Banks Report Higher Earnings
First Union Corp. on Wednesday reported record third-quarter profits, reflecting in part higher fee income from its bond and money-management businesses.
Wachovia Corp., meanwhile, reported a 2.7 percent increase in earnings for the same period. Revenue growth was tempered by spending for advertising and computer conversions and higher provisions for loan losses.
Earnings at the nation’s sixth-largest bank rose 14 percent to $505 million, or 90 cents per share, from $442 million, or 81 cents, a year ago.
Fee income from the Charlotte, N.C.-based bank’s capital markets group increased 41 percent in the third quarter, while capital management fee income rose 46 percent.
``The successful integration of these two groups into our 12-state distribution network has been key to their success,″ said chairman and chief executive Edward Crutchfield.
For the first nine months of the year, First Union’s earnings were $1.5 billion, or $2.60 per share, compared with $1.3 billion, or $2.33 per share, a year ago.
On Sept. 30, First Union had $144 billion in assets and about 2,100 offices stretching from Connecticut to Florida.
First Union’s stock was down 19 cents a share at $51.19 in late morning trading on the New York Stock Exchange.
The Atlanta-based company said net income for the three months ended Sept. 30 was $167.3 million, or $1.03 per share, compared with $164.6 million, or 97 cents per share, a year ago.
Chief executive officer L.M. Baker Jr. said income was up from growth in loans, investment income, credit-card income and fees from trust services during the quarter.
The gains were offset by spending for salaries, computer programming and consulting services for the year 2000 conversion work as well as advertising for Wachovia’s brand recognition campaign.
In addition, Wachovia made a $50.3 million provision for loan losses in the third quarter, up 23.6 percent from the year earlier. Net loan losses for the quarter were $50.3 million, or .61 percent of outstanding loans, including $44.8 million for the quarter in credit-card loan losses.
Net income for the first nine months of the year totaled $496 million, or $3.04 per share, compared with $473.8 million, or $2.79 per share, a year ago.
As of Sept. 30, Wachovia had $46.69 billion in assets.
Wachovia’s stock was down 31 cents per share at $77.44 in late morning trading on the New York Stock Exchange.