BankAmerica Earns $1.9 Billion, or $1.08 Per Diluted Share, in First Quarter
The return on common equity was 16.8 percent and the return on assets was 1.27 percent.
Cash earnings - which exclude the amortization of intangibles - were $2.14 billion, or $1.23 ($1.20 diluted) per share in the latest quarter. Return on average tangible common shareholders' equity was 27.4 percent.
"We are pleased with our first quarter results, which include continued strong performance in Consumer Banking and a significant improvement in Global Corporate and Investment Banking," said Hugh L. McColl, Jr., BankAmerica chairman and chief executive officer. "Our merger transition is on track, and we expect the benefits of lower costs and enhanced revenue opportunities to positively impact earnings in the coming quarters."
First Quarter Earnings (compared to a year ago)
Lower expenses - primarily due to merger-related savings - stronger trading results and continued solid loan growth were offset by lower other income, investment banking revenue and securities gains.
Net Interest Income
Fully taxable-equivalent net interest income of $4.65 billion was virtually unchanged from a year earlier, as loan and deposit growth and deposit pricing initiatives offset the impact of asset securitizations, loan sales and spread compression. Average managed loans grew 11 percent to $385 billion, reflecting increases in both consumer and business loans. The net yield on earning assets declined by 23 basis points to 3.58 percent due to a higher level of investment securities and lower loan and deposit spreads.
Noninterest income declined 8 percent to $3.22 billion, reflecting lower other income and investment banking revenue. Trading results were up from last year's strong performance. Credit card income and deposit fees also rose. Investment banking results, despite continuing improvements over recent quarters, remained below last year's strong performance.
Securities gains of $130 million were significantly below the $213 million recorded in the first quarter of 1998.
Noninterest expense decreased by more than 5 percent to $4.45 billion, reflecting cost reductions resulting from recent mergers somewhat offset by continued spending on transition projects associated with the merger of NationsBank and BankAmerica. Personnel expense dropped by more than 4 percent, and other operating expenses were also reduced. The efficiency ratio was 57 percent, an improvement from 58 percent a year earlier.
The provision for credit losses in the first quarter was $510 million, the same as a year earlier. Net charge-offs remained virtually flat from a year ago at $519 million, equal to .58 percent of loans and leases, a 3-basis-point improvement from a year ago.
Nonperforming assets were $3.12 billion, or .86 percent of loans, leases and foreclosed properties on March 31, 1999, compared to $2.69 billion, or .79 percent a year earlier. The allowance for credit losses totaled $7.12 billion on March 31, 1999, equal to 251 percent of nonperforming loans and 1.96 percent of loans and leases. The allowance was $6.76 billion, or 1.98 percent of loans and leases, a year earlier.
Total shareholders' equity rose 4 percent to $46.8 billion at March 31, 1999. This represented 7.62 percent of period-end assets, compared to 7.77 percent on March 31, 1998. Book value per common share rose 4 percent from a year earlier to $26.86 at March 31, 1999.
Business Segment Results
Consumer Banking, which serves individuals and small businesses, earned $873 million, while Commercial Banking, which serves companies with from $10 million to $500 million in revenue, earned $197 million. Together, they represented 56 percent of the company's net income. Global Corporate and Investment Banking, which serves large corporate customers, earned $492 million, representing 26 percent of the company's earnings. Principal Investing and Wealth Management, which encompasses the private bank, trust, investment management, mutual funds, retail brokerage and principal investing, earned $209 million, representing 11 percent.
BankAmerica Corporation, with $614 billion in total assets, is the largest bank in the United States. It has full-service operations in 22 states and the District of Columbia and provides financial products and services to 30 million households and 2 million businesses, as well as providing international corporate financial services for business transactions in 190 countries. BankAmerica Corporation stock (ticker: BAC) is listed on the New York, Pacific and London stock exchanges and certain shares are listed on the Tokyo Stock Exchange.
BANKBANKAMERICA CORPORATION THREE MONTHS ENDED MARCH 31 1999 1998 FINANCIAL SUMMARY (In millions, except per-share data) Operating net income $1,914 $1,973 Operating earnings per common share 1.10 1.14 Diluted operating earnings per common share 1.08 1.11 Cash basis earnings (1) 2,136 2,201 Cash basis earnings per common share 1.23 1.27 Cash basis diluted earnings per common share 1.20 1.24 Dividends paid per common share .45 .38 Price per share of common stock at period end 70.63 72.94 Average common shares 1,737.562 1,724.490 Average diluted common shares 1,779.708 1,773.015 SUMMARY INCOME STATEMENT (Operating Basis) (Taxable-equivalent in millions) Net interest income $4,645 $4,659 Provision for credit losses (510) (510) Gains on sales of securities 130 213 Noninterest income 3,223 3,493 Other noninterest expense (4,453) (4,704) Income before income taxes 3,035 3,151 Income taxes - including FTE adjustment 1,121 1,178 Operating net income $1,914 $1,973 SUMMARY BALANCE SHEET (Average balances in billions) Loans and leases $360.746 $341.970 Managed loans and leases(2) 384.933 347.451 Securities 75.830 65.787 Earning assets 523.682 493.821 Total assets 609.624 578.841 Deposits 345.931 339.867 Shareholders' equity 46.279 43.628 Common shareholders' equity 46.208 42.953 PERFORMANCE INDICES (Operating Basis) Return on average common shareholders' equity 16.78% 18.52% Return on average tangible common shareholders' equity 27.44 32.57 Return on average assets 1.27 1.38 Return on average tangible assets 1.46 1.59 Net interest yield 3.58 3.81 Efficiency ratio 56.59 57.72 Cash basis efficiency ratio 53.76 54.92 Net charge-offs (in millions) $519 $516 % of average loans and leases .58% .61% Managed credit card net charge-offs as a % of average managed credit card receivables 6.01 6.78 REPORTED RESULTS (Including Merger-Related Charges) (In millions, except per-share data) Net income $1,914 $1,331 Earnings per common share 1.10 .77 Diluted earnings per common share 1.08 .75 Return on average common shareholders' equity 16.78 12.46 (1) Cash basis earnings equal operating net income excluding amortization of intangibles. (2) Prior periods are restated for comparison (e.g. acquisitions, divestitures and securitizations). (3) Ratios and amounts for 1998 have not been restated to reflect the impact of the BankAmerica merger. MARCH 31 1999 1998 BALANCE SHEET HIGHLIGHTS (In billions, except per-share data) Loans and leases $363.102 $341.219 Securities 78.469 67.325 Earning assets 529.980 493.428 Total assets 614.245 580.211 Deposits 343.317 344.447 Shareholders' equity 46.831 45.104 Common shareholders' equity 46.761 44.430 Per share 26.86 25.72 Total equity to assets ratio (period-end) 7.62% 7.77% Risk-based capital(3) Tier 1 capital ratio 7.40 6.80 Total capital ratio 11.17 11.19 Leverage ratio(3) 6.47 5.64 Common shares issued and outstanding (in millions) 1,740.872 1,727.746 Allowance for credit losses $7.123 $6.763 Allowance for credit losses as a % of loans and leases 1.96% 1.98% Allowance for credit losses as a % of nonperforming loans 250.99 279.44 Nonperforming loans $2.838 $2.420 Nonperforming assets 3.120 2.690 Nonperforming assets as a % of: Total assets .51% .46% Loans, leases and foreclosed properties .86 .79 OTHER DATA Full-time equivalent headcount 166,422 179,607 Banking centers 4,676 5,010 ATMs 14,229 14,630 BUSINESS SEGMENT RESULTS - Three months ended March 31, 1999 (In millions) OPERATING AVERAGE RETURN ON TOTAL NET LOANS RISK-ADJUSTED REVENUE INCOME AND LEASES EQUITY Consumer Banking $4,317 $873 $176,513 19% Commercial Banking 717 197 55,585 17 Global Corporate and Investment Banking 2,040 492 112,121 16 Principal Investing and Wealth Management Group 685 209 18,214 29