NEW YORK — Benefiting from growth in consumer loans and strong revenue in most core businesses, First Interstate Bancorp and several other large U.S. banks reported moderately higher second-quarter earnings Monday.
But most banks saw the difference between interest income and the interest they pay on deposits narrow in the second quarter. The reductions are expected to continue as banks lower their prime lending rates in response to Federal Reserve interest rate cuts.
Profits at Los Angeles-based First Interstate rose 5%, NationsBank Corp.'s net was up 7%, and First Chicago Corp.'s profit was up 11%.
Detroit-based NBD Bank Corp., which announced a merger with First Chicago last week, said profits rose 6%.
Bucking the trend was Chase Manhattan Corp., lately the subject of takeover rumors. Earnings fell 8% from a year ago, when the bank recorded one-time gains.
First Interstate reported that its net income totaled $219.9 million, or $2.73 a share, compared to $208.2 million, or $2.38 per share, a year ago.
Revenue for the quarter was $921.9 million, up 9.7% from the year-ago period. Average loans and leases increased $7.8 billion, or 28%, from the 1994 second quarter.
In the first six months, First Interstate earned $431.9 million, or $5.40 a share, compared to $392.3 million, or $4.60 a share, a year ago.
Charlotte, N.C.-based NationsBank, the nation's fourth-largest bank, earned $467 million, or $1.71 a share, compared to $437 million and $1.58 a share, in the second quarter of 1994.
Average loans and leases were up 17% to $108 billion, led by increases in both consumer--primarily residential mortgages--and commercial lending.
In the first six months, NationsBank earned $910 million, or $3.28 a share, compared to $854 million, or $3.07 a share, during the 1994 first half.
Chase earned $281 million, or $1.38 a share, down from $307 million, or $1.46 a share, in the 1994 second quarter.
The nation's sixth-largest bank benefited from a recovery in financial markets, which helped its trading businesses. Trading revenue and interest on trading account assets totaled $207 million, up from $181 million a year ago.
But compared to last year, total profit was down because of extraordinary gains in the 1994 second quarter from selling its Arizona bank and from Brazilian bond repayments last year.
Also hurting the bottom line was a 4% drop in net interest revenue. Credit card securitization was also partly to blame, but the bank said competitive pressures on loan spreads reduced consumer net interest revenue.
For the first six months, Chase earned $541 million, or $2.67 a share, compared to $671 million, or $3.27 a share, during the same 1994 period.
Chase has been viewed as a takeover candidate following pressure to sell or break up the company from a New Jersey investor who owns a 6% stake.
First Chicago, which last week announced a merger with NBD Bank Corp. to create the Midwest's largest bank, earned $187 million, or $1.90 a share, compared to $169 million, or $1.67 a share, a year ago.
Investment securities gains jumped to $56.9 million from $3.9 million a year earlier. Credit card loans grew $13 million, a 23% increase over last year.
For the first six months, net income totaled $382.5 million, or $3.88 a share, compared to $362.5 million, or $3.76 a share, during the same 1994 period.
Detroit-based NDB earned $143.4 million, or $0.91 a share, compared to $135.2 million, or $0.84 a share, in the second quarter of 1994.
Loan and lease balances averaged $31.6 billion in the quarter, an increase during the past year of $5.2 billion, or 20%.
Net income in the first six months of 1995 totaled $284.3 million, compared to $242.5 million in the first half of 1994.