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Two banks hit mark in 2Q
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July 20, 1999: 4:25 p.m. ET
Bank One cites cost cuts, Mellon nods to restructuring as results meet Street
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NEW YORK (CNNfn) - Two top-name regional banks matched analysts' targets with double-digit growth in earnings during the second quarter, citing restructuring and cost-cutting maneuvers.
Super-regional bank Bank One Corp. (ONE) of Chicago credited strong revenue growth and cost reduction, while Pittsburgh-based Mellon Bank Corp. (MEL) cited efforts to shed its less profitable units.
The earnings announcements came a day after several top-name banks matched or topped Wall Street targets, citing a solid U.S. economy, merger benefits and an wide improvement in credit quality.
Bank One, the nation's fifth-largest bank fresh off last fall's $21 billion buyout of First Chicago NBD, earned $992 million, or 83 cents per diluted share, up from $895 million, or 75 cents per share during the same quarter a year ago.
That figure includes a merger-related charge of $179 million in the second quarter of 1999. In the year-earlier period, Bank One had a one-time gain from branch sales of $155 million and merger costs of $182 million.
Aside from that, Bank One said operating income rose 21 percent in the second quarter 1999 to $1.1 billion, or 93 cents a diluted share, matching analysts' targets as tallied by research firm First Call Corp.
"Strong revenue generation and disciplined expense management were the highlights of the second quarter, while credit quality remained stable," John McCoy, president and chief executive officer, said in a statement.
Bank One vaulted to the No. 5 spot among U.S. banks last year with its purchase of First Chicago NBD.
Separately Tuesday, Bank One declared a cash dividend of 42 cents a share payable on Oct.1 to shareholders of record on Sept. 15.
Mellon, parent of mutual fund manager Dreyfus, reported operating income of $236 million, or 45 cents per diluted share, in the second quarter 1999, climbing from $215 million, or 40 cents per share, in the same quarter a year ago.
Mellon's top executive credited the company's recent reorganization to focus on its most profitable business lines. The bank sold its $1.9 billion credit card portfolio in April and announced plans to sell its $14 billion commercial mortgage portfolio.
"We are pleased that our strong second quarter earnings show that we are already benefiting from the sharpening of our strategic focus on our high-growth, high-return businesses," Martin McGuinn, Mellon chairman and chief executive officer, said in a statement.
Total revenue, not including the lost fee-based revenue due to the sale of the credit card portfolio, rose to $1.2 billion, up from $1.1 billion a year ago.
Also Tuesday, Mellon announced a two-for-one stock split payable on Aug. 16 to shareholders of record on July 30, 1999.
Shares of Bank One fell 1-1/16 to 59-3/8 while Mellon shed 1-3/4 to 34- 7/8 on the New York Stock Exchange Tuesday.
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Mellon Bank
Bank One
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