clarinews@clarinet.com (BRIAN ROONEY, UPI Business Writer) (01/19/90)
SAN FRANCISCO (UPI) -- BankAmerica Corp., California's largest bank, capped its financial rebound Thursday with record earnings of $1.1 billion, or $5.19 a share, for 1989. Net income for the year jumped 52 percent from $726 million in 1988, while earnings per share climbed 37 percent from $3.79. The bank, pushing forward with growth in consumer loans and home mortgages, said fourth quarter net income rose 2 percent to $270 million, compared with $265 million in the same quarter of 1988. Earnings per share slipped in the quarter to $1.21 from $1.36 in the year-earlier quarter, largely because of new stock issued through shareholder reinvestment and employee benefits programs. The bank's results were up 48 percent in the quarter if one-time items were taken out of the comparison, particularly a $351 million Brazilian debt payment received in the fourth quarter of 1988, Vice Chairman Frank Newman said. Newman is the company's chief financial officer. The results fell in line with analyst expectations. Bank of America's stock dropped 12.5 cents to $26.50 a share by late afternoon Thursday in a generally down market. ``Improved credit quality, increased loan and deposit volume, and growing fee revenue, coupled with continuing control over operating expenses, have produced an excellent finish to a turbulent decade for the corporation,'' said Chairman A.W. Clausen. The bank's return on average assets, a common measure of bank profitability, climbed to a healthy 1.14 percent in 1989 and 1.07 for the fourth quarter, Newman said. Disregarding special items and tax savings, the ROA climbed to 1.0 for the year, he said. During 1989, Bank of America reduced its portfolio of loans to developing countries by $1.4 billion. Simultaneously, it increased its reserves against Third World losses to 47 percent of exposure. BankAmerica expanded into Nevada through its newly acquired subsidiary, Bank of America Nevada, while its Seafirst Corp. unit added 12 new branches in Washington State's Pierce County, Clausen said. The bank substantially increased its ratio of equity to assets and is now positioned to take on larger acquisitions, Newman said. Newman declined to comment on speculation the bank might go after ailing First Interstate Bancorp of Los Angeles. ``We'll look at a number of alternatives but do not have anything big in the works,'' he said. Net credit losses stemming from Third World loans totaled $89 million in the last quarter and $263 million for the full year, it said. Aside from loans to the developing world, BankAmerica said, nonaccrual assets totaled $1.28 billion at year end, virtually unchanged from a year earlier. Nonperforming real estate loans totaled $375 million, down $167 million from their level at the end of 1988. BankAmerica's total assets at year end were $98.8 billion, compared with $94.6 billion at the end of 1988.