Profits Rise at Financial Services Firms
BankAmerica Corp. and other big regional banks reported higher first-quarter earnings Wednesday as the mergers sweeping the industry paid off with increased revenue and cost-cutting.
San Francisco-based BankAmerica said first-quarter earnings rose 7%, boosted by higher brokerage fees.
BankAmerica--which agreed Monday to a $62.5-billion merger with NationsBank Corp. to create the second-largest U.S. banking company--profited from last year’s purchase of investment bank Robertson, Stephens & Co. BankAmerica is selling smaller businesses such as its manufactured-home finance unit.
The bank said net income rose to $835 million, or $1.17 a diluted share, from $780 million, or $1.03, a year earlier. That compared with an average estimate of $1.16 a share, based on a survey of analysts.
BankAmerica’s first-quarter results included a $187-million increase in income from fees and commissions, reflecting the purchase of Robertson Stephens.
Total non-interest income rose 32% to $1.81 billion, aided by the increase in fees. In addition, trading income rose 34% to $251 million, and gains on venture capital investments jumped 79% to $190 million.
BankAmerica shares fell 69 cents to close at $90.37 on the New York Stock Exchange.
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Charles Schwab Corp. said first-quarter earnings rose just 2%, as a shift to lower-priced online trading slowed commissions growth as expenses surged.
Profit at the largest U.S. discount broker rose to $68 million, or 25 cents a share, from $66.7 million, or 25 cents, in the year-ago period. The earnings fell short of analysts’ average forecast of 27 cents a share.
After the report, Schwab shares plunged $3.44 to close at $36.50 on the NYSE.
The San Francisco-based company lowered its Internet trading prices for some customers early in the quarter to compete with other online brokers.
A 16% surge in expenses and a 24% decline in revenue from making markets in stocks also contributed to the earnings shortfall, analysts said.
The broker returned 23% on shareholders’ equity, down from 30% a year ago.
At a Glance:
* Fleet Financial, the 12th-largest U.S. bank, said profit from operations rose to $367 million, or $1.21 a diluted share, from $334 million, or $1.10, in the year-earlier period. After charges related to its acquisitions, profit was $323 million, or $1.06 a diluted share.
* Bear Stearns Cos. said earnings in its fiscal third quarter were little changed. Net income for the quarter ended March 27 rose to $166.3 million, or $1.15 a diluted share, from $165.5 million, or $1.14, in the same period a year ago, beating the $1.04-a-share average forecast of analysts.
* Freddie Mac, the second-largest U.S. mortgage financer, said first-quarter earnings rose 19% to $393 million, or 54 cents a diluted share, from $329 million, or 44 cents, a year ago. That beat analysts’ estimates by a penny.
* Golden West Financial Corp., the Oakland-based parent of World Savings, said first-quarter profit from operations rose 32% to $110.1 million, or $1.89 a diluted share, from $83.4 million, or $1.43, a year ago, beating the $1.64-a-share estimate of analysts.
* US Bancorp said first-quarter profit from operations rose to $350 million, or $1.40 a diluted share, from $292.2 million, or $1.17, in the year-earlier period. That beat the average estimate of $1.36 per share.
* Comerica Inc. said first-quarter earnings rose 16% to $144 million, or 88 cents a diluted share, from $124 million, or 74 cents. That result beat the average forecast of 87 cents.
