Two of the nation's largest banks reported strong third-quarter results Thursday at the outset of what is expected to be a profitable earnings season for the industry.
New York-based J.P. Morgan & Co., the nation's fifth-biggest bank, said its net income rose 10% for the third quarter, boosted by a rise in revenue from its corporate finance business.
First Union Corp., based in Charlotte, N.C., reported a 9% rise in earnings, mostly attributable to strong growth in fee income in capital markets and capital management areas. On June 19, First Union announced a $5.4-billion merger agreement with First Fidelity Bancorp., New Jersey's largest bank, with $35.3 billion in assets.
J.P. Morgan & Co. said profit rose to $360 million, or $1.78 a share, for the third quarter, from $327 million, or $1.63 a share, for the period in 1994. Revenue rose 8% to $1.55 billion from $1.43 billion.
"We are earning a growing share of our clients' business, with advances in equity and debt underwriting, corporate finance advisory, market-making, and investment management results," Chairman Douglas A. Warner III said.
Operating expenses climbed 9% from a year earlier as a result of a weaker dollar and higher employee compensation and benefits.
For the nine months ended Sept. 30, however, earnings were down 9%, in part because of the cost of severance packages for employees let go earlier in the year. The work force has declined 4% in the first nine months of 1995, dropping to 16,394 from 17,055 at the end of 1994.
Profit for the first three quarters fell to $930 million, or $4.62 a share, from $1.02 billion, or $5.05 a share, for the same period of 1994.
Assets rose to $178.33 billion at the end of September from $154.92 billion at the end of 1994.
J.P. Morgan stock closed up $2.50 at $80.625 a share Thursday on the New York Stock Exchange.
First Union said it earned $255 million, or $1.50 a share, for the third quarter, compared to $235 million, or $1.35 a share, for the same period the year before.
In one of the largest bank deals in history, First Union and First Fidelity, based in Newark, N.J., and Philadelphia, agreed to merge, creating a banking company with $126 billion in assets and 2,000 offices from Connecticut to Florida. The combination still needs regulators' approval.
For the first nine months of 1995, First Union earned $734 million, or $4.27 a share, up from $675 million, or $3.94 a share, for the period the year before.
As of Sept. 30, First Union had assets of $86.8 billion and was operating full-service banking offices in Florida, North Carolina, Georgia, Virginia, South Carolina, Tennessee, Maryland and Washington, D.C.
First Union shares closed up $1 at $53 on the NYSE on Thursday.