B of A Nets $63 Million in Quarter; Problem Loans Up
BankAmerica Corp., which suffered a $377-million loss for all of 1985, on Wednesday reported net income of $63 million for the first quarter of 1986.
Though the bank holding company’s profit was 44.7% lower than in last year’s first quarter, it was viewed by analysts as a welcome improvement over its recent losses, including a $178-million deficit in the fourth quarter of 1985.
“It’s actually a bit better than I expected,” said Paul H. Baastad, an analyst with S. G. Warburg, Rowe & Pitman Akroyd in San Francisco.
Baastad said the only discouraging news in B of A’s results was an 11% increase in non-performing loans to $3.8 billion from $3.42 billion in the fourth quarter of 1985. Non-performing loans, which are at least 90 days overdue or have been restructured, stood at $3.55 billion in the first quarter of 1985.
“It shows they still have a significant level of credit problems,” said William J. Welsh, an analyst with Sanford C. Bernstein & Co. in New York.
The bank said most of the additional $382 million in problem loans involved real estate.
As expected, the company’s board of directors voted to omit its dividend on common stock for the second quarter. The bank’s last dividend payment was 20 cents a share last November. Securities analysts who follow the bank don’t expect it to pay a dividend until the end of next year at the earliest.
Samuel H. Armacost, BankAmerica’s president and chief executive, attributed the company’s rebound to lower loan losses and a cost-containment program. The bank said operating costs rose 4.4% in the first quarter from a year ago, compared to an average annual increase of 11.6% over the last five years.
Analysts agreed that the decline in net loan losses to $257 million from $527 million in the fourth quarter of 1985 was encouraging. Net loan losses a year ago were $221 million. B of A’s provision for loan losses in the latest quarter declined to $262 million from $591 million in the fourth quarter of 1985. The loan-loss provision a year ago was $209 million.