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Fee Income Boosts BankAmerica’s Operating Profit 8.4%

From Bloomberg News

BankAmerica Corp. said its operating profit rose 8.4% in the second quarter on higher fee income from investment banking and other businesses.

Several other U.S. banks also reported healthy earnings for the quarter as they generated higher fees from consumers and corporations in a strong economy.

The San Francisco-based bank, which has agreed to be acquired by NationsBank Corp., said profit from operations rose to $866 million, or $1.21 a diluted share, from $799 million, or $1.07, for the same period last year. The results matched the average estimate of analysts surveyed by First Call Corp.

Like other banks, BankAmerica’s interest income was sluggish as low interest rates squeezed the gap between rates charged to borrowers and those paid to depositors. That was more than offset by the rapid growth of fees.

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The largest West Coast bank’s interest income fell 4.7% to $2.11 billion. Non-interest income jumped 29% to $1.84 billion.

Fees and commissions other than those from deposits, credit cards and trusts jumped 56% to $651 million, mainly from the BancAmerica Robertson Stephens investment banking unit. BankAmerica recently agreed to sell the unit as part of its merger deal with NationsBank.

BankAmerica’s latest results exclude a $84-million pretax gain on the sale of a Seattle office building and a $45-million estimated loss from the expected sale of Robertson Stephens.

BankAmerica shares fell $2.75 to close at $96.56 on the New York Stock Exchange.

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At a Glance

Other bank earnings, excluding one-time gains and charges unless noted:

* City National Corp., parent of City National Bank of Los Angeles, said its second-quarter net income rose 21% to $23.6 million, or 49 cents a diluted share, from $19.6 million, or 41 cents, a year ago. Net interest income rose 14.7% and non-interest income jumped 29%. Total average assets rose 17% to a record $5.5 billion.

* Comerica Inc. said second-quarter net income rose 16% to $150.4 million, or 92 cents a diluted share, beating analyst estimates of 91 cents, as it kept costs down and boosted fee income. Net interest income increased 0.3% and non-interest income increased 23%.

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* Fleet Financial Group Inc.'s profit rose 13% to $393 million, or $1.29 a share, in the second quarter from a year ago, beating estimates of $1.26 a share, as new brokerage and investment businesses thrived. The company also announced a 2-for-1 stock split. Non-interest income jumped 35% and net interest income gained 5%.

* National City Corp. posted a 22% jump in earnings to $331.2 million, or 99 cents a share, from a year ago, beating analyst estimates of 96 cents a share. Net interest income rose 3.1%, and non-interest income, excluding securities gains, rose 33%.

* Republic Bank of New York said second-quarter earnings gained 7.5% to $118.8 million, or $1.05 a diluted share, from a year ago. The New York-based bank said net interest income rose 6.8%. Gains from investment securities nearly doubled.

* State Street Corp.'s second-quarter profit rose 18% to $108.6 million, or 66 cents a diluted share, from a year ago, meeting analyst estimates. Fees from processing securities, trading currencies and managing money for institutional investors boosted results. The Boston-based bank said revenue rose 21%.

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* U.S. Bancorp’s profit from operations jumped 18% in the second quarter to $358.2 million, or 48 cents a diluted share, from a year ago, on higher fees from investment and trust services. The results met the average estimate of 48 cents from analysts surveyed by First Call Corp. Net interest income fell 0.2%. Non-interest income rose 38% as credit card revenue surged 49%.

* Wachovia Corp. said its operating earnings rose 17% to $230.3 million, or $1.09 a diluted share, from the year-ago second quarter, beating analyst estimates by a penny. Non-interest income rose 22% and net interest income rose 14%.


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