B of A Reports $146-Million Operating Loss; Asset Sales Trim Deficit to $23 Million

BankAmerica said Friday that it suffered a loss from operations of $146 million during the third quarter, although one-time profits from the sale of various assets sliced the troubled banking giant’s net loss to $23 million.

“We are making progress, but I can’t predict when we’ll turn the corner and report an operating profit,” Frank Newman, BankAmerica’s newly named vice chairman and chief financial officer, said in an interview.

Third-quarter results were bolstered by gains of $77 million from the sale of BankAmerica’s Los Angeles headquarters building and $21 million from the sale of vehicle leases, as well as a $58-million pretax profit from the sale of the Tokyo residence that used to house the head of BankAmerica’s Asia division.

‘Offbeat, Hidden Assets’

“It just goes to show some of the offbeat, hidden assets BankAmerica has and can convert to cash when they really take inventory,” said banking analyst Donald Crowley of Keefe, Bruyette & Woods. Taxes on the Japanese transaction reduced the net gain to $25 million.

BankAmerica officials, perhaps fearing adverse reaction from shareholders who have seen their dividend eliminated in the past year, seemed embarrassed by the disclosure that the sale of the manager’s residence in Japan yielded a $58-million profit.

“It’s not a mansion,” Chief Financial Officer Newman said. “I’ve never seen it, but the land was in an extremely good location--an industrial location.”

The property was sold to International Business Machines, which will use it to expand an adjacent facility.

Results in Line With Expectations

BankAmerica posted net income of $65 million in the third quarter of 1985, including a $310-million gain from sale of the company’s San Francisco headquarters tower.

Third-quarter results for the parent company of Bank of America were in line with, or slightly better than, the expectations of analysts. And while the results represent a dramatic improvement over the second quarter’s net loss of $640 million, they fall short of heralding a turnaround.

“These numbers are no cause for celebration,” analyst Crowley said. “The key issue now is what is going to happen in the fourth quarter?”

BankAmerica’s loan losses--which, along with high personnel and other expenses, have caused the bank’s recent woes--remained high at $403 million during the quarter with foreign, commercial and industrial loan portfolios showing the highest losses.

The annualized ratio of net credit losses to average loans outstanding was 1.97% for the quarter, up from 1.86% in the second quarter and more than twice the industry average.

But problem loans remained essentially flat during the period at $4.5 billion--an encouraging sign in an institution in which that number had been rising steadily.

For the first nine months, BankAmerica posted a net loss of $600 million, compared to $159 million a year earlier.

“Our No. 1 goal is to return the corporation to profitability,” said A. W. Clausen, BankAmerica’s newly named chairman and chief executive.

“We will continue our strategy on an accelerated pace to improve the quality of the credit portfolio, to reduce costs and to improve the efficiency of the bank’s operations.”

Clausen replaced Samuel H. Armacost last week in the wake of the disastrous and shocking second-period results, which led to a plummeting stock price, management instability and several unsolicited threats to BankAmerica’s independence--most prominently, that of First Interstate Bancorp. BankAmerica is expected to spurn that $2.8-billion offer as inadequate.

So far this year, BankAmerica has pared 2,700 employees from its payroll, which currently stands at 75,400, and plans to shed another 2,300 before year-end.

But Newman, who has been on the job for two weeks, said he doesn’t plan to contribute to the turnover. Asked whether he plans to stay on the job longer than his predecessor, John Poelker, who quit after five months, Newman replied: “Damn right!”