THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, July 18, 1995 TAG: 9507180268
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 57 lines
NationsBank Corp. said Monday that its second-quarter net income climbed 7 percent because of increased lending, additional fee income and limited growth in noninterest expenses.
Separately, Virginia Beach Federal Financial Corp., the parent of Virginia Beach Federal Savings Bank, said it earned $271,000, or 6 cents a share, for the June 30 quarter after losing $575,000, or 11 cents, in the comparable three months of 1994.
Charlotte-based NationsBank said it earned $467 million for the three months ended June 30, up from $437 million in the year-earlier quarter. For the April-through-June period, its fully diluted per-share earnings rose to $1.70 from $1.57.
NationsBank said one source of earnings - noninterest income - jumped 16 percent to $730 million because of growth in deposit fees, investment banking fees, mortgage-servicing fees and other income.
Meanwhile, its noninterest expenses of $1.29 billion were unchanged from the first quarter and up only 5 percent from the second quarter of 1994.
The company's loans and net leases on June 30 totaled $109.8 billion, a 16 percent increase from the mid-1994 total. However, its net interest income grew only 2 percent, as the spread between the cost of funds and the yield on its loans and investments narrowed.
NationsBank's return on average assets, a measure of bank profitability, dropped to 0.96 percent from 1.08 percent for the 1994 second quarter.
For the six months through June, net income grew 7 percent to $910 million from $854 million for the first half of 1994. Per-share earnings, fully diluted, were $3.28, compared with $3.07 for the same period last year.
Meanwhile, Virginia Beach Federal Financial attributed part of the turnaround in its second-quarter results to the lower cost of its deposits. The spread between its cost of funds and the yield on loans and investments had been hurt in recent years by an abundance of high yielding certificates of deposit. By late 1994, these had been redeemed or rolled over at lower interest rates.
The thrift holding company also benefited in the recent quarter from a positive adjustment in the market value of interest rate swaps and caps. Virginia Beach Federal had purchased these financial instruments help protect the spread between its cost of funds and its yields.
But when interest rates shot up in early 1994, the swaps and caps lost value, and Virginia Beach Federal was forced by accounting rules to immediately readjust their value. That contributed to a net loss of $1.26 million, or 25 cents, for the first half of 1994.
For the comparable six months of 1995, Virginia Beach Federal reported net income of $375,000 or 8 cents a share.
The company said it sold the interest-rate swaps and caps during the recent quarter. by CNB