Potential borrowers, bank officials, regulators and investors will be nervously awaiting the slew of fourth-quarter bank results due out this week, beginning with a vault full of them on Tuesday alone.
For, they will offer a clue to whether banks are healthy enough to lift their lending volume as the Federal Reserve lowers interest rates.
On Tuesday alone, the following banks will report fourth quarter revenues, earnings, and perhaps most importantly, their non-performing loans: Citigroup, Bank of America, Bank of New York, Firstar, Mellon Bank and Wells Fargo.
On Wednesday, we learn the same from Bank One, J.P. Morgan Chase and FleetBoston while on Thursday First Union reports its results.
The fourth-quarter reports also come out on the heels of a report published Friday by New York City-based investment banking firm Salomon Smith Barney, which listed the 10 banks with the most exposure to corporate loans at risk of default in 2001.
Leading the way was Bank of America, which has $4.244 billion in corporate loans that could default in 2001.
It was followed by Bank One and then the recently merged J.P. Morgan Chase.
First Union came in fourth.
Rounding out the top-10 list are: FleetBoston, fifth; Bank of New York, sixth; KeyCorp., seventh; Wachovia, eighth; U.S. Bancorp, ninth and Comerica, tenth.
According to the report, vulnerable Bank of America is a participant in three of the five largest syndicated loans on the list. They include loans to:
- Owens-Illinois, a Toledo, Ohio-based packaging company, for $4.5 billion.
- Finova, a financial-services company in Scottsdale, Ariz., for $4.7 billion.
- J.C. Penney, the retail chain based in Plano, Tex., for $6 billion.
Bank Results are In
- Citigroup Inc. said fourth-quarter earnings met Wall Street consensus estimates, rising 11 percent to $3.33 billion or 65 cents a share, compared with $3 billion, or 58 cents a share in the year ago quarter. It earned a record $14.14 billion for the whole year, up 25 percent from a year ago.
- The Bank of New York Co. Inc. said its fourth-quarter earnings also met expectations, rising 14 percent to $372 million, or 50 cents per diluted share, compared with $327 million a year ago, or 44 cents per share.
- Bank of America Corp. said fourth-quarter earnings fell 27 percent because of loan and investment losses. The Charlotte, N.C.-based bank, which back in December issued an earnings warning due to deteriorating loan quality, earned $1.39 billion, or 85 cents a share in the quarter, compared with $1.90 billion, or $1.10 a share in the year-ago quarter. The 1999 results include a $213 million charge related to the merger of BankAmerica and NationsBank, and the 2000 quarterly results included a gain from the sale of a factoring unit. Wall Street had expected Bank of America to earn 86 cents a share, according to market research firm First Call/Thomson Financial, which tracks analysts' estimates.
- KeyCorp said its fourth-quarter net profits rose more than 6 percent to $272 million, or 63 cents a share. Wall Street was looking for only 60 cents a share while the company had expected to net between 58 cents and 64 cents a share. The company expected full year earnings to come in between $2.27 and $2.33 cents a share.
- Midwest regional bank Fifth Third Bancorp said fourth-quarter net income rose 18 percent on strong fee income growth and improving net interest margins, meeting Wall Street expectations.
Other Tuesday Earnings News
Meanwhile, the tech sector is anxiously awaiting the earnings results of two bellwether and Dow 30 components-Microsoft and Intel.
Their results are due out after the stock market closes on Tuesday.
On Monday, Intel Corp. said it agreed to acquire Xircom Inc., the maker of mobile computing gear for $748 million to complement its line of desktop computer components. Intel will make a $25 per share tender offer for all of Xircom's stock within 10 days, the companies said. Xircom makes network adapters and modems, including the RealPort and CreditCard family of cableless products.
Forstmann-Little To Buy Citadel
He's back.
Teddy Forstmann, that it, perhaps the shrewdest buyout-meister. His Forstmann Little & Co. is expected to announce that it will buy radio broadcaster Citadel Communications, which owns 143 FM stations and 66 AM stations in 44 markets nationwide, for about $1 billion in cash, according to The New York Times.>
The deal, the buyout firm's first in more than a year, also includes the assumption of $1 billion in debt.
Under the deal, Forstmann Little will plunk down $26 per share in cash for each Citadel share. Not too bad, considering that Citadel closed Friday at $17.50 per share.
Forstmann plans to finance the deal with $1.5 billion from its equity and subordinated debt funds in addition to a $500 million loan from affiliates of J.P. Morgan Chase.
Today's Layoff News
- Motorola, Inc. said on Monday that it plans to cease manufacturing operations at its Harvard, Ill., campus, resulting in the elimination of 2,500 jobs.
- First Union Corp. will cut a currently unspecified number of regional executives as it consolidates its branch-banking operations from Connecticut to Florida, according to the Associated Press. The financial services giant said both senior-level executives and staff are at risk of losing their jobs. In a memo last week to "senior leaders" obtained by theCharlotte Observer, the bank outlined changes that will accompany the realignment of the general bank. It will eliminate the job of general banking executive, given to those in charge of banking operations on a state level, and consolidate 25 regional positions into 19.
Crossgain Corp., a new web company started and populated by former Microsoft employees, canned more than 20 of its 80 employees in an attempt to quell tension with the software giant, according to The Journal. Employees were told they were being terminated until the expiration of non-compete agreements they had signed at Microsoft, after which time they could be rehired by Crossgain. Crossgain is working on new Internet-based standards and tools for software developers, an area that is said to be critical to Microsoft's new, make- or-break Web initiatives.
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