Wells Fargo Profit Up, Stock at Record High
Improving loan quality and the stronger California economy helped Wells Fargo & Co. achieve a 15% increase in first-quarter profit compared to a year ago, exceeding analysts’ expectations.
Wells Fargo shares soared to a record high Tuesday on the New York Stock Exchange, jumping $7 to close at $167.
Also reporting earnings Tuesday, H.F. Ahmanson & Co., the Irwindale-based parent of Home Savings of America, had an 8.4% decline in first-quarter income, as rising interest rates slowed mortgage lending. Ahmanson logged a profit of $50.7 million, or 33 cents a share, compared to $55.4 million, or 36 cents a share, in the same period of 1994.
San Francisco-based Wells Fargo said profit rose to $233 million, or $4.41 a share, from $202 million, or $3.41, in 1994. The key difference was that the bank did not add to its loan-loss reserves this year, whereas it had set aside $60 million last year in the first quarter.
The average number of common shares outstanding fell to 50.5 million from 55.7 million a year earlier because of $760 million in stock repurchases during 1994. Wells Fargo announced a new repurchase program Tuesday, saying it plans to buy back an additional 5 million shares.
At Ahmanson, Chairman and Chief Executive Charles R. Rinehart said he is encouraged by the company’s success in reducing expenses and the apparent turnaround in the net interest margin--the difference between the average rate the company pays for deposits and what it charges on loans--in early 1995.
Ahmanson shares climbed 12.5 cents Tuesday to close at $20.125 on the New York Stock Exchange.
Net interest income totaled $295.2 million for the first quarter, compared to $350.6 million for the first quarter of 1994. The quarter’s net interest margin was 2.27%, compared to 2.96% in the first quarter of 1994, Ahmanson said.
Citicorp, the nation’s largest bank, said Tuesday that its earnings soared 50% to $829 million in the first quarter, overshadowing the rosy results throughout the banking industry. Citicorp said its earnings of $829 million, or $1.53 a share, were up from $553 million, or $1.01 per share, a year earlier.
Chemical Banking Corp., the nation’s No. 3 bank, said its profit jumped 21% in the quarter, while Mellon Bank Corp. also posted higher earnings. Banc One Corp., the nation’s eighth-largest bank, bucked the trend with a fall in profit.
Also Tuesday, Bankers Trust New York Corp. announced a $157-million first-quarter loss. The troubled bank said it will get back on track by eliminating 1,400 positions and reducing its dependency on derivatives.
Most of the loss was tied to red ink in the bank’s Latin American trading operation. The bank lost $78 million trading securities, compared to a $14-million profit a year ago. But falling revenue from derivatives--customized securities whose values are derived from the movement of interest rates, commodities prices or other underlying factors--also accounted for part of the loss.
