Boatmen's Sees Sour Loans Leveling Off
ST. LOUIS - Boatmen's Bancshares Inc. anticipates little change in its level of nonperforming assets for the remainder of the year, said chairman Andrew Craig 3d.
Mr. Craig said in an interview that the $17 billion-asset bank holding company also plans to maintain its current level of loan-loss provisions because of concern about the health of commercial real estate.
"We've been gradually adding to our reserves because we're uncomfortable with the overall real estate situation," he said. "We don't anticipate any major changes in the provision."
A Narrow Range
In the first quarter, St. Louis-based Boatmen's took a loan-loss provision of $20.5 million and earned $1 a share. In last year's first quarter, the bank took a $14.4 million provision and earned 94 cents a share.
"Our nonperformers are going to stay generally in the range they are for a while," Mr. Craig said. "They might pop up a little bit, and they might pop down a little bit. It just depends on what is happening in a given quarter."
As of March 31, nonperforming assets, including foreclosed property, were $293.9 million. The reserve for credit losses totaled $157.2 million.
On March 31, 1990, the company's nonperforming assets were $222.8 million and loss reserves $141.9 million.
Mr. Craig declined to comment on analysts' average second-quarter earnings estimate of $1.02 a share. That would be above the 95 cents turned in for the 1990 period.
Boatmen's which is well capitalized, is seen expanding in states contiguous with Missouri, including Oklahoma, Arkansas, Tennessee, Kentucky, Illinois, Iowa, Nebraska, and Kansas.
A recent offering of 2.99 million shares at $38.50 apiece to finance the acquisition of First Interstate Bank of Oklahoma from First Interstate Bancorp, Los Angeles, was oversubscribed.
The acquisition of the $860 million-asset Oklahoma bank will be completed in August and contribute to earnings immediately, Mr. Craig said. And there is potential for growth in Oklahoma since the economy is poised for a recovery that is not dependent on energy, he said.
"It's sort of a typical, boring, midwestern type of economy that we're used to going into and doing our blocking-and-tackling kind of banking," Mr. Craig said
Earning Power Sought
Depending on acquisitions, Mr. Craig said, Boatmen's could have assets of $25 billion to $30 billion in five years. But the company's main acquisition goal is earning power, he said.
"We're alert to good opportunities that fit our strategy of no significant asset risk, no significant dilution, and meaningful market share," he said.
There is a limit to the prices that Boatmen's is willing to pay, Mr. Craig added. For example, Banc One Corp.'s proposed $347 million acquisition of First Illinois Corp., equal to about 2.75 times First Illinois's book value, would probably be too expensive for Boatmen's.