Newspaper article THE JOURNAL RECORD

Major Banks Post Higher Profits

Newspaper article THE JOURNAL RECORD

Major Banks Post Higher Profits

Article excerpt

NEW YORK (AP) -- Four major U.S. banks posted strong first quarter profits Tuesday, capping a double-digit increase for the industry.

Chase Manhattan Bank, Wells Fargo and Mellon Bank all reported earnings that topped Wall Street's expectations, while Bank One's results matched estimates.

"The earnings this morning were good," said Catherine Murray, an analyst with J.P. Morgan. "Revenue continues to come in higher than expected." The large national banks saw an impressive 8 percent profit increase over the first quarter last year, and beat estimates by about 10 percent, according to First Call. Regional banks like Mellon posted an average 14 percent gain in profits, but the results were just 1 percent higher than estimates. "The results are strong, said Brad Ball, an analyst with Credit Suisse First Boston. "Now people are starting to question just how sustainable they are." Bank stocks have had a good run over the past six months, and on Tuesday, Citigroup and Mellon both announced stock splits and dividend increases. Stock splits increase the number of shares outstanding, but decrease their price in order to make them more affordable to investors. Bank One, the country's No. 4 bank, posted earnings of $995 million, or 88 cents a share, up 6.6 percent from the first quarter last year, when the Chicago-based bank earned $933 million, or 78 cents a share. The results met Wall Street expectations. Bank One's 1999 earnings do not reflect three special items: A gain of $249 million gain from its merger with First Chicago NBD, and a charge of $204 million for accounting changes and integration costs. Additionally, Bank One recorded a $111 million gain for the sale of its Electronic Payment Services company. Including all one-time charges and gains, Bank One earned $1.15 billion, or 88 cents a share. "We began to see the promised merger expense and revenue synergies, which should gain momentum throughout the year," John B. McCoy, president and chief executive of Bank One, said in a statement. Revenues totaled $4.59 billion, up 20 percent from $3.81 in the first quarter last year. Return on assets was 1.85 percent, up from 1.59 percent in the first quarter last year. Return on common equity was 22.9 percent, an increase from 20.3 percent. Chase Manhattan, the nation's third-largest bank, reported profits of $1.17 billion, or $1.32 a share, beating Wall Street's estimate of $1.25 a share. The results were 11 percent better than the first quarter last year, when Chase earned $1.05 billion, or $80 cents a share. Operating revenues rose 10 percent to $5.41 billion from $4.92 billion in the first quarter last year. "We are looking for 1999 to be a record year in our history," said Dina Dublon, chief financial officer for Chase. While most consumers probably think of checking and savings accounts when they think of Chase, the New York bank actually makes more than half its money selling corporate bonds and complicated interest rate contracts. …

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