Tired of depressing economic news? Anxious for a sign that the good old days are yet to come?
Then you should have dropped in to First Security Corp's annual meeting Tuesday where FSC Chairman Spencer F. Eccles painted an upbeat economic picture for his financial institution in particular and Utah and the Mountain West in general."We've seen some good signs," Eccles told shareholders. "The return to Utah of copper and steel, joining with aerospace, computer technology, food processing and medical research. The Utah economy may not be booming, but we believe it will continue to experience steady growth."
Eccles said the regional economy showed good progress in the first quarter 1988 and he expects that to continue through the rest of the year. In March, he said, unemployment was at 5.5 percent in Utah and 5.4 percent in Idaho where FSC also has operations. New job growth in the first three months was up 30 percent over first-quarter 1987. Manufacturing was also showing new growth and strength.
"We believe the economy...is beginning a gradual upturn." said Eccles. "We've painted an optimists' picture here today. And we are optimistic, for First Security, and for the future of our regional economy."
Eccles made it clear that First Security is healthier than it has been in years. Consider these "vital signs:" Net income rose from $5.1 million in 1986 to $27.0 million last year--an increase of $1.72 per share in one year (to $2.13 per share).
For the first quarter 1988, FSC's net income of $8.0 million was an 11.5 percent jump over the same period last year, the highest earnings for a single quarter in four years and a 33.5 percent jump from fourth-quarter 1987.
During the meeting Eccles told shareholders that directors had declared a regular quarterly dividend of 27.5 cents per share, payable June 6 to shareholders of record May 20.
Eccles attributed the increased earning to higher loan volumes and improved margins along with continuing efforts to reduce the corporation's non-performing assets--mostly real estate taken back on defaulted loans.
"As you know," said Eccles, "our market area has experienced a substantial economic downturn over the last five years. This has had a dramatic impact on First Security's earnings.
"Faced with managing foreclosed properties and non-performing assets, in 1986 we substantially increased our reserves for possible future losses. In 1987, those reserves enabled us to accelerate the liquidation of our non-performing assets at a record rate."
And that's still going on, he said. Non-performing assets had been reduced to $100 million (3.1 percent of total loans) by the end of the first quarter '88 compared with $159 million a year ago.
In other first quarter financial results, Eccles said.
Average return on earning assets increased from 9.09 percent a year ago to 10.06 in the first three months of this year. Average margin rose from 3.65 percent to 4.46 percent in the same period.
Total loans and leases rose to $3.4 billion in the first quarter '88 compared with $3.3 billion a year ago. First Security subsidiaries made loans totaling $837.1 million last quarter, 59.4 million more than in the like period a year ago.
Stockholders' equity reached $372.4 million at the end of the quarter--762 percent of toal assets--and total primary capital was $450 million or 9.07 percent of total. The company's capital ratio, said Eccles, exceeds the 5.5 percent minimum regulatory requirement by 65 percent.
"it's been a long, tough five years re-orienting First Security to new, deregulated, competitive realities of the financial services industry," said Eccles, "but that's just what we've done, and it's the spirit of caring and pride of our First Security people that has accomplished the task."