BankAmerica Shows Strong First Quarter : Banking: On first anniversary of merger with Security Pacific, it records a 60% jump in profit.
BankAmerica Corp., celebrating the one-year anniversary of its huge merger with Security Pacific Corp., said Thursday that its first-quarter profit jumped 60% compared with the first three months of 1992.
The San Francisco-based parent of Bank of America said the earnings gain--to $484 million from $303 million--came on a 54% surge in the company’s assets, thanks largely to the merger.
In Los Angeles, meanwhile, California Federal Bank extended its recent rebound by posting a first-quarter profit of $10.5 million, compared with an operating loss of $2.9 million a year earlier. (The thrift had a $16-million gain from discontinued operations a year ago that boosted its net income in that quarter to $13.1 million.)
Calfed also said its capital, or cushion against future losses, has climbed above regulators’ requirements for the thrift, and its stock spurted $1.625 a share, to $18.75, in New York Stock Exchange trading.
Despite BankAmerica’s first-quarter gains, Chairman Richard M. Rosenberg cautioned that the continued woes of the California economy “remain a source of concern.” Nonetheless, BankAmerica said it wrote off $303 million in loan losses in the first quarter, compared with $501 million in the last quarter of 1992.
Although the bank’s first-quarter profit rose sharply, the earnings-per-share slipped to $1.19 from $1.22 because BankAmerica has 54% more shares of common stock outstanding than a year ago.
The results were about as expected on Wall Street, and BankAmerica also argued that comparing its overall year-to-year results is not particularly useful because the Security Pacific deal had not yet been completed in the first quarter of 1992.
BankAmerica has also incurred substantial one-time costs since then related to closing branches and otherwise merging Security Pacific’s business with its own.
But the company’s figures suggest BankAmerica, the nation’s second-largest banking concern behind Citicorp, has been able to maintain the same earning power it had a year ago despite the problems of digesting the merger.
For instance, even though BankAmerica’s assets jumped to $184 billion from $120 billion a year ago, the bank’s return on those assets edged up to 1.06% from 1.03%. The ratio measures how profitably a bank employs the assets at its disposal, and a reading of 1% or higher is a strong showing.
“The results were solid, in line with expectations,” said David Barry, an analyst with the investment firm Keefe Bruyette & Woods in New York. “It’s a holding period while they finish putting the Security Pacific merger together.”
After that, he said, BankAmerica’s profits “should do well once the California economy gets back on its feet.”
Separately, BankAmerica said it will move 1,100 of its New York employees into the World Trade Center, becoming the first major new tenant since the office complex was rocked by a terrorist bombing in late February.
Calfed said that in addition to its latest earnings, the thrift continued to whittle away at its mountain of bad loans. “Non-performing” assets slipped to 7.09% of Calfed’s $16.8 billion in assets, from 7.11% on Dec. 31.
Calfed in recent months has shored up its capital base with the help of a debt-for-equity swap and a sale of preferred stock.
