More Banks, Thrifts Report Rise in Earnings
U.S. banks and thrifts rolled out another round of upbeat profit reports Tuesday as big regional institutions including Wells Fargo & Co., FleetBoston Financial Corp. and Bank One Corp. reported higher earnings.
Solid results in traditional lending businesses such as mortgages, credit cards and small business loans offset weakness in banks’ Wall Street operations such as investing, trading, underwriting stock and bond issues, and advising companies on mergers and new stock offerings.
On Monday, Citigroup Inc. and Bank of America Corp. posted higher earnings, but bank stocks slumped amid a general market decline as investors worried about the outlook for banks’ lending businesses during what could be a sluggish U.S. economic recovery.
It was a different story Tuesday. Banks joined a broad market rally, with the Standard & Poor’s index of 27 bank stocks rising 1.9%.
San Francisco-based Wells Fargo, the No. 5 U.S. banking company, earned $1.38 billion, or 80 cents a share, in the first quarter, compared with $1.17 billion, or 67 cents, in the year-earlier quarter as low interest rates drove growth at its large mortgage banking arm.
That beat Wall Street’s consensus profit estimate of 78 cents, according to Thomson Financial/First Call. Wells Fargo shares rose 51 cents to $50.10 on the New York Stock Exchange.
Including a one-time charge of $276 million for writing off goodwill, after a recent accounting rule change, the bank reported profit of $1.10 billion, or 64 cents a share.
The results “continue to prove that our strategy for market share growth works whether the economy is growing or in a recession,” Chief Executive Dick Kovacevich said.
After the market closed, Washington Mutual Inc., the biggest U.S. savings and loan, posted a 48% increase in quarterly profit and raised its quarterly dividend a penny to 26 cents a share.
The Seattle-based thrift earned $950 million, or 98 cents a share, in the first quarter, compared with $641 million, or 76 cents, in the year-earlier period, matching Wall Street’s consensus estimate.
FleetBoston posted first-quarter net income of $735 million, or 70 cents a share, as it forecast it would last week. Profit was up from $142 million, or 12 cents a share, a year earlier, when it took $642 million in after-tax charges.
Fleet also said it will sell its Robertson Stephens investment bank, stop investing in Latin America and cut its investments portfolio, to focus on less risky operations such as personal financial services and business banking.
FleetBoston’s stock rose $2.70 to $36.18 on the NYSE.
At Chicago-based Bank One, profit rose to $787 million, or 67 cents a share, in the first quarter, compared with $679 million, or 58 cents a share, in the year-earlier quarter. That beat Wall Street’s consensus estimate of 66 cents, according to First Call.
However, CEO Jamie Dimon warned that some analysts are too optimistic about the bank’s prospects for 2003, and Bank One’s shares erased earlier gains to fall 5 cents to $41.16 in NYSE trading.
In other bank earnings:
* Beverly Hills-based City National Corp., parent of City National Bank, reported first-quarter net income of $44.2 million, or 87 cents a share, compared with $36.8 million, or 75 cents a share, a year ago.
CEO Russell Goldsmith, citing the improving California economy, revised his company’s 2002 earnings guidance up a notch. City National now expects profit to grow 8% to 11% this year over last. In January the bank predicted 7% to 10% profit growth.
* Detroit-based Comerica Inc. reported net income of $214 million, or $1.20 a share, in the first quarter, compared with $94 million, or 50 cents a share, in the year-earlier quarter. Excluding charges, Comerica’s income for the 2001 first quarter was $223 million, or $1.21 a share.
* Oakland-based savings and loan Golden West Financial Corp. earned $238 million, or $1.51 a share, in the first quarter, up from $170 million, or $1.10 a share, in the year-earlier quarter.
* U.S. Bancorp, based in Minneapolis, earned $841.6 million, or 44 cents a share, compared with $797.3 million, or 42 cents a share, in the year-earlier quarter.
* Cincinnati-based Fifth Third Bancorp earned $390 million, or 66 cents a share, in the first quarter, compared with $306.2 million, or 52 cents a share, a year earlier.
