Helped by rising fee income and a premium refund from the Federal Deposit Insurance Corp., Wells Fargo & Co. reported higher-than-expected earnings of $261 million, or $5.23 a share, for the quarter ended Sept. 30, up 20% from the $217 million, $3.86 a share, earned in the third quarter of 1994.
Three other large banks also reported higher third-quarter earnings Tuesday. Chemical Banking Corp. said profit rose 9%, Mellon Bank said profit was up 9%, excluding merger charges, and Banc One Corp.'s earnings rose 17%.
Meanwhile, Citicorp, the parent company of Citibank, the nation’s largest financial institution, saw its profit fall 2% compared to a year ago, when it had big tax gains. Factoring out last year’s tax benefits, Citicorp said earnings rose 10%.
Wells Fargo, the San Francisco-based parent of Wells Fargo Bank, said earnings were helped by its having added nothing to its provision for loan losses in the third quarter.
“We are pleased with the sustained growth of our loan portfolio and the broad-based expansion of fee income,” Chairman Paul Hazen said in a statement.
Wells’ return on average assets was 2.07% and return on average common equity was 30.13% in the quarter, compared to 1.65% and 22.99%, respectively, a year earlier.
The company’s net interest margin--the difference between the rate it charges on loans and it pays on deposits--was 5.90%, compared to 5.53% in the same quarter of 1994. Analysts attributed the jump largely to Wells’ strategy of emphasizing high-yielding credit-card and small-business loans.
Non-interest income in the third quarter was $339 million, up 10% from $307 million a year ago, reflecting an overall increase in fee-based products and services.
Non-interest expense in the third quarter of 1995 was $542 million, up 2% from $531 million in the same quarter of 1994. The company benefited from a $23-million refund from the FDIC for the period June 1 through Sept. 30, 1995.
Net charge-offs in the third quarter of 1995 totaled $75 million, or 0.86% of average loans. Credit-card loans accounted for $52 million of that amount, partially reflecting a 36% increase in the portfolio since the third quarter of 1994, Wells said. In the third quarter of 1994, net charge-offs totaled $60 million, or 0.69% of average loans.
Among the other banks, Citicorp said net income totaled $877 million, or $1.62 a share, compared to $894 million, or $1.67 a share in the 1994 third quarter.
The bank’s global consumer business improved more than its global corporate banking division. Consumer profit rose 10% to $522 million, led by branch banking worldwide and the credit-card business in Asia.
The nation’s third-largest bank, Chemical Bank, earned $477 million, or $1.70 a share, compared to $439 million, or $1.56 a share a year ago.
Banc One said earnings totaled $331 million, or 83 cents a share, compared to $283 million, or 68 cents a share.
Mellon said net income was $175 million, or $1.14 a share, compared to $78 million, or 42 cents a share last year, when Mellon took charges related to its acquisition of Dreyfus Corp.
Growing sales of flagship products, favorable foreign exchange conversions and selective price increases helped drug companies earn more.
* Merck & Co. reported a 10% increase in third-quarter net income. Sales of its cholesterol-lowering drug Zocor continue to soar because of a study last year showing it could prevent heart attacks.
Merck reported earnings of $861.9 million, or 70 cents per share. Sales rose 10% to $4.17 billion, 2% of which was based on favorable foreign exchange rates.
* Eli Lilly & Co. reported earnings of $1.23 billion, or $4.29 per share in the quarter, a nearly fourfold increase from the same period in 1994. But that includes a $910-million gain from spinning off its Guidant Corp. and other medical device businesses. Without that, profit from continuing operations was $310 million, up 5%.
Lilly revenue declined 10% to $1.63 billion due to its divestiture.
* Merrill Lynch & Co. said third-quarter earnings rose 30%, powered by surging investment banking revenue and higher commissions.
The nation’s biggest securities firm said earnings rose to $300.4 million, or $1.47 a share, from $231.6 million, or $1.10, a year ago.
The gains were led by a 44% increase in investment-banking revenue and a 23% rise in commissions.
* GTE, the nation’s largest local phone company, earned $695 million, or 72 cents per share, in the quarter that ended Sept. 30, up 6% from $657 million, or 69 cents per share, in the same period a year ago.
In both periods, the company recorded gains from the sale of telephone properties it no longer considered important. Without those gains, GTE would have earned $684 million in the latest period and $609 million a year ago.
Quarterly revenue rose 3% to $5.12 billion from $4.99 billion a year ago.
* Sprint Corp. said third-quarter profit rose 16.7% as each of the company’s units reported a stronger performance.
The nation’s third-largest long-distance carrier said it earned $268 million, or 76 cents per share, in the quarter that ended Sept. 30.
It earned $230 million, or 66 cents per share, in the same period a year ago.
Revenue was $3.44 billion, up 6% from $2.23 billion a year ago.
* Philip Morris Cos. said profit climbed 16.5%, led by strong sales of Marlboro and its other cigarette brands around the world.
Philip Morris, the world’s biggest cigarette maker and a leading food company, earned $1.43 billion, or $1.71 a share, in the three months ended Sept. 30, compared to $1.23 billion, or $1.42 a share, a year earlier.
The consensus of analysts surveyed in advance of the report by Zacks Investment Research was for earnings per share of $1.68 a share.
Revenue slipped to $16.69 billion from $16.71 billion for the quarter, but would have been up 6.7% if businesses sold since a year ago were excluded from the comparison.
* Continental Airlines Inc. said its third-quarter profit more than tripled because of fuller aircraft and higher average ticket prices.
The Houston-based airline’s net income rose to $111 million, or $3.09 a share, from $31 million, or $1.03 per share, a year ago, continuing a turnaround this year from cost-cutting.
The result was the largest quarterly profit in the carrier’s 61-year history.
Continental’s third-quarter revenue remained almost unchanged at $1.52 billion, compared to $1.51 billion a year ago.