Earnings Reports for Jan. 16

Bad Loans Drive Down Earnings at Bank of America

Fourth quarter profit fell 27 percent at Bank of America and the company blamed the decline on high loan losses and reduced capital markets business due to a slowing economy.

Quarterly profit dropped from $1.9 billion, or $1.10 a share, to $1.39 billion this year, or 85 cents a share.

Bank of America's 12-month earnings were 4 cents higher per share, from $4.48 to $4.52, but total net earnings dropped from $7.88 billion in 1999 to $7.52 billion last year.

The company said last month that its fourth quarter wouldn't be in line with previous periods. The 1999 fourth-quarter earnings included a $213 million after-tax charge to cover costs associated with the merger of NationsBank and BankAmerica corporations.

Last year, Bank of America's net income was $7.52 billion, or $4.52 per share, compared to $7.88 billion, or $4.48 per share, in 1999. Results in 2000 and 1999 included after-tax charges associated with growth initiatives and mergers of $346 million and $358 million, respectively.

A report released last week by New York investment banking firm Salomon Smith Barney said Bank of America has $4.244 billion in corporate loans that could default in 2001 — more than any other bank in the country.

Bank of America is a participant in three of five of the largest syndicated loans, including:

Owens-Illinois, a Toledo, Ohio-based packaging company, for $4.5 billion,

Finova, a financial-services company in Scottsdale, Ariz., for $4.7 billion, and

J.C. Penney, the retail chain based in Plano, Texas, for $6 billion.

Bank spokesman Bob Stickler said last week Bank of America is one of the most aggressive commercial lenders in the country, meaning it will have more bad loans than more consumer-oriented banks.

While Stickler wouldn't confirm the amount of the loans, he said that $4.244 billion represents 1 percent of the bank's $400 billion loan portfolio.

"As the company projected late last year, loan losses and nonperforming assets increased significantly in the fourth quarter as the economy slowed," Bank of America said in its earnings statement. "Higher provision expense accounted for the majority of the decline in net income."

Net charge-offs for the year totaled $2.4 billion, compared to $2 billion in 1999. Charge-offs for the last quarter were $1.08 billion.

"Nonperforming assets were $5.5 billion, or 1.39 percent of loans, leases and foreclosed properties at Dec. 31, 2000, compared to $3.2 billion, or .86 percent a year earlier," the statement said.

"The increase in nonperforming assets was centered in the commercial domestic portfolio, where nonperforming loans were up $1.7 billion from a year earlier." BACK TO TOP

Citigroup's Profits Rise 11 Percent

Citigroup, the No. 1 U.S. financial services company, said today its fourth-quarter profits rose 11 percent, helped by solid growth in its large consumer banking business.

The company, with banking, insurance and brokerage operations in more than 100 countries, earned $3.33 billion or 65 cents a share, in the quarter, compared with $3.00 billion, or 58 cents, in the year-ago quarter.

Its fourth-quarter 2000 results included $146 million in charges, mostly for a transportation loss provision for the truck loan and leasing portfolio of Associates First Capital Corp., which it bought last November.

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