EARNINGS : 2 California Banks Buck Trend, Post Record Profits

Two of California’s biggest banks--Security Pacific Corp. and Wells Fargo--reported record earnings for 1989, but some East Coast banks, suffering from continuing problems with loans to developing countries, posted losses and earnings declines.

“The theme of the day (for California banks) was reassurance of credit quality,” said Thomas Hanley, banking analyst with Salomon Bros. in New York. Investors have been scared away from bank stocks lately because of worries about declining real estate prices and loan quality problems, he added. “Problems are going to emerge over time, but if you look at the earnings of the California banks, you see the problems are manageable.”

The same could not be said for some of New York’s biggest banking companies, however.

Citicorp, the nation’s biggest bank with $231 billion in assets, reported a net loss of $784 million, or $2.52 per share, during the fourth quarter ended Dec. 31, contrasted with a profit of $747 million, or $2.19 per share, during the like quarter a year ago. The New York-based banking company said year-end earnings were $498 million, $1.16 per share, versus a profit of $1.9 billion, $5.36 per share, in 1988.

The loss was the result of setting aside $1 billion for possible losses on its portfolio of loans to developing countries in Latin America and Asia, according to the bank.

Manufacturers Hanover Corp. also blamed a $1.1-billion addition to its loan loss reserves for the company’s $518-million, or $10.21 per share, year-end loss. During 1988, the banking company earned $952 million, or $18.27 per share.

Manny Hanny’s fourth quarter net income of $62 million, or 82 cents per share, was also depressed by a $35-million after-tax charge resulting from a fraud at the company’s Geneva, Switzerland, branch. Net income for the like period in 1988 was $210 million, or $4.00 per share.

Security Pacific, which has $85 billion in assets, said earnings rose to $191.7 million for the fourth quarter ended Dec. 31, up from $169.5 million during the like quarter a year ago. Year-end profit reached $740.6 million, up 16% from $638.9 million in 1988.

Wells Fargo & Co.’s profit was up 17% for both the year and the fourth quarter. Year-end profit was $601.1 million, $11.02 per share, compared to $512.5 million, or $9.20 per share, in the previous period. Fourth-quarter earnings were $158.5 million, $2.95 per share, versus $136 million, $2.45 per share, in the year earlier period.