Profits at Wells Fargo, Great Western Surge

Wells Fargo & Co., California’s third-largest banking company, on Tuesday reported a 58% increase in second-quarter earnings over the 1989 period.

Citicorp, the nation’s largest banking company, said its second-quarter income declined 37%, and Great Western Financial Corp., the Beverly Hill-based parent of the nation’s second-largest thrift, reported a 51% jump in net income.

Well Fargo attributed the increase to a $116.5-million pretax gain from a joint venture with Nikko Securities Co.

The San Francisco-based bank’s net income totaled $232.4 million, up from $147.4 million. In the first six months of 1990, income totaled $392.2 million, compared to $288.9 million a year earlier.

Without the joint venture with Nikko Securities Co., Wells Fargo-Nikko Investment Advisors, the bank’s net income for the first half would have been $323.6 million.

Wells Fargo’s second-quarter loan-loss provision was $75 million; a year ago, it totaled $100 million.

Citicorp, parent of the nation’s largest bank--Citibank--said it earned $248 million for the three months ended June 30, down sharply from $395 million. It attributed the decline to weakness in the real estate market and the failure of Argentina and Brazil to pay interest on loans.

The company noted earnings increases of 28% in consumer banking and 44% in international banking and finance activities. But it said results from its global finance operations in Japan, Europe and North America dropped 69%, mainly because of weakness in the real estate market.

The New York-based institution said its net commercial loan writeoffs amounted to $92 million, including $42 million stemming from U.S. real estate, compared to net writeoffs of $29 million a year ago.

Citicorp also reported an $82-million loss for the quarter on cross-border loans, mainly because of non-payment of loan interest by Argentina and Brazil. Citicorp reported a profit of $25 million from such activity in the quarter last year, including $88 million in loan payments from Brazil.

Great Western Financial, parent company of Great Western Bank, said it earned $78.2 million in quarter ended June 30, up 51% from the 1989 period.

“Great Western’s earnings continued to improve in the second quarter of 1990, as the company’s strong core operating results enabled it to achieve its target of a return on stockholders’ equity of 15%,” said James F. Montgomery, chairman and chief executive.

Net interest income was $286 million for the second quarter, up sharply from $223 million a year ago. Net interest margin, the difference between the company’s yield on earning assets and its cost of funds, was 2.86% on June 30, compared to 2.54% a year earlier.

New loans totaled $3.6 billion, compared to $3.4 billion a year ago.

For the half of 1990, earnings totaled $152 million, compared to $109 million in 1989.

Two other major banking companies reported profit declines for the quarter: Chemical Banking Corp.’s fell 12.6% to $113.1 million, and Manufacturers Hanover Corp.’s tumbled 68.9% to $33 million.

Chemical said its results reflected a slight dip in net interest income and a bigger decline in non-interest income, because of lower gains from venture capital activities. But results from its Texas Commerce Bancshares subsidiary improved sharply, with earnings up to $24.1 million from $3.2 million.

Manufacturers Hanover said its results reflect the previously announced $100-million pretax restructuring charge, which will cover onetime costs of staff cuts and real estate leasing costs.