Huge Rise in Problem Loans Cited by B of A

BankAmerica’s $338-million second-quarter loss was fueled by huge increases in losses from foreign, agriculture and real estate loans, according to bank statements filed with the Securities and Exchange Commission.

Foreign and farm lending losses doubled from a year ago, while losses from real estate lending rose eightfold. Losses from consumer installment lending, which includes credit card, home equity and personal loans, continued to hit record levels.

The bank’s losses were its first since 1933 and led to its first dividend cut in 52 years. The bank announced last week that it was cutting the pay-out to 20 cents from 38 cents to save about $110 million a year.

Foreign loan losses in the second quarter totaled $168.7 million, compared to $95.8 million in the period last year.

The bank’s agricultural loan portfolio continues to plague it, with losses reaching 8.74% of total loans outstanding, for a total of $39.3 million. The comparable figures for a year ago were 3.27% and $18 million, respectively.

Real estate loan losses grew to $42 million from $5.3 million a year ago, while consumer loan losses totaled $73.8 million, compared to $43.5 million last year.

Overall, B of A charged off 1.83% of its total loans of $84 billion, a ratio more than three times the average of its major bank peers.