BankAmerica Reports 11% Jump in Income for 1994 : Finance: Chairman credits California economy but voices concern about Latin American prospects. Investors remain wary of bank stocks.
BankAmerica Corp., expressing enthusiasm over California’s economic outlook but concern about the company’s prospects in financially troubled Latin America, on Wednesday reported a 19% increase in fourth-quarter profit and an 11% jump in profit for all of 1994.
“We believe we are well positioned to benefit from an improving California economy and continuing growth in most of our other domestic and offshore markets,” Richard M. Rosenberg, BankAmerica chairman and chief executive, said in a statement.
Despite the strong performance announced by San Francisco-based BankAmerica and several other California and regional banks Wednesday, many investors were wary of banking stocks after disappointing results announced the day before by several major New York-based banks.
The banking results have been hurt by “weak revenues and high expenses, and investors are reacting by selling the stocks,” said industry analyst Mark C. Alpert at Alex. Brown & Sons.
On Wednesday, BankAmeri ca shares fell 87.5 cents to $41.625 on the New York Stock Exchange. Chase Manhattan fell 50 cents to $34.25; Chemical Bank dropped 50 cents to $37.875; Wells Fargo slumped $5.625 to $147.
BankAmerica--parent of Bank of America, California’s largest bank--reported a 1994 profit of approximately $2.2 billion, compared to about $2 billion in 1993. Reflecting the impact of previous mergers and a larger loan portfolio, profit from the fourth quarter jumped to $591 million from $496 million in the same three-month period of 1993.
The company also reduced its provision for credit losses by $50 million, to $100 million, during the three-month period ended Dec. 31.
The bank’s strong performance will probably result in a 15% dividend increase this year as well as a share buyback program, said industry analyst Ronald I. Mandle at Sanford C. Bernstein & Co.
There were some disappointments in BankAmerica’s earnings report, including a $68-million drop in non-interest income during the fourth quarter, which the bank blamed primarily on a falloff in securities trading activity.
“Our securities trading is down because of the volatility” in interest rates, Bank of America Vice Chairman Lewis W. Coleman told a news conference.
Coleman also said the bank lost about $10 million in foreign currency exchanges as a result of last month’s peso devaluation. Coleman said it is too early to tell what kind of impact the economic and financial problems in Mexico and other Latin American countries will have on its loan portfolio.
However, in the long run, “the lower (economic) growth rate (in Mexico) will produce lower profits and revenues for us than we expected,” he said.
Also reported on Wednesday:
* Chatsworth-based Great Western Financial Corp. said its 1994 profit totaled $251 million, compared to $62 million in 1993. The earnings included a $37.1-million after-tax gain on the December sale of 31 branches of a Florida subsidiary.
* City National Bank of Beverly Hills posted an annual profit of $37.2 million, a dramatic turnaround from the $6.9-million loss recorded in 1993. Higher net interest income, lower credit costs and cost controls contributed to the improved performance.
