Magazine article American Banker

Strong 1Q Results Expected at Post-Merger NationsBank

Magazine article American Banker

Strong 1Q Results Expected at Post-Merger NationsBank

Article excerpt

NationsBank will turn in a solid first-quarter performance and begin dispelling doubts about its recent purchase of Barnett Banks Inc., a prominent analyst predicted Monday.

In a note to clients, PaineWebber's Ruchi Madan said, "We expect underlying trends to be strong" as the Charlotte, N.C., banking company culls cost savings from the Barnett deal and also supplies some unexpected favorable news on the operations front.

Revenue growth should be "very impressive," at over 10%, and expenses should be down from the fourth quarter, Ms. Madan said.

She projected "positive surprises" in the form of higher-than-expected net interest revenues from a growing balance sheet.

Also, trading revenues should be near $70 million in the first quarter, up from fourth-quarter results of $26 million, Ms. Madan said.

The developments could revive some of the confidence that Wall Street lost after NationsBank's eye-popping $15.5 billion deal for Barnett. Costs and integration challenges were cited as prime concerns.

The solid timbre of first quarter operations "may lead investors to be optimistic regarding future quarters," Ms. Madan said.

But to get a true sense of the company's solid prospects, she said, investors should look beyond some nonrecurring items that will impair first-quarter results.

Most notably, a charge of about $900 million in connection with the Barnett purchase will probably cause NationsBank to report 96 cents per share in first-quarter earnings, instead of the $1.09 the company earned from operations.

The earnings, when released this spring, will also provide opportunity for NationsBank's management to update investors about the Barnett integration. …

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