BankAmerica Reports Strong Third-Quarter Earnings, Beats Market Expectations

Strategic Insights -

BankAmerica Corporation's third-quarter earnings have exceeded market expectations, with the company reporting a 26 percent increase in earnings per share to $1.72. This marks a significant improvement from the same period last year, with net income rising 29 percent to $704 million. The company's return on average common equity for the quarter also increased to 15.09 percent, a 197 basis points gain over the same period in 1994.

Key Takeaways:

  • The company's net interest income rose by 13 percent, driven by growth in average loans and the effects of the Continental Bank Corporation acquisition.
  • Noninterest income increased by $85 million, primarily due to higher revenues from service charges on certain deposit accounts and expanded loan syndication volume.
  • Noninterest expense decreased by $60 million, mainly due to a $65 million refund received from the FDIC, which was applicable to the third quarter of 1995.
  • Nonaccrual assets declined by $107 million, or 5 percent, from their June 30, 1995 level, resulting in a nonperforming assets ratio of 1.03 percent at September 30, 1995.
  • As part of its stock repurchase program, BankAmerica repurchased 3.5 million shares of its common stock during the third quarter of 1995 at an average per-share price of $57.48.
  • The company redeemed all outstanding shares of its 11% Cumulative Fixed Preferred Stock, Series I on September 30, 1995, reducing stockholders' equity by approximately $110 million.
  • The Board of Directors modified the stock repurchase program, authorizing a $250 million increase in the total amount of preferred stock that may be repurchased or redeemed through the end of 1996.

Statistics:

  • Earnings per share: $1.72 (26% increase over 1994 third quarter)
  • Net income: $704 million (29% increase over 1994 third quarter)
  • Return on average common equity: 15.09% (197 basis points gain over 1994 third quarter)
  • Net interest income: Up $252 million (13% increase over 1994 third quarter)
  • Noninterest income: Increased by $85 million (primarily due to higher revenues from service charges and expanded loan syndication volume)
  • Noninterest expense: Decreased by $60 million (mainly due to a $65 million refund received from the FDIC)
  • Nonaccrual assets: Declined by $107 million, or 5 percent, from their June 30, 1995 level

Sources:

  • Business Wire - October 18, 1995
  • BankAmerica Corporation - Press Release - October 18, 1995