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Banks eke out 2Q gains
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July 17, 2000: 12:27 p.m. ET
Bank of America meets Street while FleetBoston beats forecasts
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NEW YORK (CNNfn) - Some of the country's biggest banks posted second-quarter profits Monday that either met or beat analysts' forecasts, aided by higher fees from consumer banking and from higher interest income, even as rate hikes from the Fed made it more difficult to profit from outstanding loans and stock market volumes tapered off.
Bank of America, the largest U.S. commercial bank, posted second-quarter operating earnings of $2.06 billion, or $1.23 a diluted share, little changed from $2.06 billion, or $1.15, a year earlier. The per-share results matched the $1.23 a share expected by analysts polled by First Call Corp.
The latest quarter reflects 112 fewer shares outstanding, the result of a stock buyback program initiated in June 1999. As well, the company's year-earlier income included a one-time charge of $145 million related to the 1998 merger of NationsBank Corp. and San Francisco-based BankAmerica Corp., which resulted in Bank of America.
Including that charge, Bank of America posted year-ago net income of $1.92 billon, or $1.07 a diluted share.
Like other banks, stronger returns in its consumer banking business and higher interest income generated on outstanding loans helped offset slower capital markets activity and depreciation of some of its investments.
FleetBoston beats the Street
Indeed, FleetBoston Financial Group Inc., the nation's sixth-biggest commercial bank, reported separately that its second-quarter profit rose 10 percent, fueled by discount brokerage commissions, trading activity and by generating gains from investing its own capital.
 Operating profit rose to $772 million, or 83 cents a share, from $700 million, or 72 cents, a year earlier. The bank was expected to earn 82 cents a share according to a First Call. Revenue rose 7.5 percent to $3.73 billion.
FleetBoston, created last fall when Boston-based rivals Fleet Financial Group Inc. and BankBoston Corp. merged, said more than half of its quarterly earnings resulted from non-interest income, mostly trading and discount brokerage commissions from its Quick & Reilly brokerage unit.
A gain of $75 million, or 8 cents a share, from selling branches to Sovereign Bancorp (SVRN: Research, Estimates) resulted in net income of $847 million, or 91 cents, the bank said.
Bank of New York hits record
Bank of New York Co. Inc., the 13th-largest U.S. bank and parent of one of the oldest commercial banks operating in the United States, posted a record second-quarter profit $356 million, or 48 cents a share, up from $323 million, or 42 cents per share, a year earlier.
Analysts polled by First Call had expected the 216-year-old company to post a profit of 47 cents a share.
The bank benefited from strength in its global custody, clearing and foreign exchange trading businesses, as well as from its operations that help overseas companies issue shares in the United States.
 Since June 1999, the U.S. Federal Reserve Board has raised rates six times in an attempt to keep the economy from overheating. Those rate increases have affected banks' earnings by forcing them to absorb the difference between what they earn in interest income and what they have to pay.
The Fed's rate increases also have affected banks' bottom lines by having an impact on trading activity on Wall Street, reducing fees generated from commissions earned on trades and lowering profit from initial public offerings and other brokerage-related services.
Shares of Bank of America (BAC: Research, Estimates) slipped 9/16 to 46-15/16. FleetBoston (FBF: Research, Estimates) shares fell 1-5/16 to 36-7/16, while shares of Bank of New York (BK: Research, Estimates) gained 11/16 to 47-5/8 on the New York Stock Exchange. 
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