Bank's earnings rise 26% in quarter NationsBank aided by acquisition, revenue

October 15, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

NationsBank Corp., said yesterday that net income jumped 26 percent in the third quarter, propelled by gains from its acquisition of Boatmen's Bancshares Inc. and across-the-board increases in revenue.

Net income rose to $788 million in the quarter that ended Sept. 30, compared with $625 million for the same period a year earlier. NationsBank earned $1.11 per share in the quarter, up 4.6 percent from the $1.06 per share earned in 1996's third quarter.

Third-quarter results included the benefit of several acquisitions completed this year and in 1996, including St. Louis-based Boatmen's, which was finalized in January.

"It was a good quarter," said David Stumpf, a bank analyst with St. Louis-based A. G. Edwards. "Asset quality continues to be strong, only their credit-card portfolio is still slipping a bit."

Stumpf said he has rated NationsBank's stock a "buy," and he expects it to reach $80 a share in the future.

NationsBank's stock closed at $64.437 a share, down $1.125.

The company's assets rose to $242.4 billion for the nine months, up 29 percent from the same time a year earlier.

The Charlotte, N.C.-based bank has bulked up by being one of the most prolific acquirers in the banking industry. Six months after completing the Boatmen's deal, it agreed to buy San Francisco-based Montgomery Securities for $1.2 billion.

In August, it said it would buy Jacksonville, Fla.-based Barnett Banks Inc. for a record $15.5 billion in stock, creating the nation's third-largest bank.

The company entered Baltimore in 1993, snapping up MNC Financial Inc. NationsBank has 203 branches in Maryland and about 4,600 employees here. It operates in 16 states and the District of Columbia.

Net income for the first nine months of the year rose 30 percent to $2.26 billion, or $3.13 per share, compared with $1.74 billion, or $2.91 per share, a year earlier. Excluding a merger-related charge in 1996's first quarter, operating net income and earnings per share were $1.82 billion and $3.04 per share respectively.

Gains from lending and from products and services that generate fees drove earnings in the quarter.

Income from lending jumped 24 percent to $2 billion compared with the third quarter in 1996. The growth was achieved through a 21 percent increase in average loans, which total $145.5 billion.

Income from services that generate fee income increased 38 percent to $1.22 billion. The growth was attributable to gains on service charges on deposit accounts, mortgage servicing, investment banking and gains on the sale of a credit-card portfolio.

NationsBank's loan portfolio remains solid and problem loans were less than 1 percent of total loans. But like other banks, NationsBank continues to wrestle with credit-card delinquencies. It wrote off a total of $199 million in bad loans, up 47 percent from the same time a year earlier.

Net write-offs in its credit-card portfolio as a percentage of average managed credit-card receivables rose to 6.74 percent, compared with 4.67 percent the same time a year earlier.

Susan Carr, NationsBank's head of investor relations, expects credit-card write offs to "creep up" in the fourth quarter.

"I would say to be most conservative to expect a little more of what we have seen," she said.

Pub Date: 10/15/97

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