Us Banksearnings On Target; Slowdown Seen
"Going into the quarter, I was concerned about a linked-quarter (quarter two to quarter three) slowdown in revenues, and that's happening," said Thomas McCandless, analyst at NatWest Securities.
Nancy Bush, analyst at Brown Brothers Harriman, said overall loan growth on a linked-quarter basis appears to be slowing to about a five-per cent annualized rate from seven per cent.
Several analysts said Boston-based Fleet Financial Group Inc exceeded their expectations. "Fleet had a good quarter, they're starting to make real progress on their acquisitions," said Lawrence Cohn of PaineWebber Group Inc. Fleet acquired NatWest Bank in the US earlier this year.
Fleet said third-quarter earnings rose to $1.02 per share from $0.96 last year.
Philadelphia-based CoreStates Financial Corp was an example of a bank where a merger seemed to account for flattish year-over-year revenue. CoreStates, which acquired Meridian Bancorp in April, said operating earnings were up a scant 0.9
per cent from a year ago to $194.86 million. The $0.89 per share result was 1.1 per cent higher than year ago.
Bush said the revenue trend was not a surprise as not all of the business of two banks can be retained after a merger. Bush said while CoreStates was a little beneath her estimate Winston-Salem, N.C.-based Wachovia Corp was $0.01 cent better, reporting $0.97 per share.
In the case of Wachovia, Bush said there was a slight slowing of loan growth but improved margins plus stronger fee income.
Sally Pope Davis, analyst at Goldman, Sachs & Co, said US Bancorp, which reported earnings of $0.75 per share for the third quarter, was $0.02 beneath her estimate. She noted the Portland, Ore.-based bank announced a major technology
investment which should be positive for the long term.
Bradley Ball, analyst at CS First Boston, said loan growth at US Bancorp appeared solid and he noted the company's business is underpinned by a strong regional economy.
Cohn said BankAmerica Corp overall had a "slow quarter" with a share repurchase program giving a boost to the per-share earnings. The San Francisco-based company reported third-quarter earnings of $1.75 a share versus $1.72 a share year ago.
He noted that BankAmerica's charge for an assessment to recapitalize the Savings Association Insurance Fund (SAIF) was largely offset by non-recurring gains.