Bank of Boston Posts a Loss
Bank of Boston Corp. on Thursday posted a loss of $49.5 million and a decline in problem assets, in what analysts described as an encouraging second-quarter report.
Though still in the red, the bank appears to be getting stronger. It had an $89 million loss in the first period and a $187 million loss in the fourth quarter of 1990. In the second quarter of last year, the bank had a scant $3.5 million profit.
Analysts said the big New England banks showed welcome signs of stabilization in the second quarter, with Bank of Boston joining the group.
"It's definitely better than expected," said Carole Berger, an analyst for C.J. Lawrence Morgan Grenfell in New York, who had predicted a $78 million loss for the bank.
Bank of Boston's stock rose $1 on the news Thursday, to close at $10.
Bank of Boston's health looks even better when a restructuring charge is taken into account. The bank took a $40 million charge for severance payments and other elements of its expense-reduction plan.
"They nearly broke even: They're back from the dead," said Nancy Bush, an analyst for Brown Brothers Harriman in New York.
Indicating it has made strides in credit quality, the bank's total nonperforming assets declined by $43 million in the three-month period, to $1.75 billion.
Other New England companies also showed improvements in the quarter. Shawmut National Corp. noted a 6% drop in nonperforming assets, and Fleet/-Norstar Financial Group Inc. said nonperformers shrank at two of its New England units.
Ms. Bush, however, injected a cautionary note into Bank of Boston's numbers. "Nonperforming assets remain essentially flat if you include renegotiated loans," she said.
Renegotiated loans, or loans with an approximate yield of only 7%, increased to $213 million. This represented a 32% increase from the first-quarter level of $161 million. Many analysts classify these loans as nonperforming.
Pretax Earnings Climb
In one very positive sign, the company's pretax earnings rose 58%, to $103 million from $65 million in the first quarter.
Noninterest expenses were essentially flat at $286 million. The figure does not include the restructuring charge and other onetime expenses.
Table : Bank of Boston Boston Dollar amounts in millions (except per share)Second Quarter 2Q'91 2Q'90Net income $(49.5) $3.5Per share (0.70) (0.04)
Net interest income (tax. equiv.) 226.0 246.2Margin 3.25% 2.92%ROA NA NAROE NA NANoninterest income 166.9 202.4Noninterest expense 359.1 315.7Loss provision 75.0 125.0Net chargeoffs 75.0 200.0First Half 1991 1990Net income $(138.2) $47.2Per share (0.70) (0.04)
Net interest income (tax. equiv.) 433.8 556.9Margin 3.12% 3.32%ROA NA NAROE NA NANoninterest income 321.6 413.9Noninterest expense 703.6 642.2Balance Sheet 6/30/91 6/30/90Assets $32,279.0 $37,297.0Deposits 25,964.0 28,662.0Loans 21,668.0 22,825.0Shareholder equity 1,301.0 NALoss reserve 924.0 NAReserve/loans ratio 4.26% 3.91%Nonperf. loans 1,178.0 1.240.0Nonperf. loans/loans 7.90% 8.30%Tier 1 capital ratio 4.80% 6.10%