4 Top Banks Recover From Loan-Loss Additions, Show Quarterly Profits
Four of the nation’s leading bank holding companies Tuesday reported higher third-quarter earnings, while a fifth reported a drop in profit. Wells Fargo & Co., Citicorp, Manufacturers Hanover and Bankers Trust New York Corp. reported profit gains.
Mellon Bank Corp. reported a drop in its profit.
Wells Fargo, the nation’s 10th-largest bank holding company, said operating efficiencies from its acquisition of Crocker National Bank last year and a one-time tax benefit helped boost its third-quarter net income to $155 million.
Without the tax benefits, which stemmed from a $550-million addition to loan-loss reserves earlier in the year, Wells Fargo’s third-quarter profit would have been $104.1 million. That is up 34% from its earnings of $77.4 million in the third quarter of 1986.
As a result of what Wells Fargo said are operating savings resulting from its May, 1986, merger with Crocker, the company reported a decrease in non-interest expenses from the second quarter of this year and the third quarter of 1986. At the same time, Wells reported increases in net interest income and non-interest income for the quarter, producing the gain in net income.
Nonetheless, the San Francisco-based bank reported a net loss of $60.4 million for the first nine months of 1987, reflecting primarily the $550-million addition to reserves. The company said it anticipates a modest profit for the full year.
Wells Fargo, the state’s third-largest bank, said its assets at the end of the third quarter on Sept. 30 were $45.1 billion, compared to $42.7 billion a year ago, an increase of 6%.
The loan-loss provision for the quarter was $75 million, compared to $76.5 million a year ago. Including the addition of $550 million in the second quarter, the loan-loss provision for the nine months totaled $778 million, compared to $246.5 million in the same period last year.
Citicorp reported a quarterly profit of $541 million, compared to after-tax earnings of $247 million in the third quarter of 1986.
For the first nine months of the year, Citicorp had a loss of $1.8 billion, contrasted with a profit of $752 million last year. Citicorp again projected that it will have a $1-billion loss for the full year, due mainly to the $3 billion it set aside earlier this year as a reserve for shaky Third World loans.
In addition to $139 million in tax benefits related to the loan-loss provision, the New York-based company cited improvements in earnings from its core businesses and an after-tax gain of $163 million from a pension plan through its purchase of an annuity contract.
Manufacturers Hanover, the nation’s sixth-largest banking company, reported a third-quarter profit of $129.1 million, a rise of 22% from earnings of $105.8 million last year.
For the first nine months, the New York bank had a net loss of $1.16 billion, reflecting the $1.7 billion it added to its loan-loss reserves earlier this year. In 1986, it had earnings of $301.8 million in the first three quarters.
Bankers Trust, the eighth-largest banking concern, said its third-quarter profit was $146.4 million, up 33% from earnings of $110.3 million in 1986.
No. 14 Mellon said its third-quarter profit dropped 70% to $16 million, but signaled a return to profitability after a net loss of $626 million for the first half of 1987. It had a profit of $53 million last year.
For the first nine months, Mellon reported a loss of $610 million, stemming from increases in loan-loss reserves on loans to Third World countries as well as to residential real estate developers in Texas, Colorado and Louisiana. It had a profit of $168 million in 1986.
Separately, California First Bank posted net income of $10.1 million for the third quarter, up 26.8% from a year ago. Earnings for the first nine months of 1987 were $28.1 million, up 25.6% over the same period in 1986.
California First listed total assets at $6 billion at the end of the quarter, an increase of 4% over a year ago. The company, based in San Francisco, is the state’s sixth-largest bank.
