Security Pacific Posts 10% Gain; Big Loss at J. P. Morgan
Security Pacific Corp., the nation’s sixth-largest bank holding company, said Monday that its quarterly profit rose 10%. J. P. Morgan & Co., the third-largest bank holding company, posted a third-quarter loss of $1.8 billion.
The Los Angeles-based Security Pacific attributed its gains to strong results from California and the Northwest overcoming weakness in Arizona commercial real estate.
For the quarter ending Sept. 30 the parent of Security Pacific Bank, with operations throughout the West, earned $185.1 million compared to $167.9 million for third-quarter 1988.
“Strong growth in our California consumer and residential real estate businesses, continuing strength in our Pacific Northwest business units, as well as a good showing by our financial services units, have more than offset continuing weaknesses in the Arizona commercial real estate market” said Richard J. Flamson II, chairman and chief executive.
The New York-based Morgan said the $1.8-billion, third-quarter loss reflected its decision to add $2 billion to its reserves against shaky loans to Third World customers.
The loss for the three months ended Sept. 30, compared to a profit of $233.6 million during the same period a year ago.
It was in line with projections made Sept. 21, when Morgan announced that it was adding $2 billion to its loan-loss reserves. Other major banks took similar action and also showed big third-quarter losses.
The additional funds brought Morgan’s reserves to $3 billion, or 100% of its estimated portfolio of medium-term and long-term lending in Third World countries--the highest of any money-center bank.
For the first nine months of 1989, Morgan’s net loss was $1.4 billion, compared to last year’s earnings of $744 million.
Morgan said its non-interest income rose by 12% to $414 million in the third quarter, but non-interest expenses also increased in the quarter, to $496 million from $429 million.
Net interest income fell to $254 million from $347 million, while net interest expenses rose to $496 million from $429 million.
Morgan is the parent of flagship Morgan Guaranty Trust Co. of New York and has assets of about $100.4 billion.
