As his troops brace for the inevitable layoffs and bad press clippings, Sam Armacost of BankAmerica continues to project optimism.
"I'm paid to be confident about our future," the bank's president and chief executive said in a telephone interview Wednesday. "I don't feel any pressure this morning that I didn't feel before."
Armacost's apparently upbeat attitude contrasts with the grimness of the news that he had to deliver Wednesday. BankAmerica reported that it lost $338 million in the second quarter, one of the biggest losses in U.S. financial history. The company faces the prospect of reporting an annual loss for the first time since the Depression.
Wednesday's news raised again the question of Armacost's future. Analysts suggested that he might be under extreme pressure to improve the bank's results or depart. Still, the bank's board of directors has been patient despite continuing disappointments.
The 46-year-old chief executive took the reins of the country's largest bank from A. W. Clausen in 1981 after a remarkably rapid rise through the company ranks. He is considered one of the bank's best salesmen who nonetheless has developed few close friends within the organization.
The four years of Armacost's tenure have been marked by an unending stream of bad news: declining profits, huge losses from a mortgage-securities scandal, branch closings and unprecedented layoffs. Earlier this year, Claire Giannini Hoffman, daughter of the bank's founder, resigned her honorary board seat with a blistering attack on Armacost and his top managers.
Through it all, however, Armacost has retained his optimism and the apparent support of his board of directors.
Not one member of the board has publicly criticized Armacost. And while one director has said--asking that his name not be used-- that he is "losing patience" with Armacost, none will say that the chief executive's job is in jeopardy.
At this point, Armacost's biggest problem might not be his directors but federal bank regulators. They have been taking an increasingly aggressive approach to bank examinations and were instrumental in the bank's decision to set aside $892 million in second-quarter loan-loss provisions.
What's more, the regulators appear to be taking a direct hand in what previously were board and management prerogatives. For instance, it was reported last week that federal regulators had suggested to a First Chicago director that bank chairman Barry F. Sullivan might have to be replaced if credit losses weren't solved quickly.
Sullivan's sins appear minor compared to the problems facing Armacost.
"The directors (at B of A) might not be in charge. It might be the regulators," said George M. Salem, chief bank analyst at the securities firm Donaldson, Lufkin & Jenrette.
"In defense of Sam, one would have to say he didn't create the system that made the bad loans. But the obvious move when the team is losing is to change coaches."
Analyst Mark Biderman of Oppenheimer & Co. agreed that the bulk of Armacost's problems were not of his making. Besides, he said, if Armacost were ousted, "who would you bring in to replace him?"
For his part, Armacost said he plans simply to carry on with the strategy that he's developed to trim jobs and expenses and reduce the global reach of Bank of America.
Has he given any thought to quitting?
"No. This is too much of a challenge. And I'm too young."
PROBLEMS AT BANKAMERICA BankAmerica Corp., the nation's second-largest bank holding company, reported a $338-million loss for the second quarter, its first loss since it began issuing quarterly figures in 1970. The parent company of Bank of America , Seafirst Corp. of Seattle and discount broker Charles Schwab & Co. has been severely hit by bad loans, domestic and foreign, and high operational expenses. The firm attributed the second-quarter loss to an $892-million provision for loan losses. (See story, Part I, Page 1.) THE BALANCE SHEET Year-end financial data in billions of dollars
1985 1984 1983 1982 1981 1980 Loan loss reserves 1.5 0.861 0.658 0.502 0.322 0.242 Assets 121 118 121 122 121 112
As of June 30.