Magazine article American Banker

BankAmerica's New, Gloomier Estimate of '86 Loan Losses Disappoints Analysts

Magazine article American Banker

BankAmerica's New, Gloomier Estimate of '86 Loan Losses Disappoints Analysts

Article excerpt

BankAmerica's New, Gloomier Estimate Of '86 Loan Losses Disappoints Analysts

NEW YORK -- Bank analysts reacted with disappointment Wednesday after officials from BankAmerica Corp. confirmed that the bank holding company's 1986 loan-loss estimates had been revised upward.

Although the bank declined to offer figures, analysts said management predicted that yearend loan losses would total $1.2 billion, up from the estimate of $1.0 billion to $1.1 billion the bank had projected two months earlier.

A bank spokesman confirmed Wednesday that "we have slightly increased our outlook for loan losses for the year."

George M. Salem, an analyst at Donaldson, Lufkin & Jenrette Inc., said the move dissipated any notion the investment community had that the bank was turning its fortunes around.

"The disease [at BankAmerica] was always being unable to accurately forecast loan losses and coming out with these unpleasant surprises," he said. "You can't have euphoria when the basic disease seems to be returning. It's not a major escalation, but it's an escalation nonetheless. It says to you, 'Here it comes again.'"

Brent B. Erensel, first vice president at Dean Witter Reynolds Inc., agreed with Mr. Salem.

"We're not halfway through the year yet and they've essentially bumped their forecast by 20%," he said. "When the fourth quarter comes around you just have to grit your teeth and brace yourself for whatever might happen."

Mr. Salem said several sectors of the bank's portfolio have produced losses higher than previously expected: agriculture, real estate construction, nonrecourse automobile loans, consumer unsecured lines of credit, and middle-market loans abroad to countries such as Indonesia.

In addition, Bank of America, the holding company's chief subsidiary, is one of the largest U.S. lenders to Mexico. As of March 31, 1986, the bank had $2. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.