NationsBank posts 48% jump in profit

April 19, 1994|By David Conn | David Conn,Sun Staff Writer

NationsBank Corp. reported a sharp increase in first-quarter earnings yesterday, partly because of its acquisitions of financial companies such as Baltimore-based MNC Financial Inc.

The Charlotte, N.C.-based company, the nation's third-largest bank holding company, said its earnings for the three months ended March 31 were $417 million, a 48 percent gain over earnings of the same period in 1993. Last year's first-quarter profit of $281 million does not include a $200 million gain stemming from a change in accounting for income taxes.

NationsBank's per-share earnings of $1.52 for the latest quarter were higher than Wall Street's average estimate of $1.39 a share. The company said much of the improvement was because of its 1993 acquisitions, including higher-than-expected trading income from its Chicago Research & Trading subsidiary, a derivatives investment firm.

LTC The company had estimated that its four largest acquisitions -- Chicago Research & Trading (CRT), MNC, the consumer finance business of US West Inc., and Corpus Christi National Bank in Texas -- would add about 50 cents a share to earnings this year. In the first quarter alone, the acquisitions added 20 cents a share, according to NationsBank spokesman Rusty Page.

In particular, "the MNC acquisition was a great contributor to our first-quarter performance," Mr. Page said. MNC's contribution to earnings was almost twice as big as the next largest contributor, CRT, according to Mr. Page.

The company announced last fall that it planned to reduce employment at MNC, owner of Maryland National Bank, by about 1,200 jobs within a year. Many of those reductions already have taken place, and the company started closing some branches earlier this year.

NationsBank also has shown an ability to make loans in a still-struggling economy. Average loans were up 12 percent since a year ago and 9 percent since the fourth quarter, excluding last year's acquisitions and the sale of credit card assets.

Although lending was higher in the quarter and CRT's trading revenues capitalized on a volatile bond market, "What's really impressive . . . was the expenses, which were significantly lighter," said analyst Merrill Ross, of Wheat, First, Butcher & Singer in Richmond, Va.

Until this month, when NationsBank's stock climbed by about $6 a share, the market had undervalued the company, according to Ms. Ross. But "they're delivering on what they promised," she said. Yesterday, the company's shares closed at $52.25, up 12.5 cents.

The market is also beginning to believe that NationsBank will focus its buying on nonbank industries from now on, such as credit card and consumer finance businesses, which could provide cheaper and easier access to larger financial services markets.

"There's better vehicles to go nationwide with than retail banking," Ms. Ross said.

Nations Bank Corp.

Ticker.. .. .. .. .. .. .. Yesterday's

Symbol .. .. .. .. .. .. ..Cls.. .. ..Chg.

NB .. .. .. .. .. .. .. .. 52 1/4 .. .. ..+

Period ended

3/31/94 .. .. .. .. .. .. 1st qtr.. .. .. ..Year ago.. .. .. .. .. Chg.

Net Income .. .. .. .. ..$417,000 .. .. ..$481,000*. .. .. .. .. -13.3%

Primary EPS .. .. .. .. .$1.52 .. .. .. ..$1.89*.. .. .. .. .. ..-19.6%

Annualized return

on avg. assets .. .. .. 1.05% .. .. .. .. 1.62%*. .. .. .. .. .. .--

Add. to allowance

for loan losses .. .. ..$100,000 .. .. ..$120,000 .. .. .. .. .. -16.7%

.. ... ... ... ... ... ... ... . Balances as of

.. .. .. .. .. .. .. .. 3/31/94.. .. .. .. 3/31/93

Assets.. .. .. .. .. $165,071,000.. .. ..$121,441,000.. .. .. .. ..+35.9%

Deposits .. .. .. .. $90,756,000 .. .. ..$81,308,000 .. .. .. .. ..+11.6%

Loans outst. .. .. ..$92,130,000.. .. .. $74,303,000 .. .. .. .. ..+24.0%

Loan loss

reserve .. .. .. .. $2,187,000 .. .. .. .$1,566,000 .. .. .. .. .. +39.7%

Figures in thousands (except per share data.)

* The 1993 first quarter includes a gain of $200 million, or 79 cents a share, because of a one-time accounting change. Return on average assets before the gain was 0.95 percent.

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