Bank of California Loses $183 Million in Quarter : Banking: $200 million was set aside to cover any loan losses.
Bank of California lost $183 million in the second quarter, becoming the first Japanese-owned bank in the state to disclose that it shares the major loan problems afflicting other California institutions.
The San Francisco-based bank, owned by Mitsubishi Bank Ltd. in Tokyo, confirmed Wednesday that it set aside $200 million for possible losses on loans. The loss and the amount set aside are hefty for an institution the size of Bank of California, which has about $9 billion in assets.
Susan Banashek, a spokeswoman for the bank, said 60% of the provision for losses on loans was real estate-related, while the other 40% is tied to corporate buyout loans and general commercial loans. Most of the problem loans are believed to be in California. The bank also operates in Washington and Oregon.
The bank said it plans to reduce its emphasis on real estate lending. As of Dec. 31, $3.1 billion of its $7.4 billion in loans, or 42%, were real estate-related.
Although some of the state’s major banks, notably Security Pacific Corp., Wells Fargo & Co. and First Interstate Bancorp, recently disclosed increasing loan difficulties, Japanese-controlled institutions in California have not previously disclosed major problems.
Japanese banks in the state have shown mixed results lately. Sumitomo Bank of California and Sanwa Bank have posted healthy earnings, while results for Union Bank, controlled by Bank of Tokyo, have been flat.
Banking industry executives said the Bank of California disclosure does not surprise them because the operations of Japanese-owned banks in California mirror their competitors here. “They’re not immune. They’re lending in the same area,” said an investment banker who deals frequently with Japanese banks.
Bank of California did post a loss in the fourth quarter of 1990, albeit a much smaller one of $19 million.
The privately held bank as a rule does not publicly announce quarterly earnings the way most banks do. But it does periodically disclose its financial performance in communications to employees and customers.
While not disclosing second-quarter results, the bank said it lost $168 million in the first half of the year. Because it earned $15 million in the first quarter, that would put the second-quarter loss at $183 million.
Even with the second-quarter loss, it said it comfortably meets all regulatory guidelines for capital, the financial cushion against losses.
In a statement, Chief Executive Yasumasa Gomi said Mitsubishi “has confirmed its continuing support and its commitment to the financial integrity of the bank.”
MORE EARNINGS: D3
