Magazine article American Banker

Three Largest Banking Companies in North Carolina Report Double-Digit Gains in 3d Quarter; First Union Leaps Furthest

Magazine article American Banker

Three Largest Banking Companies in North Carolina Report Double-Digit Gains in 3d Quarter; First Union Leaps Furthest

Article excerpt

NEW YORK -- North Carolina's three largest bank holding companies reported double-digit gains in third-quarter earnings, as strong loan volume offset lower net interest margins.

First Union Corp. had the largest earnings gain, as third-quarter net income rose 25% from the year before to $1.38 per share. NCNB Corp. had a 24% gain to $1.26, and Wachovia Corp. reported a 12% increase to 90 cents.

"There was downward pressure on some of the margins," said Judah Kraushaar, an analyst with Merrill Lynch, Pierce, Fenner & Smith Inc. But he added that "volume is holding up strong."

Mr. Kraushaar said one of the challenges The North Carolina companies will have to meet to continue their good earnings performances will be to sustain their strong retail loan growth.

He also said the companies will need securities gains to support their earnings if interest rates rise. "First Union might have been a little bit more aggressive in positioning its investment portfolio earlier in the eyar," he said.

First Union, based in Charlotte, said its third-quarter earnings of $28.3 million were a quarterly record for the company.

It said strong net interest income, resulting from a larger investment portfolio, and growth in loans and deposits accounted for the increased net income.

First Union said that three companies it expects to acquire by yearend -- Northwestern Financial Corp., Atlantic Bancorp., and Central Florida Corp. -- also had higher third-quarter earnings. …

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