BankAmerica Corp. Reports 3d-Quarter Profits Down 29%

By Luke, Robert | American Banker, October 18, 1985 | Go to article overview

BankAmerica Corp. Reports 3d-Quarter Profits Down 29%


Luke, Robert, American Banker


LOS ANGELES -- Battered by mounting loan losses and credit quality problems, BankAmerica Corp. said its third-quarter profits fell 29% from a year earlier.

Without the recent $660 million sale of its world headquarters in San Francisco, BankAmerican said, it would have sustained a pretax loss of 158 million in the quarter.

Company officials did not calculate a similar potential loss figure for the nine months but analysts are now expecting a loss for 1985, which would be the company's first year in the red since 1932.

As it is, BankAmerica reported losses of $159 million, or $1.40 a share, for the nine months ended Sept. 30, against profits of $302 million, or $1.61 a share, a year earlier. In the third quarter, BankAmerica said earnings fell to $65 million, or 31 cents a share, from $91 million, or 47 cents a share.

Some Wall Street analysts said they were disappointed at the results for the nation's second largest banking firm.

"The results were in line with expectations except for the credit quality problem," said Donald K. Crowley, senior vice president of Keefe, Bruyette & Woods Inc., San Francisco. "Clearly, they found more to charge off than expected earlier."

Mr. Crowley now predits that BankAmerica will lose 65 cents a share -- or nearly $100 million -- for the full year.

That loss would come despite the sale of the bank's headquarters complex and its FinanceAmerica subsidiary, which is being sold to the Chrysler Corp. for $405 million. BankAmerica expects to close that sale in the fourth quarter.

Mr. Crowley had estimated earlier this summer that BankAmerica would make 55 cents to 60 cents per share for the year -- or about $90 million.

Investors reacted rather mildly to the company's news. The price of a share of BankAmerica common stock on the New York Stock Exchange fell to $14, down 3/8, at the close of trading.

"The market, if not prepared for these earnings, was sufficiently open-minded," Mr. Crowley observed. "We were all concerned that it might be worse than this."

Mr. Crowley said he does not think that BankAmerica's board of directors will trim the company's dividend further when it meets on Nov. 4.

"I would expect they would sustain the dividend level," he said. He added that he still thinks that the company could earn $2 a share or better in 1986. If so, that would "still comfortably cover the dividend," he said.

BankAmrica officials could not be reached for comment.

BankAmerica cut its dividend to 20 cents a share from 38 cents a share shortly after it reported a $338 million second-quarter loss in what was supposed to have been a "break-even" period. …

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