Clausen Pleased by B of A’s Gains, but He Isn’t Complacent

At 9 a.m. Friday, the 25 top officers of BankAmerica gathered on the 50th floor of the headquarters building in San Francisco for their monthly management meeting. The mood was upbeat, befitting an organization gaining strength with each quarter.

The day before, California’s largest banking company had reported third-quarter earnings that were stronger than industry analysts had expected and more than triple the profit of a year ago.

But the talk around the table in the bank’s board room Friday was also of problems that remain for the company and its primary unit, Bank of America.

A. W. Clausen, chairman and chief executive, reminded his senior managers that revenue from fees and charges was flat from a year earlier and the company is still overstaffed in some areas.

“We’re all feeling a lot better than we were two years ago,” Clausen said in an interview a few hours after the meeting ended. “Not complacent. But I’m damned pleased.”

In describing the session earlier in the day, Clausen acknowledged that some executives expressed concern about continuing job cuts to trim expenses. The company eliminated 4,700 positions in the first nine months of 1988; the bank has nearly 7,000 fewer empoloyees than it did a year ago.

But Clausen said he and other senior officials are determined to make further inroads in personnel costs and related expenses in the coming months, although he declined to provide specific figures.

The meeting Friday morning, which lasted until shortly past noon, marked not only the strong earnings report for the third quarter, but the second anniversary of Clausen’s return to the helm of the bank from which he had retired in 1981.

A New Clausen

In reflecting on the past two years during a 90-minute interview in his 40th-floor office Friday, Clausen praised the team effort of the bank’s employees and his fellow executives, peppering his conversation with terms such as “collegiality” and “communication” and “shared goals.”

A lot of current and former B of A employees say this expansiveness marks a new Tom Clausen, an executive who has learned to share the authority for decision making and shed his autocratic manner.

Clausen did not flinch when asked if he had abandoned what many said was a harsh management style. Nor did he acknowledge that he ever ignored his colleagues.

“We have an old Norwegian saying that covers that,” Clausen said. “Bull crap.”

He said he never failed to consult with other bank officials. And on Friday he was lavish in praising the executives who have improved the bank’s domestic credit quality and helped it regain the confidence and accounts of a public that had lost a degree of faith.

Certainly the results of that progress showed in the quarterly earnings report, which showed a sharp increase in income from consumer and real estate loans, a barometer of customer confidence. In addition, B of A has opened more customer accounts than it has closed each month since July, 1987.

Big Loan Exposure

The picture, of course, is not completely rosy. Non-interest income, which is derived from fees and charges, has remained flat, and the bank cannot become solidly profitable without growth there.

BankAmerica also has an enormous and nagging loan exposure in less developed countries. But reserves for the LDC debt have increased to 31%, according to the bank.

Two years ago, the bank was far worse off. Clausen said he was “scared” when he first returned to the bank following unfounded rumors that the institution was on the brink of bankruptcy. But he said his comfort level has increased with each quarter of improvement.

“The last two years have been the most satisfying and rewarding in my lifetime,” Clausen said, leaning forward in his chair. “But I wouldn’t want to go through it more than once.”