Earnings mixed for Nevada’s big bank operators

Tuesday, Jan. 16, 2001 | 11:29 a.m.

SUN STAFF AND WIRE REPORTS

Wells Fargo & Co.'s fourth-quarter profit rose 8.7 percent, as the sixth-largest U.S. bank sold more home equity loan and other financial products to its customers.

The San Francisco-based bank, the largest in Nevada, today said net income rose to $1.13 billion, or 65 cents a share, from $1.04 billion, or 59 cents, in the fourth quarter of 1999. Revenue rose 12 percent to $5.41 billion.

The bank, created in 1998 when Norwest Corp. bought Wells Fargo, sold more home equity loans and other bank products. Wells finished combining the computer systems of its predecessors in November six months ahead of schedule, a feat analysts think will help sustain revenue growth even if the economy slows.

"Now that the systems conversions have been completed, it should give them some additional sales momentum," said Joseph K. Morford, a bank analyst at RBC Dain Rauscher Wessels in San Francisco.

Wells converted almost 15 million accounts and more than 2,700 branches in 22 states.

Wells stock, which has slumped 13 percent this year, fell 63 cents to $48.06 in early trading today but then rebounded to be up $1.12 at $49.81. The bank met the average estimate of analysts polled by First Call/Thomson Financial. The company's results include First Security Corp., the Salt Lake City- based bank it bought in October.

Online banking helped Wells boost revenue. The bank said it had 2.5 million online customers at yearend and made more than $600 million in home-equity loans over the Internet in 2000.

Net interest income rose 7 percent to $2.79 billion. The net interest margin, or the difference between what it charges for loans and pays for funds, fell to 5.30 percent from 5.46 percent.

Non-interest income rose 18 percent to $2.61 billion. Trust and investment fees jumped 18 percent to $421 million.

The company took higher net gains on the sale of mortgages and investment securities, even though it had fewer venture capital gains. Wells took net venture capital gains of $203 million, down from $721 million in the year-earlier quarter.

The provision for loan losses rose to $352 million from $294 billion. Net chargeoffs totalled $352 million, or 0.90 percent of its average loans. The full-year provision was $1.33 billion, with net-chargeoffs totaling $1.22 billion, or 0.84 percent of average loans.

"We continue to see upward pressure on non-performing assets, which increased 20 percent over September levels," said Chief Credit Officer Ely Licht in a statement. He said $122 million of the increase was from one "commercial finance" customer, which had been a customer of both Wells and Norwest since the 1970s.

Bank of America

Charlotte, N.C.-based Bank of America, the No. 2 bank in Nevada, said its profits fell 27 percent in the October-December quarter due to high loan losses and a drop in capital markets business amid a slowing economy.

Fourth-quarter profit was $1.39 billion, or 85 cents a share, down from $1.9 billion, or $1.10 a share, a year earlier.

The earnings were a penny short of the 86 cents expected by analysts surveyed by First Call/Thomson Financial.

The company said last month that fourth-quarter earnings would be down from earlier quarters as it dealt with non-performing loans.

Investors, apparently comfortable with the bank's provisions for loan losses, today sent its stock up $1.13 to $50.19 on the New York Stock Exchange.

The earnings report put the bank's provision for credit losses rose to $1.21 billion in the fourth quarter from $350 million a year earlier, while net charge-offs, or writeoffs taken against loan loss reserves, increased to $1.08 billion, or about 1.07 percent of loans and leases, from $501 million, or .55 percent, a year earlier.

It valued its non-performing assets at $5.5 billion as of Dec. 31, or about 1.4 percent of loans and leases, compared with $3.2 billion a year earlier. The bank's allowance for credit losses was $6.8 billion at year's end, or 1.74 percent of loans and leases.

A report last week by New York investment banking firm Salomon Smith Barney said Bank of America has $4.24 billion in corporate loans that could default in 2001 -- more than any other bank in the country.

Bank spokesman Bob Stickler said last week Bank of America is one of the most aggressive commercial lenders in the country, meaning it will have more bad loans than more consumer-oriented banks. While Stickler wouldn't confirm the amount of the loans, he said $4.24 billion represents 1 percent of the bank's $400 billion loan portfolio.

The bank said today that net income for all of 2000 was $7.52 billion, or $4.52 a share, compared with $7.88 billion, or $4.48 a share, a year earlier.

Citigroup Inc.

Citigroup, the nation's largest bank corporation by assets, said net income for the fourth quarter was $2.84 billion, down 6 percent from $3.02 billion a year earlier.

Citigroup's Citibank unit operates a retail banking network in Las Vegas as well as a big call center.

Excluding charges related to the acquisition of Associates First Capital Corp., a subprime lender, income was $3.33 billion, or 65 cents a share, up 11 percent from $3 billion, or 58 cents a share, a year earlier. That was in line with estimates from analysts surveyed by First Call/Thomson Financial.

Citigroup shares today traded at $53.88, up 75 cents on the Big Board.

Figures were not immediately available on any changes in loan-loss provisions.

Net income for all of 2000 was $13.52 billion, up 20 percent from $11.24 billion a year earlier. Income before charges related to the Associates First acquisition was $14.14 billion, or $2.74 a share, up from $11.35 billion, or $2.19 a share in 1999.

The bank said revenue was up 11 percent in the October-December period and 14 percent for the year, but it did not give figures.

California Federal

Golden State Bancorp Inc. of San Francisco, the second-biggest U.S. thrift, said fourth-quarter profit rose 5.5 percent.

Net income at the holding company for California Federal Bank rose to $89.3 million, or 63 cents a share, from profit from operations of $84.6 million, or 61 cents, a year earlier, the San Francisco-based company said.

Per-share earnings matched the average estimate of analysts surveyed by First Call/Thomson Financial.

Net interest income fell 3.4 percent to $283.7 million, from $293.7 million in the year-earlier period. Noninterest income rose 16 percent to $117 million, from $100.8 million.

Golden State Bancorp shares fell 38 cents to $26.31 in early trading today.

California Federal Bank, with $60 billion in assets, has 354 branches in California and Nevada.

In the year-earlier quarter, a gain of $2.5 million, or 2 cents a share, made net income $87.1 million, or 63 cents. The charge was for early extinguishment of debt.