NationsBank Corp. said yesterday that second-quarter operating profit jumped 23 percent, excluding a one-time gain from the sale of branches, as revenue from investment banking and brokerage operations more than doubled.
The Charlotte, N.C.-based banking company made $1.13 billion in the second quarter, which ended June 30, before the one-time gain, up from $919 million in the corresponding period a year earlier, or $1.15 per diluted share, up from 94 cents in the 1997 quarter.
Including the sale of 67 Florida bank branches in the quarter, which resulted in a $430 million pretax gain, NationsBank made $1.41 billion in the second quarter, or $1.43 per diluted share.
"It is doing everything right," said Eric Rothmann, senior bank analyst at Little Rock, Ark.-based Stephens Inc. "Year over year, we are seeing some very strong growth trends."
The results topped Wall Street analysts' estimates by a penny, according to Zacks Investment Research, which tracks earnings predictions. Shares of NationsBank closed yesterday at $87, down 18.75 cents.
The strong report comes as NationsBank is digesting its acquisition of Jacksonville, Fla.-based Barnett Banks Inc. and merging with San Francisco-based BankAmerica Corp. to create a banking colossus.
The $59.3 billion NationsBank-BankAmerica transaction is expected to be completed in the fall. The combined companies will have about $580 billion in assets with nearly 5,000 branches and 29 million customers in 22 states.
"To pull this off and still have momentum in earnings growth and loan growth is pretty impressive," said David Stumpf, banking analyst at St. Louis-based A. G. Edwards & Sons Inc. NationsBank entered Baltimore in 1993, buying MNC Financial Inc. It has 197 branches and 508 automated teller machines in Maryland. It operates in 16 states and the District of Columbia.
In the first six months of the year, NationsBank made $2.27 billion, or $2.32 per share, up 28 percent from $1.8 billion, or $1.81 per share.
Assets rose 8.3 percent to $308 billion, making NationsBank the country's third-largest banking company.
NationsBank Chief Executive Hugh L. McColl Jr. said in a statement that he was pleased with the company's growth in fee-based businesses, such as investment banking and brokerage, because it lessens the bank's dependence on income from loans.
NationsBank's noninterest income, which is generated from business lines that charge fees to corporate and retail customers, rose more than 31 percent to $1.9 billion compared with the year-earlier quarter.
Income from brokerage operations jumped to $113 million in the quarter, up from $49 million a year earlier. Income from investment banking soared to $377 million, up from $153 million a year earlier.
Net interest income, generated largely from loans, grew 4 percent in the quarter to $2.56 billion.
Pub Date: 7/14/98