Tuesday, Jan. 18, 2005 | 10:36 a.m.
SUN STAFF AND WIRE REPORTS
Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp, three of the five largest financial institutions in the Las Vegas Valley, reported record quarterly profits as consumers signed up for more credit cards, checking accounts and loans.
Bank of America, the nation's No. 3 lender by assets, led the gains with a 41 percent increase in fourth-quarter earnings to $3.85 billion, bolstered by its purchase of FleetBoston Financial Corp. Wells Fargo, the fifth-largest lender, said net income rose 10 percent to $1.8 billion, and No. 6 U.S. Bancorp said profit rose more than 8 percent.
Bank of America is the largest Clark County institution with nearly 50 local branches and about $6 billion in deposits, based on the Federal Deposit Insurance Corp.'s most recent market share data.
Lured by borrowing costs near four-decade lows and emboldened by the strongest job growth since 1999, consumers took on more debt. Bank of America alone opened 1.53 million new credit-card accounts in the quarter and Wells Fargo said average loans at its consumer-banking unit swelled by 18 percent.
"The positive for the consumer is that job growth is increasing, the economy and wages are improving," said Wayne Bopp, who helps manage $35 billion, including Wells Fargo and Bank of America shares, at Fifth Third Investment Management in Cincinnati. "The consumer feels more confident about borrowing."
Charlotte, N.C.-based Bank of America said profit at its unit serving consumers and small businesses climbed 23 percent to $1.76 billion. The bank, led by Chief Executive Officer Kenneth Lewis, 57, opened more checking and savings accounts than it forecast at branches gained in the $48 billion acquisition of FleetBoston in April.
"They have done wonders with the consumer bank and have become much more of a formidable competitor," Robert Maneri, who helps run 3 million Bank of America shares at Victory Capital Management in Cleveland, said before Bank of America reported earnings.
Per-share earnings rose to 94 cents, matching the average estimate of 15 analysts surveyed by Thomson Financial. A year earlier, Bank of America earned 92 cents a share.
The bank's assets rose 51 percent to $1.15 trillion, also helped by the addition of FleetBoston. JPMorgan Chase & Co., the second-biggest U.S. bank, No. 4 Wachovia Corp. and Washington Mutual Inc. all report earnings tomorrow. Citigroup, the world's largest bank, plans to report on Jan. 20.
Profit at Bank of America's commercial-banking unit more than doubled to $887 million. The company's corporate and investment bank lagged, with profit rising 16 percent to $536 million.
Wells Fargo CEO Richard Kovacevich, 61, helped make up for a drop in mortgage demand by selling more deposit, credit-card and wealth-management services. Profit rose 5 percent to $1.24 billion at the bank's consumer unit, and 8 percent to $129 million at Wells Fargo Financial, which issues its credit cards.
"On the consumer side, everything from home-equity loans and first mortgages continue to have strong demand," Wells Fargo Chief Financial Officer Howard Atkins said in an interview. "The economy is still doing well and long-term interest rates are still attractive for borrowing."
Kirk Clausen, president of Wells Fargo's Nevada operations, said local performance exceeded the companywide results.
"Nevada is above the averages you see in the corporate (results)," he said. "It's a broken record I like playing."
Clausen said that while the mortgage refinance market has "close to dried up" consumers continue buying homes and seeking additional products.
Nationally, the San Francisco-based bank said it's now selling each consumer client an average of 4.6 products, up from three in 1998.
Wells Fargo is the second largest Clark County lender with more than 65 local branches and nearly $5 billion in deposits, FDIC statistics said.
Minneapolis-based U.S. Bancorp said quarterly profit rose 8.1 percent, missing a record by less than $10 million.
Earnings were $1.06 billion, or 56 cents a share. Chief Executive Jerry Grundhofer, 60, has focused on consumer-banking growth since spinning off U.S. Bancorp's Piper Jaffray securities unit in December 2003.
U.S. Bank, fifth largest in Clark County, has more than 30 Clark County branches and more than $1 billion in deposits, FDIC statistics said.
Like Clausen, Ken Ladd, president of U.S. Bank's Nevada operations, said the performance of Las Vegas led the company's 26 major metropolitan markets.
"We are truly setting the pace for the company," Ladd said.
He pointed to the success of the company's eight new grocery store branches opened in 2004 for sparking growth in the bank's local retail operations.
Bloomberg News and Sun business writer Kevin Rademacher contributed to this report.
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