FleetBoston Financial reported third quarter net income from continuing operations of $597 million, or $.57 per share, compared with $771 million, or $.70 per share, in the third quarter of last year. The decrease from last year was mainly due to declines from businesses undergoing significant market pressure: Argentina, Principal Investing and Brazil. For the first nine months of 2002, net income from continuing operations was $1.2 billion, or $1.16 per share, compared with $1.4 billion, or $1.30 per share for the first nine months of 2001. Including results from discontinued operations (primarily Robertson Stephens), net income in the current quarter was $579 million, or $.55 per share, compared with $766 million, or $.70 per share, in the third quarter of last year.
Chad Gifford, President and Chief Executive Officer of Fleet, said, “We are pleased to report that our third quarter results were in line with expectations, despite these difficult economic times. The execution of our strategic refocus on our customer related businesses has gone well. In our consumer business, core deposits remain robust and are up approximately 10% from a year ago. We had a record number of new checking accounts opened this quarter and continue to make steady improvements in customer service. In wholesale banking, despite weak loan demand our results improved due, in part, to the cross-selling of products such as cash management and foreign exchange. I am greatly encouraged by the progress we have made to date in transforming the business mix of this company to concentrate on our customer focused businesses. We also made some key organizational announcements, which included naming Eugene M. McQuade President and Chief Operating Officer and H. Jay Sarles Chief Administrative Officer. I greatly look forward to working with them in their new roles as we continue to re-shape the company.”
Gene McQuade remarked, “The actions we took in the second quarter to strengthen our balance sheet have held up well. On the credit quality front, our nonperforming assets were down on a consecutive quarter basis for the first time in two years and our chargeoffs were approximately $500 million less than the second quarter. We continue to actively lower our risk profile by steadily reducing exposures to large corporations both domestically and in Latin America. Like others, we are dealing with a weak economy and capital markets, which certainly challenges our market-driven businesses. While difficult, it has not distracted us from our path. As we manage through this period of transition, we are greatly aided by our balance sheet strength. Our combined capital ratios and reserve levels are among the highest of any major bank in the country.”
Highlighting the financial performance was a quarter over quarter earnings improvement in Consumer Financial Services of $13 million, or 6%, driven by consumer loan growth and higher core deposits and in Wholesale Banking of $12 million, or 4%, due to lower credit costs and higher revenues from cash management and foreign exchange.
Also included in the current quarter’s results were a net loss from the Principal Investing business of $68 million ($.06 per share) reflecting continued weakness in the technology and telecommunications segments of this portfolio and a loss from Argentina of $42 million ($.04 per share) reflecting the impact of government measures on the financial system and the economic deterioration in the country. Partially offsetting these losses were securities gains of $34 million after-tax, or $.03 per share.
Credit Quality/Balance Sheet
Nonperforming assets were $3.8 billion at September 30, 2002, down approximately $130 million from June 30, 2002. Loan loss reserves stood at 3.2% of total loans. Total assets at September 30, 2002 were $187 billion, compared with $202 billion at September 30, 2001. The decrease from a year ago is primarily due to our previously announced risk reduction strategies and a decline in Latin American assets as a result of currency devaluations. Stockholders’ equity amounted to $17 billion at September 30, 2002, with a common equity to assets ratio of 8.9%.
For complete details on FleetBoston’s 3Q/02 performance visit CardData ([www.carddata.com]).