First Union's earnings up 34% in 4th quarter

Increased fees help No. 6 bank beat the forecasts

Banking

January 15, 1999|By BLOOMBERG NEWS

CHARLOTTE, N.C. -- First Union Corp.'s fourth-quarter earnings rose 34 percent as the sixth-largest U.S. bank boosted investment banking and money-management fees.

The Charlotte, N.C.-based bank said profit from operations rose to $993 million, or $1 a share, from $743 million, or 77 cents, in the year-earlier period. The earnings beat the average forecast of 99 cents a share from a survey of analysts by First Call Corp.

First Union became more like a securities firm in 1998, buying Richmond, Va.-based brokerage Wheat First Butcher Singer Inc. and Charlotte-based mergers advisory firm Bowles Hollowell Conner & Co.

The purchases helped noninterest income rise 46 percent to $1.68 billion, excluding $98 million from gains on securities transactions in the fourth quarter and $18 million a year earlier.

Investment banking fees boosted noninterest income 51 percent to $116 million. Capital management income, including trust and mutual-fund fees, rose 58 percent to $471 million.

Noninterest expense gained 21 percent to $2.32 billion, excluding charges in each quarter.

After charges mostly for First Union's acquisition of Philadelphia-based CoreStates Financial Corp. for $20 billion in April, net income rose 49 percent to $857 million.

Mortgage banking fees also grew, rising 72 percent to $131 million, as low interest rates encouraged more people to take out home loans.

Other areas did not do as well. Net interest income fell 6.4 percent to $1.83 billion. Net interest margin, measuring what a bank earns on loans minus its cost of funds, narrowed to 3.63 percent from 4.38 percent.

For the year, profit from operations rose 27 percent to $3.70 billion. Including merger and restructuring charges, net income gained 6.7 percent to $2.89 billion.

Pub Date: 1/15/99

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