NationsBank and Chase Post Strong Quarter

NationsBank Corp., reporting earnings for the first time since it was formed by the merger of two large Southern banks, posted a 95% jump in earnings for the first quarter Monday.

Chase Manhattan Corp., meanwhile, said its first-quarter profit rose 21% from the previous year, partly from higher one-time gains.

NationsBank will become No. 4 and Chase No. 6 in the nation after the merger of BankAmerica Corp. and Security Pacific Corp. becomes final to create the No. 2 U.S. bank group.

NationsBank, based in Charlotte, N.C., and created in December by the merger of NCNB Corp. and C&S;/Sovran Corp., said it earned $310 million, or $1.28 a share. That compared to a pro forma $159 million, or 70 cents a share, a year earlier that would have been earned if the two companies were merged at the time.

Increased sales of investment securities to $204 million from $76 million--twice what analysts had forecast--was a major factor in the earnings improvement.

NationsBank also reported an improvement in credit quality and said its provision for loan losses fell to $265 million from $333 million.

Rusty Page, senior vice president at NationsBank, said even excluding the investment securities sales, the company’s core earnings rose.

“The fundamentals are good,” Page said.

Brent Erensel, an analyst for UBS Securities, said, “Asset quality improved, the balance sheet was stronger, and the company is poised for explosive earnings growth from cutting costs and shifting its balance sheet.”

Shares of NationsBank rose 12.5 cents to $46.50 a share in trading on the New York Stock Exchange.

Chase Manhattan said net income was $141 million, or 81 cents a share, compared to $117 million, or 73 cents a share, a year ago.

The bank said it had $93 million in pretax, one-time gains, up from $28 million of such gains a year earlier.

The gains consisted of $43 million from loan sales and asset securitizations, $30 million from the disposition of some equity investments and about $20 million from the disposition of stock warrants related to a previously sold Chase unit.

Chase said it succeeded in containing operating expenses, which were $959 million during the quarter, compared to $936 million a year earlier. Chase now has 2,370 fewer employees, including 450 staff cut in the quarter, and has a total of 35,760.

The New York money center bank said net interest revenue rose to $861 million from $841 million a year ago.

Credit loss provisions at the end of March fell to $300 million from $315 million at the end of December but were up from $240 million a year ago.

Chase said it sees its loan loss provisions staying at high levels because of the weak U.S. economy, especially commercial real estate markets.

The stock price fell 75 cents to $23.625 a share on the NYSE.