Magazine article American Banker

Banc One's Earnings Up 12%; Continental Posts a 26% Increase

Magazine article American Banker

Banc One's Earnings Up 12%; Continental Posts a 26% Increase

Article excerpt

Ohio's Banc One Corp. posted second quarter earnings Tuesday of $315.9 million, up 12.06%, while Chicago's Continental Bank Corp. said it boosted earnings by 26%, to $77 million.

Bane One's profitability, though hearty, was virtually flat from a year ago, and it was down slightly from the first quarter. The Columbus-based banking company said rising short-term rates clipped its net interest margin.

Continental cited firming credit quality, equity investment gains, and net interest income growth in its performance.


Loan growth figured strongly in Banc One's results, with average net loans and leases rising by 12.9% from a year ago. Consumer installment and credit card loans led the expansion, with average combined balances rising by 24.7%, or $4.6 billion.

Net interest income was flat, however, owing to a whopping 7g-basis-point decline in Bane One's net interest margin.

The company attributed the drop to "increasingly competitive loan pricing," and to the positioning of its balance sheet, on which liabilities were set to reprice more quickly than assets.

Carole Berger, a banking analyst with Salomon Brothers Inc., said she expects Bane One's net interest margin to stabilize. She expressed optimism about the bank's expense reduction campaign, saying, "efficiency gains will accelerate earnings growth."

Banc One's cost of interestbearing liabilities rose by 20 basis points, to 3.24%, while its yield on earning assets fell by 60 basis points, to 8.2%.

Revenues from derivatives contracts, mostly interest rate swaps, totaled $38 million, or 3.7% of net interest income, Bane One said. That compares with $107 million, or 10.4%, a year ago.

Helping offset margin compression were firming credit quality and expense cuts. A loss provision of $47.3 million was down 19%. Noninterest expenses fell by 2. …

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