NationsBank profit up 26% for quarter

October 18, 1994|By David Conn | David Conn,Sun Staff Writer

Strong loan growth and solid acquisitions drove NationsBank Corp.'s earnings 26 percent higher in the third quarter, although the company's efforts to respond to higher interest rates delivered a small blow to profits.

NationsBank earned $431 million, or $1.55 a share, in the quarter that ended Sept. 30, compared with $341 million, or $1.33 a share,in the same period last year.

The company's earnings came from a combination of stronger-than-expected commercial lending, acquisitions such as last year's purchase of MNC Financial Inc., revenues from nonlending businesses such as investment banking, and only moderate increases in expenses. Earnings were down slightly since the second quarter, but NationsBank officials attributed that to one-time balance sheet transactions intended to reduce the company's exposure to a changing interest-rate environment.

The major action during the quarter was the sale of about $10 billion in derivatives and other securities. That led to a $4 million loss from securities sales, contrasted with a $50 million gain a year ago. The change has shortened the average maturity of NationsBank's securities portfolio.

"Before we undertook the balance sheet repositioning, we had maintained a modest posture to benefit from falling or stable rates," said Rusty Page, the company's investor relations director. "As of now we have a modest posture to benefit from stable or increasing rates."

In the short term, that has contributed to a slight drop in the company's net interest margin, the spread between interest earned from loans, and funds paid to depositors.

Still, net income from lending activities rose to $1.33 billion, flat since the second quarter but higher than the $1.17 billion in net interest income a year ago. That's because average loans during the quarter were 23 percent higher than last year, or 13 percent higher excluding the recent acquisitions.

The company's credit quality continued to improve, allowing it to cut to $70 million the amount it set aside to cover future loan problems. Last year that provision was $100 million.

"NationsBank continues to produce strong financial results with broad-based improvements in almost every key area," Chairman and Chief Executive Hugh L. McColl said. "Outstanding loan growth and steady fee income growth demonstrate the value of our franchise."

That franchise continues to grow, most recently from the purchase of 43 Florida branches of California Federal Savings Bank this year. Last year's purchase of MNC, the parent of Maryland National Bank and American Security Bank, "was the greatest contributor" to earnings of all of NationsBank's 1993 acquisitions, Mr. Page said.

NationsBank, which has operations in nine states and the District of Columbia, ended the quarter with 1,926 banking centers and $171 billion in assets.

$

NationsBank Corp.

Charlotte, N.C. ... ... ... ... Ticker ... ... ... ... Yesterday's

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

... ... ... ... ... ... ... ... NB ... ... ... ... ... 50 .. .. - 5/8

Period ended

9/30 ... ... ... ... 3rd qtr. ... ... ... Year ago ... ... ... Chg.

Net Income .. .. ... $431,000 ... ... ... $341,000 ... ... ... +26.4%

Primary EPS .. .. .. $1.55 ... ... .. ... $1.33 ... ... .. ... +16.5%

Annualized return

on avg. assets .. .. 1.03% ... ... .. ... 1.00%

vTC Add. to allowance

for loan losses .. .. $70,000 ... ... ... $100,000 ... ... ... 30.0%

... ... ... ... ... 9 mos. ... ... ... Year ago ... ... ... Chg.

Net Income .. .. .. $1,285,000 ... ... $1,128,000* .. .. .. +13.9%

Primary EPS ... ... $4.66 ... .. .. .. $4.42* ... ... .. .. +5.4%

Annualized return

on avg. assets ... 1.05% ... ... ... .. 1.19%

Add. to allowance

for loan losses ... $240,000 ... ... .. $330,000 ... ... ... 27.3%

Balances as of

... ... ... ... 9/30/94 ... ... ... 9/30/93

Assets .. .. .. $170,912,000 .. ... $139,453,000 ... ... ... +22.6%

Deposits ... .. $96,735,000 ... ... $79,594,000 ... .. .. .. +21.5%

Loans outst. .. $97,330,000 ... ... $79,338,000 ... .. .. .. +22.7%

Loan loss

reserve ... ... $2,202,000 .. .. .. $1,585,000 ... ... .. .. +38.9%

* Includes a gain of $200 million, or 79 cents a share, from a one-time accounting change.

Figures in thousands (except per share data.)

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