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CALIFORNIA / News and Insight on Business in the Golden
State

Wells' Profit Falls 12%; Other Banks See Drops

January 21, 1998|DEBORA VRANA | TIMES STAFF WRITER

Showing the first signs of stability in more than a year, Wells Fargo & Co. said its fourth-quarter earnings fell 12%, stemming from a loss of customers prompted by its purchase of First Interstate Bancorp nearly two years ago.

Meanwhile, banking giants J.P. Morgan & Co., Citicorp and Chase Manhattan Corp. reported that slowing economies and plunging financial markets in Asia hurt the banks' fourth-quarter profits.

San Francisco-based Wells reported its net income fell to $298 million, or $3.36 a share, from $340 million, or $3.45 a share, before merger charges during the quarter a year ago. Earnings were below Wall Street expectations of $3.41 a share.

Still, the quarterly results were hailed by analysts who said California's second-largest bank seems to be improving after a series of disappointing quarters.

"What's most encouraging here is that we saw an increase in stability in the balance sheet and even some modest growth," said Joseph Morford, a banking analyst with Bankers Trust in New York.

Wells shares rose $8.19 on Tuesday to close at $329.75 in New York Stock Exchange trading.

Analysts were reassured by modest revenue growth and a 1% increase in both loan volumes and deposits from the third quarter ended in September. Still, both loan volumes and deposits are below year-ago levels.

Additionally, a surge in credit card losses at the bank sparked some concern among analysts.

Although turmoil in Asian markets didn't result in weakness at Wells, it did at Chase Manhattan and Citicorp.

Chase Manhattan's fourth-quarter profit from operations fell to $850 million, or $1.89 a diluted share, from $901 million, or $1.88 a share, in the same quarter last year. The results were below analysts' forecast of $1.91.

Citicorp said fourth-quarter profit from operations rose 7.5%, exceeding analysts' expectations. Net income rose to $1.1 billion, or $2.20 a diluted share, from $987 million, or $1.97, in the same quarter last year.

J.P. Morgan, however, reported fourth-quarter net income declined to $271 million, or $1.33 a share, from $419 million, or $2.04 a share.

Separately, Washington Mutual Inc.--reporting results for the first full quarter following its takeover of rival thrift Great Western Financial Corp.--said fourth-quarter earnings totaled $237.9 million, or 94 cents a diluted share, compared with a loss of $82.8 million, or 38 cents, after merger charges a year earlier. The results beat estimates of 91 cents.

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This report includes information from Bloomberg News.

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