B of A’s First-Quarter Net Rises 13% to $114 Million
BankAmerica on Friday reported first-quarter earnings of $114 million, up 13% from the $101 million reported a year ago.
Loan losses for the quarter, however, nearly doubled, from $120 million in the first three months of 1984 to $221 million this year.
The first-quarter results compare favorably to the fourth quarter of 1984, when the bank holding company recorded profits of $44 million after charging off $95 million lost in a mortgage securities scheme that the bank, in a lawsuit, has called fraudulent.
“These results reflect continued progress in the growth of our fundamental revenue sources, coupled with a slowdown in expense growth,” President Samuel H. Armacost said. “Loan losses in the first quarter remained at higher-than-normal levels and included large charge-offs in the commercial real estate and shipping sectors.”
At the end of the first quarter, BankAmerica’s non-performing loans--those on which the company is not receiving payments--totaled $3.5 billion, down from $4 billion on March 31, 1984, but up slightly from the year-end figure.
The company reported a 16% increase in income from sources other than interest on loans. It said it took in more from service charges on deposit accounts and fees for trading securities and foreign currency.
The bank continues to have problems, however, in containing costs. Personnel expenses, a major target of cost-reduction efforts, were down only 1% from a year ago and would have shown a 3% increase if the bank hadn’t incurred a one-time expense of $21 million a year ago for an early retirement incentive program.
Modest success was achieved in reducing the bank’s total assets, a move coupled to efforts by Bank of America, the company’s main operating unit, to comply with federal regulatory orders to increase capital. Total assets were $117 billion at March 31, down from $121 billion a year ago. The primary capital ratio at Bank of America was 5.85%. Regulators have ordered the bank to achieve a 6% primary capital ratio by next year.
BankAmerica’s return on average total assets was 0.39%, compared to 0.34% a year ago. The bank’s big money-center competitors generally show a return on assets of 0.55% to 0.75%.
