Magazine article American Banker

Barnett Takes Merger-Related Hit; Profit off 3%

Magazine article American Banker

Barnett Takes Merger-Related Hit; Profit off 3%

Article excerpt

Barnett Banks Inc. reported a decline in third-quarter earnings for a reason tied to its Aug. 29 merger agreement with NationsBank Corp.

Jacksonville, Fla.-based Barnett took a $72.2 million pretax charge to cover the value of employee stock options that increased sharply with the share price.

Net income fell 3%, to $122.6 million, or 62 cents a share. Without the charge, the company said it would have earned a fully diluted 86 cents a share, up from 65 cents a year earlier.

The first of the 25 largest bank holding companies to report for the third quarter, Barnett could be a harbinger for the rest, analysts said.

"The key for all the banks was continued strength in fee services," said Anthony Davis of SBC Warburg Dillon Read. "Barnett is a classic example of that," reporting a 13% revenue increase.

Banks generally are expected to post healthy year-to-year increases along the lines of those in the second quarter.

A Merrill Lynch report projected 11% to 12% advances in earnings per share for regional banks, with efficiency gains and share repurchases more than offsetting rising credit costs.

The firm noted pressure on net interest margins, "which doesn't bode well for spread revenue-the lifeblood of the typical, undifferentiated regional bank."

Therefore, major banks' results could range widely. The consensus of analysts polled by First Call Corp. has NationsBank Corp.'s per-share earnings increasing 2.9%, and J.P. Morgan & Co.'s rising 30.1%.

Barnett's would have exceeded 30% but for the fact it had to account for the value of employee stock options as an expense item, according to chief financial officer Charles W. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.