Fueled by hefty gains from its money management and investment banking businesses, First Union Corp.'s profit jumped 20 percent in the first quarter before a one-time charge of $19 million, the company said yesterday.
The Charlotte, N.C.-based company's earnings were $606 million in the quarter ended March 31, or 93 cents a share, compared with earnings of $504 million, or 79 cents a share in the same period in 1997.
The performance of the nation's sixth largest banking company beat Wall Street's earnings estimates of 88 cents a share.
"They had an excellent quarter," said Moshe A. Orenbuch, a bank analyst at New York-based Sanford C. Bernstein, who noted that the company beat his estimate by a penny.
After the $19 million charge related to merger costs and the acquisition of Richmond, Va.-based brokerage Wheat First Butcher Singer Inc., First Union's net income was $587 million, or 90 cents a share in the quarter.
Shares of First Union closed yesterday at $60.25, up $1.125.
Net income was propelled by a 39 percent gain in businesses that generate fees for the company, which include mortgage banking, deposit accounts, investment banking and retail brokerage accounts.
"This was a very solid quarter for First Union," Edward E. Crutchfield, chairman and chief executive of the company, said in a statement.
First Union's assets were $172 billion in the quarter, but they will increase to $220 billion when the acquisition of Philadelphia-based CoreStates Financial Corp. is completed. The deal is expected to close at the end of the month, but the company will still be much smaller than its rival, NationsBank Corp., which will have $570 billion in assets when it completes its deal with BankAmerica Corp., which was announced Monday.
First Union acquired Richmond, Va.-based Signet Banking Corp., which had a large Baltimore presence, last November for $3.3 billion.
First Union operates 65 branches in the Baltimore area and employs about 800 people.
David Stumpf, a bank analyst at St. Louis-based A.G. Edwards & Sons Inc., said he is "high" on First Union.
"We believe the company has a tremendous amount of momentum going into the CoreStates deal," he said.
He said First Union is a bargain trading in the $60 range.
Two other smaller banks in the Baltimore area released first quarter results yesterday.
Sandy Spring Bancorp said net income in the quarter rose 21 percent to $3.86 million, or 40 cents a share, compared with $3.2 million, or 33 cents a share in the first quarter of 1997.
The Olney-based banking company's assets rose 15 percent to $1.1 billion, and loans and deposits were up 7 percent to $573.6 million, and $867.3 million, respectively.
Columbia Bancorp reported net income of $1.1 million, or 46 cents a share, for the quarter, up 10.5 percent over net income of $971,554, or 43 cents a share, in the same period in 1997.
While the company's assets jumped 19 percent to $391.5 million in the quarter, growth in loans outstanding slowed to 8.8 percent.
Columbia's net income was boosted by a 15.1 percent gain in deposits and a 73 percent increase in noninterest income, the company said.
Pub Date: 4/15/98
