 a year earlier.
Bankers Trust said its fourth-quarter profit rose to $81.0 million from $67.8 million a year earlier. For the full year, its net income rose 17% to $306.8 million from $261.2 million in 1983.
