Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, April 20, 1993 TAG: 9304200064
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
Chase's results were offset by several special accounting gains and losses that left some investors worried that a new $750 million stock offering will dilute the value of their shares.
NationsBank Corp. reported a substantial increase in outstanding loans as profits advanced 55 percent in the first quarter. The country's fourth-largest bank said it earned $481 million, or $1.89 a share, for the quarter, compared with $310 million, or $1.28 a share, during the 1992 period. The earnings exceeded analysts' expectations of $1.44 a share, according to a survey by Zacks Investment Research Inc.
NationsBank's stock was off $1 at $54.75 a share in late NYSE trading.
The bank saw its average loans and leases grow 8 percent to $73.5 billion from year-earlier levels. In the past three months alone, average loans and leases grew $3.1 billion due to purchase of the Chrysler First consumer finance assets.
The first-quarter results reflect a one-time benefit of $200 million, or 79 cents a share, from the adoption of new accounting rules for income taxes. Absent the accounting charge and gains from securities sales, NationsBank reported pretax operating income of $414 million, up 133 percent from the previous year.
The bank reported improved credit quality, with its allowance for loan losses declining 55 percent to $120 million from the year-earlier period. Troubled loans and foreclosed real estate declined 29 percent to $1.92 billion.
Chase's announcement to sell 22 million shares of new common stock caught analysts by surprise. Its stock was down $2.37 1/2 per share to $34.50 late Monday on the New York Stock Exchange.
Chase also unveiled what one bank executive termed a draconian strategy to unload $2 billion in troubled commercial real estate. The bank sharply wrote down the value of the loans to 39 percent of original book value. That's one of the sharpest cuts analysts could recall for a portfolio that size.
Chase may wind up selling the troubled loans for more than 39 cents on the dollar, he said. Banks are generally selling problem commercial real estate loans to investors for about half of original book value.
Despite the size of Chase's real estate loan plan, the banking company will have $1.8 billion in troubled commercial real estate left on its books, Treasurer Arjun K. Mathrani said. Those loans include deals Chase considers higher quality and loans that have been sold in pieces, or syndicated, to other banks, Mathrani said.
Chase's first-quarter earnings were $153 million, or 74 cents a share, as the bank benefited from a $500 million accounting change for income taxes. Before that benefit, Chase reported a net loss of $347 million, or $2.43 a share. For the 1992 quarter, Chase earned $141 million, or 81 cents a share.
Arthur Ryan, Chase's president, said that when all of the one-time charges and credits were stripped away, Chase earned $179 million for the quarter, up 61 percent from the year-earlier period.
by CNB