Magazine article American Banker

First Chicago's 4th Quarter Shows Continued Recovery

Magazine article American Banker

First Chicago's 4th Quarter Shows Continued Recovery

Article excerpt

CHICAGO -- Profits at the recovering Frist Chicago Corp. rose 7.1% in the fourth quarter and nearly doubled for the year, but they fell short of the $183.5 million record set in 1983.

"It was a very good, solid quarter and we're very pleased with it," said William J. McDonough, executive vice president and chief financial officer. "The earnings were quite strong just where we'd like them -- in the net interest margin. Noninterest income was particularly strong, especially in venture capital, which is consistently improving."

Chicago's biggest bank holding company, which owns the First National Bank of Chicago and the American National Corp. banking group, suffered from one-time losses for the second year in a row. But it more than recovered to report higher fourth-quarter earnings of $59.4 million -- up from $55.5 million a year before -- and a spectacularly better year, with profits of $169.0 million. This compared with a spectacularly poor 1984, when profits were reduced to $86.4 million by a one-time provision for loan losses of $308 million.

Slipups in 1985 included a writedown of $15.8 million in the first quarter on an investment in a Brazilian affiliate, Banco Denasa de Investimento SA, and a further charge in the second quarter of $115 million pretax -- $55 million after-tax -- as a special reserve was formed to cope with the deepening Brazilian quagmire. The first quarter was also affected by an $11.9 million foreign exchange loss when a subsidiary of the Hunt brothers' Hunt International Resources Corp. defaulted on a foreign currency contract.

Net interest income for the fourth quarter was flat at $282.2 million, and contrasted with a sharp increase in noninterest income to $178.3 million from $128.5 million. The latter included a jump in profits from venture capital gains on the sale of equities to $33. …

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