reported third-quarter results in line with expectations as nonlending businesses boosted its bottom line.
The bank posted earnings of 84 cents a share, meeting the 23-analyst estimate according to
First Call/Thomson Financial
, and up from the year-ago 74 cents a share. Net operating income was $782 million, up 10% from $711 million last year. Including the effect of divestitures related to its merger with BankBoston, which closed a year ago, Fleet reported net income of $841 million, or 90 cents a share.
In a press release, CEO Terence Murray said the bank is celebrating its one-year anniversary of the merger with a report that "highlights the strength and diversity of our businesses." As with many other banks in recent years, Fleet has sought to boost its bottom line by branching out from traditional bank businesses such as lending, into more lucrative areas like capital markets.
Recently, Fleet announced it is
acquiring New Jersey-based
for about $7 billion.
In the latest quarter, noninterest income jumped 17.4% to $1.9 billion, helped by a hefty 59% increase in capital markets revenue compared with the third quarter of 1999. That helped offset declines in other noninterest businesses, including banking fees and commissions, which slipped 9.5%, and credit card revenue, which declined 21.6%. Noninterest expenses were basically flat with the year-ago period.
Income from sources other than lending grew to 55% of total revenue from 50% a year ago. Meanwhile, total revenue increased 5.3% to $3.6 billion.
Fleet said net interest income declined $113 million to $1.6 billion in the latest quarter, due to lost revenue from divestitures, including $13 billion of low-cost deposits and $9 billion of loans. The net interest margin inched ahead to 4.25%, and the bank attributed the lift to the elimination of a regulatory requirement. Previously, it had been required to maintain certain levels of low yielding assets to support revenue from Robertson Stephens, which it acquired as part of its acquisition of BankBoston.
Investors will be keeping a close eye on credit quality this quarter, particularly in the wake of a recent report that showed a
spike in the level of at-risk syndicated loans. But while FleetBoston posted a noticeable increase in nonperforming loans, which are loans that are past due but have not been charged off yet, the bank's loan loss reserve, essentially a financial cushion for bad loans, remains solid.
Nonperforming assets rose 30% to $1.025 billion from $786 million a year ago. FleetBoston's reserve, or protection, for loan losses, which is already high when compared with many of its peers, rose to 2.22% from 2.1% in the same period.