Citicorp, parent of the nation's second-largest bank, reported yesterday that its earnings in the final quarter of 1980 were 38 percent lower than in the same 1979 period, while No. 4, Manufactures Hanover Corp., reported a 14.9 percent increase in profits.
Both major bank holding companies, as well as Wells Fargo & Co. -- which reported higher fourth-quarter earnings but a decline in overall 1980 income -- said last year's record-high interest rates affected their performances, while First Pennsylvania Corp. reported substantial fourth-quarter and full-year losses.
In other earnings reports yesterday Aluminum Co. of America said a 24 percent year-to-year drop in fourth-quarter profits left in 1980 earnings off the 1979 pace. And Paine Weber increase in profits for its first fiscal quarter.
Citicorp, parent of Citibank in New York, cited "the unprecedented volatitlity and height of U.S. dollar interest rates" for its decline in earnings. But Manufacturers Hanover, also based in New York, said higher interest income was a factor in achieving its record earnings.
Wells Fargo, parent of Wells Fargo Bank of San Francisco, the nation's 11th largest -- reported earnings in the fourth quarter were 2.7 percent above the same 1979 period, while 1980 earnings were off 6 1/2 percent. It was the first earning decline in 15 years, and Chairman Richard P. Cooley blamed "the unprecedented high levels and volatitlity of interest rates."
Wells Fargo said income before securities transactions was $34.4 million ($1.50 a share) in the quarter compared with $33.5 million ($1.47) in the same 1979 period. For 1980, income before securities transactions was $121.7 million ($5.32) compared with $130.2 million ($5.75) in 1979.
The losses announced by First Pennsylvania Corp., a major bank holding company and parent of First Pennsylvania Bank in Philadelphia, were expected. The troubled financial institution came close to failing in 1980 and is trying to recover with the help of a $1.5 billion rescue plan.It recently announced a $11.15 million settlement of 17 class-action lawsuits by shareholders.
Citicorp said fourth-quarter earnings before securities transactions totaled $96 million (77 cents) compared with $154 million ($1.23) in the same period a year earlier.
Manufacturers Hanover, parent of Manufacturers Hanover Trust Co., reported fourth-quarter earnings before securities transactions of $59.5 million ($1.78), up from $51.7 million ($1.56) in the final three months of 1979.
For 1980, Citicorp said its earnings before securities transactions totaled $507 million ($4.08), down from the record $544 million ($4.36) reported in 1979. Manufacturers Hanover said operting earnings last year totaled a record $230.2 million ($6.91), up from $211.3 million ($6.41) in 1979.
First Pennsylvania reported a loss of $45.4 million for the final three months last year compared with a loss of $6.2 million in the fourth quarter of 1979. The company said its 1980 operating losses totaled $73.3 million compared with 1979 earnings of $12.6 million.
Citicorp said that as interest rates rose, the high cost of acquiring funds reduced earnings from loans and investments.
For example, the interest on a 90-day certificate of deposit, offered in minimum denominations of $100,000 and a major source of funds for a bank, was 13 percent at the beginning of 1980, rose to 19 percent in March, fell to 8 percent in June, increased to nearly 21 percent in December and ended the year at 17 percent, Citicorp said.
Manufacturers Hanover said the growth of average total loans to $28.2 billion in 1980, up $3.6 billion from 1979, was a major factor in increased interest income. "Although higher interest rates on loans and other assets was also a positive factor, the spread between the average cost of funds and the average rate earned was narrower than in 1979," the company said.
The 1980 rate of return on each $100 average assets, which most analysts consider a key measure of profitability, was 47 cents for Citicorp, down from 58 cents in 1979. For Manufacturers Hanover, the 1980 rate of return on each $100 average assets, was 48 cents in 1980, down from 51 cents a year earlier.
Alcoa reported that profits fell 6.9 percent last year to $469.9 million from $504.6 million the previous year but said fiscal 1980 earnings were the second highest in the company's history.
Alcoa said the earnings amounted to $13.08 a share last year on sales of $5.1 billion. In the previous fiscal year, earnings were equivalent to $14.29 a share on sales of $4.8 billion.
The company shipped 1.83 million tons of aluminum products in 1980 compared with 1.89 million tons in 1979.
For the fourth quarter, Alcoa reported earnings fell about 24 percent to $102.9 million ($2.79) from $135.1 million ($3.82). Sales in the latest quarter were $1.29 billion, up from $1.23 billion in the year-earlier period.
Fiscal 1980 represented the company's second-best year "even in the face of a recession and increasing costs," Alcoa Chairman W.H. Krome George said.
"This was a good year for Alcoa in many markets, especially aerospace and primary ingot. Our continued emphasis on the packaging, alumina chemicals, and transportation markets, all high-technology areas, also contributing substantially to 1980 revenues."
Alcoa is the world's leading producer of integrated aluminum products.
Paine Webber's earnins for its first quarter ended Dec. 31 were $10.21 million ($1.26) compared with $6.98 million ($1.22) a year ago on 2.3 million fewer shares. Revenues were up 59 percent to $268.43 million from $168.5 million a year ago.
The year-ago first-quarter results do not include those of Blyth Eastman Dillon, acquired Dec. 31, 1979.
President Donald B. Marron said stock brokerage business was up 42 percent from the previous year and all the other operations of the company were improved.