BANK OF AMERICA QUARTERLY EARNINGS OUTPACE FORECASTS.

Byline: Daily News Staff and Wire Services

BankAmerica Corp.'s fourth-quarter earnings rose 6 percent, beating Wall Street estimates, as higher fees from checking accounts and other services offset sluggish growth in lending income.

The nation's third-largest bank's fourth-quarter net income rose to $747 million, or $1.93 a share, in 1996 from $704 million, or $1.74, in the same period of 1995. As expected, the quarter included a $280 million restructuring charge and a $147 million gain tied to the initial public offering of a credit card processing business.

The charge, announced last month, covered the costs of closing 120 of its 1,020 California branches, resulting in the loss of about 1,100 jobs. The charge also covered the costs of eliminating an added 2,600 jobs in corporate banking and support services.

``This was really a year of improving the way we manage the company, and I think the results reflect that,'' said Vice Chairman and Chief Financial Officer Michael O'Neill.

Wall Street expected earnings of $1.89 a share, according to a Zacks Investment Research survey of 22 analysts. That sent BankAmerica shares up $5.625 to $107.375 in heavy trading.

The San Francisco-based bank impressed investors by taking big steps to control costs, which helps profits over time. Expenses rose 14 percent to $2.25 billion, but mainly from the cost of the restructuring plan. Excluding the costs of the plan, expenses would have totaled $1.97 billion, down 1.4 percent from the same quarter last year.

``The control on expenses is terrific,'' said George Salem, a banking analyst at Gerard Klauer Mattison & Co.

BankAmerica also is focusing on buying back stock to boost per-share earnings by reducing the number of outstanding shares. In the quarter, the bank spent roughly $448 million to buy 4.7 million shares. For the year, the bank bought back 17 million shares at a cost of roughly $1.35 billion.

The bank plans to keep buying back stock, rather than trying to boost long-term profits by buying banks, brokerage firms or other businesses, O'Neill said. With banks selling at high prices, buying back stock can boost profits quicker than gobbling up a big bank.

``It is clear that significant premiums over market prices are required to acquire institutions these days, and it looks pricey,'' O'Neill said.

In the quarter, net interest income was almost unchanged at $2.1 billion, as income from loans barely budged. Profits from loans also were hit as the bank packaged $1 billion in credit card loans into securities and sold them to investors. The provision for future lending losses rose to $220 million, up 69 percent from last year.

Meanwhile, the Irwindale-based H.F. Ahmanson & Co. reported that fourth-quarter net income rose 50 percent, helped by fees, the sale of branches and consumer lending.

Ahmanson, parent corporation of Home Savings of America, the nation's largest thrift, said net income rose to $91.2 million, or 78 cents a share, from $60.7 million, or 41 cents, during the same period last year. That beat the average Wall Street forecast of 60 cents a share, according to a Zacks Investment Research survey of 15 analysts.

The company's stock rose 37.5 cents to $34.125.

``The company had a very productive year, completing the acquisition of 61 former First Interstate branches, building infrastructure and income, and expanding our product lines,'' Chairman and Chief Executive Charles Rinehart said in a statement.

Noninterest income, which includes businesses such as asset management that charge fees, increased 62 percent to $78 million, driven largely by the company's Personal Financial Services and Griffin Financial Services units.

The company also recorded a pretax gain of $6.9 million from the sale of branches in San Antonio, Texas, and from closing other branches.