EARNINGS : BankAmerica Gain Goes Against Trend
BankAmerica Corp., which has avoided the problems that have plagued many other big banks recently, said Thursday that its fourth-quarter profit rose 6% from the year-ago period to $287 million.
The San Francisco-based parent of Bank of America said the increase stemmed in part from a higher service charge on deposit accounts, which helped generate $554 million in non-interest income--an increase of 16%. The company said its bottom line was also helped by a rise in interest income from its loan portfolio. Interest income totaled $1.1 billion in the fourth quarter of 1990, compared to about $1 billion for the 1989 quarter, the company said.
BankAmerica was able to generate more interest income largely because it acquired four savings and loans from the U.S. Resolution Trust Corp. during the last three months of 1990, said Campbell Chaney, an analyst with Sutro & Co. in San Francisco. Chaney said BankAmerica inherited the most credit-worthy loans from the loan portfolios of the four thrifts based in California, Nevada and Arizona.
“BankAmerica is collecting on loans while some other big banks are taking losses on non-performing assets,” Chaney said.
BankAmerica has also used deposits from those recently acquired thrifts to generate new interest-producing loans, said Michael Abrahams, an analyst at Los Angeles-based Bateman Eichler, Hill Richards.
BankAmerica said its annual earnings rose from $1.103 billion in 1989 to $1.115 billion in 1990--an increase of about 1%.
BankAmerica Chairman Richard Rosenberg said he was pleased with his company’s earnings “in light of the weakening economy.”
BankAmerica’s improved results were in stark contrast to results reported by other big banks in recent days. Citicorp and Manufacturers Hanover Corp. in New York and Los Angeles-based Security Pacific Corp. all posted large fourth-quarter losses this week. Also, San Francisco-based Wells Fargo & Co. posted its first quarterly earnings drop since 1987.
The problems rippling through the banking industry stem largely from growing problems with commercial real estate loans and loans to finance corporate buyouts.
