Earnings rise 12% at First Union Corp. 'Overall, a solid quarter,' one analyst says

April 11, 1997|By BLOOMBERG NEWS

CHARLOTTE, N.C. -- First Union Corp. said yesterday that its first-quarter earnings rose 12 percent, fueled by the bank's capital markets and asset management businesses.

The bank said net income rose to $471 million, or $1.67 a share, from $420 million, or $1.50, before a charge in the year-ago period. Per-share earnings reflect payment of preferred dividends.

First Union also had $50 million in income from the sale of adjustable-rate mortgages during the quarter, a spokesman said.

"Overall, a solid quarter; everything was in line with expectations," said Michael Ancell, a bank analyst at Edward Jones. "They had great fee-income growth, slow growth in lending. Credit quality was just fantastic."

The results are in line with the consensus Wall Street estimate of $1.66 a share, according to an IBES International Inc. survey of 19 analysts. First Union shares fell 75 cents to $81.875 yesterday.

In the year-ago period, First Union's net income was $243 million, or 85 cents a share, after a $181 million charge for expenses related to the acquisition of First Fidelity Bancorp.

Lending income rose 6.2 percent to $1.29 billion from the first quarter last year, fueled by a 6.1 percent increase in net loans to $95.49 billion. Net interest margin, or the difference between what the bank pays for funds and what it earns from loans, widened to 4.37 percent.

Noninterest income rose 43 percent to $753 million, led by mortgage banking, asset management and other fee income. Service charges to depositors increased $32 million, or 20 percent, to $193 million.

The bank's capital management income, from trust, mutual xTC funds, insurance and brokerage business, rose 61 percent to $203 million.

Fees and other income from the bank's securities trading and underwriting business rose 43 percent to $237 million.

Overall credit quality improved, as improvements in commercial loans outpaced rising losses in the consumer portfolio. Credit card losses continued to rise, almost doubling to $105 million from $55 million last year.

The bank doubled its provision for future loan losses to $145 million from $70 million last year. It also reported writing off $144 million in net loan losses, or 0.61 percent, down 2.7 percent from the previous year.

Pub Date: 4/11/97

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