Continental Illinois Loses $1.1 Billion in 1984
Continuing a string of fourth-quarter earnings gains by major banking firms, BankAmerica Corp. and Continental Illinois Corp. reported profit increases for the October to December period of 39% and 44%, respectively.
However, for all of 1984, BankAmerica’s profit fell 4%, while Continental Illinois--which was saved from failure by a massive federal rescue last summer--posted a $1.1-billion loss, the largest ever for a U.S. bank.
San Francisco-based BankAmerica, the nation’s second-largest bank holding company, posted a fourth-quarter profit of $73 million, compared to a $53-million profit in the year-ago quarter.
BankAmerica, which has been hurt by earnings declines in recent years, attributed the quarterly increase to sustained growth in net interest revenue and fee income throughout the year.
Net interest revenue was aided in part by falling interest rates, which lowered the interest the bank paid for deposits faster than the interest it earned from loans. Also helping were higher cash collections on certain loans to foreign borrowers.
However, BankAmerica said the quarterly gain was smaller than its management had expected. Wall Street analysts also said the results were lower than expected.
The latest results were hurt by high loan losses--which rose to $280 million in the quarter, compared to $249 million in the third quarter and $276 million in the year-ago quarter--and an addition to the loan-loss reserve of the firm’s Seafirst Corp. unit because of a weakened energy market.
For the full year, BankAmerica said its earnings slipped to $375 million from $390 million in 1983.
Chicago-based Continental Illinois, parent of Continental Illinois National Bank & Trust Co., posted a fourth-quarter profit of $36.6 million, compared to a $25.4-million gain in the final three months of 1983.
Continental Illinois officials said their company’s improved fourth-quarter results stemmed from the government’s restructuring plan, which relieved the company of “a substantial burden of non-performing loans,” and from a “favorable interest-rate environment.”
Its $1.1-billion net loss for the year compared to a profit of $108.3 million in 1983. The company posted small profits in the first and third quarters but had a second-quarter loss of $1.16 billion.
