3 Banks Post Strong Earnings Growth
Adjustable-mortgage specialist Golden West Financial Corp. said Thursday that its fourth-quarter profit rose 16%, with lending up sharply at the Oakland-based thrift. Citigroup Inc. and UnionBanCal Corp. also posted double-digit earnings growth.
Golden West, parent of World Savings Bank, the largest savings and loan based in California, earned $338.5 million, or $1.09 a share, compared with $290.7 million, or 94 cents, during the last quarter of 2003. Full-year profit also rose 16%, to $1.28 billion, or $4.13 a share, from $1.1 billion, or $3.57.
The results beat Wall Street’s expectations by 2 cents. Shares rose 72 cents to $63.07 on the New York Stock Exchange.
During the fourth quarter, Golden West made $13.1 billion in new loans, up from $10.9 billion in the year-earlier quarter. For the year, new loans totaled $49 billion, up from $36 billion.
Golden West Chairman and Chief Executive Marion Sandler said rising home prices made adjustable-rate loans more attractive to many buyers. Adjustable mortgages offer initial interest rates that are cheaper than those for fixed-rate mortgages, although they can be adjusted higher if interest rates later rise.
New York-based Citigroup, which expanded its Citibank branch network into California in 2002 by buying the parent of California Federal Bank, said its fourth-quarter earnings rose 12%, in part because it released funds it had set aside earlier to cover loan losses.
Citigroup, the world’s largest financial services company, said consumer banking revenue soared in the fourth quarter, bolstering Chief Executive Charles Prince’s plan to scale back acquisitions and rely on existing businesses for growth. But it warned that 2005 earnings probably would be at the low end of analysts’ expectations. Its shares fell 27 cents on the NYSE to $47.77.
For the quarter, Citigroup earned $5.32 billion, or $1.02 a share, up from $4.76 billion, or 91 cents, a year earlier. Full-year earnings fell 5% to $17 billion from $17.9 billion in 2003.
UnionBanCal, the San Francisco parent of Union Bank of California, said its fourth-quarter profit rose nearly 19%, with double-digit increases in income from both lending and fees.
UnionBanCal, the second-largest commercial bank based in California, reported net income of $180.5 million, or $1.19 a share, up from $151.8 million, or $1.02, in the fourth quarter of 2003. Profit for the full year was $732.5 million, or $4.87 a share, compared with $587.1 million, or $3.90, in 2003.
Lending income for the quarter was $434 million, up 10.7%. Fee income was $231 million, up $27 million, or 13.4%. UnionBanCal shares closed the day down 25 cents at $61.24 on the NYSE.
