Security Pacific Posts Solid Gains

Security Pacific on Thursday reported strong earnings gains for the fourth quarter and for all of 1985, despite heavy losses on loans to energy firms and consumers.

The Los Angeles-based banking firm shared a prosperous year with most other major banks, several of whom reported record earnings Thursday. Continental Illinois, rebounding from a disastrous 1984 in which it lost $1.1 billion, posted a $150.5-million profit for 1985.

Security Pacific, the nation’s seventh-largest bank holding company, said it earned $86.1 million in the fourth quarter of 1985, up 8% from the same quarter of the previous year. For all of 1985, profits were $322.8 million, an increase of 10.9% over the $291 million reported for 1984.

Richard J. Flamson III, Security Pacific’s chief executive, said the bank has reported record annual earnings in each of the past 11 years, fueled in part by successful forays into non-traditional banking areas such as leasing, venture capital, mortgage banking and commercial finance.

“The balance brought about by this diversification was important again in 1985, as strong growth in earnings from our Specialized Financial Services System offset continued adversity among some of our customers in domestic industries,” Flamson said.

That adversity was felt most heavily in the oil and gas business, which accounted for fully a third of Security Pacific’s net loan losses of $353.1 million in 1985. Net loan losses for the previous year were $210 million.

The bank also took big hits in consumer lending, particularly credit cards, auto loans and home improvement loans. Agriculture, manufacturing and high technology also contributed to the bank’s loan losses.

On the foreign side, the bank’s results were helped by the return to performing status of about $32 million in loans to Argentina. The bank continued to suffer from non-payment of interest on a substantial portion of its more than $1 billion in outstanding loans to Mexico and Brazil.

Non-performing loans totaled $1.134 billion at the end of 1985, up slightly from $1.123 billion a year earlier.

Total assets at year-end were $53.6 billion, a 16% increase over the $46.1 billion reported for Dec. 31, 1984.

Bankers Trust New York, the nation’s ninth-largest banking firm, reported 1985 fourth-quarter profits of $96.3 million, compared to $79.7 million for the same period in 1985. For the full year, profits rose 21% from $306.8 million in 1984 to a record $371.2 million in 1985.

Bankers Trust attributed the improvement to a lower provision for future loan losses and higher profits from loan fees and securities and foreign exchange trading.

The company said the provision for loan losses for the quarter totaled $45 million, compared to $100 million a year earlier. Net charge-offs for the quarter declined to $27 million from $40.8 million a year ago.

Continental Illinois, the Chicago-based holding company for the nation’s 11th-largest bank, returned to a more normal performance after its near-collapse in 1984.

The bank suffered a run in May, 1984, after disclosure of huge loan losses. The run was stemmed by a multibillion-dollar bail-out by the Federal Deposit Insurance Corp. and a consortium of 28 big commercial banks.

For the fourth quarter, Continental Illinois reported net income of $38.1 million, compared to $36.6 million in 1984. It charged off $20 million in bad loans in the 1985 period, less than half the $48 million in charge-offs in 1984’s fourth quarter.

At year-end, the bank’s non-performing loans totaled $836 million, down markedly from the $1.02 billion at the end of 1984. Total assets were virtually unchanged at $30.5 billion.

Bank of New York reported record earnings for 1985, with profits of $130.3 million, compared to $107.5 million a year ago, a 21% gain. The 29th-ranked bank attributed the increase to continued improvement in net interest earnings, strong growth in loan volume and higher trust, securities and other fees.

The company said it boosted its allowance for loan losses to $173.1 million at Dec. 31, 1985, compared to $164 million a year earlier, chiefly to cover expected losses from energy companies and the Third World.