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Big California Lenders Report Rise in Profit : Banks: Wells Fargo, First Interstate, Great Western and H.F. Ahmanson post gains.

July 20, 1994|From Times Staff and Wire Reports

Four of California's biggest lending institutions reported higher second-quarter earnings Tuesday, as the state's fledgling recovery helped boost their new business and reduce losses from loans made during the recession.

San Francisco-based Wells Fargo, Los Angeles-based First Interstate Bank, Chatsworth-based Great Western Financial and Irwindale-based H.F. Ahmanson were among the lenders who posted higher profits.

Separately, New York-based Citicorp--the nation's largest financial institution--led a group of five huge New York banks that also said their second-quarter earnings climbed. The gains came even though many of them continued to be pounded by trading losses in financial derivatives. But despite the earnings gains, most banking stocks fell after Chase Manhattan Corp. warned that heavy competition for loans and credit cards could push its profit lower later this year.

* Lower loss provisions boosted earnings at Wells Fargo, which posted a second-quarter net of $206 million, or $3.57 a share. It earned $149 million, or $2.46 a share, a year ago. Provisions for losses dropped to $60 million from $140 million.

Separately, the company announced that its chief executive, Carl E. Reichardt, will retire by the end of this year but will remain a board member. It also said it will buy back up to 5.4 million shares of its common stock.

* First Interstate said its second-quarter profit jumped 53% to $208.2 million, or $2.38 a share. It earned $136 million, or $1.60 a share, in the second quarter of last year.

The bank credited the gains to greater loan volume, higher consumer banking fees and a declining number of bad loans. It did not set aside any funds to cover loan losses in this year's second quarter, compared to a provision of $26.1 million a year ago.

* H.F. Ahmanson, parent of Home Savings of America, said it earned $73.54 million in the second quarter, or 51 cents a share. A year ago, it lost nearly $291 million, or $2.55 a share, after making a bulk sale of $1.2 billion in bad loans.

* Great Western Financial, parent of Great Western Bank, eked out a small earnings gain. The company's second-quarter earnings totaled $55.86 million, or 38 cents a share, compared to a year-earlier $52.59 million, or 35 cents a share.

Great Western set aside $52.9 million for loan losses in the second quarter of this year, compared to $85.5 million a year ago.

* Citicorp, the nation's largest bank, said its earnings nearly doubled to $877 million, or $1.83 a share, from $446 million, or 88 cents a share, a year ago. This year's results included $150 million in tax benefits and $74 million in gains from asset sales.

The gain came despite a sharp plunge in its trading revenue, to $159 million in this year's second quarter from $572 million a year earlier.

* Chemical Bank Corp. said its second-quarter earnings rose 9%. The nation's No. 3 banking company had net income of $357 million, or $1.28 a share, compared to a year-earlier operating profit of $327 million, or $1.14 a share. In last year's second quarter, a $54-million tax benefit made net income $381 million, or $1.35 a share.

* Chase Manhattan Corp., the nation's No. 6 bank, said its second-quarter earnings climbed 32% to $307 million, or $1.46 a share, from $233 million, or $1.20 a share, a year ago. Lower loss reserves and higher fee revenue offset a sharp drop in trading revenue, the bank said.

Although most of the earnings reports released Tuesday were in line with analysts' expectations, many banking stocks fell after Chase Manhattan said its second-half profit could be hurt as lenders come under increasing pressure by consumers to lower their loan and credit card rates.

Many financial institutions have been forced to slash their rates to get new customers and keep existing ones, Chase Manhattan said.

* Banc One Corp. said its second-quarter earnings climbed to $316 million, or 81 cents a share, from $282 million, or 73 cents a share, in the second quarter of last year.

The Ohio-based bank said it also had its share of bad derivative investments in this year's second quarter but that those losses were offset by lower provisions for loan losses.

* Mellon Bank Corp. of Pittsburgh said its second-quarter net jumped 35% to $134 million, or $1.80 a share, from $99 million, or $1.32 a share, in the same period a year ago. It credited much of the gain from higher fees at its Boston Co. operations and last year's acquisition of Afco Credit Corp.

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