SAN FRANCISCO - Shares of Unionbancal Corp. fell as much as 22% after the company told analysts that first-quarter credit losses will double from the previous quarter because of impaired loans.
Unionbancal, which is 64% owned by Bank of Tokyo-Mitsubishi Ltd., told analysts Thursday that it will write down twice as much impaired loans as it did in the previous quarter, according to Kirsten Gard, an analyst at Bear, Stearns & Co.
The company attributed the increase to a $9 million unidentified loss and five other loans it was unable to recover, she said. "Anything on credit quality is not a good thing," said Ms. Gard, who rates the stock a "buy." "People are worried it's going to be a trend."
Unionbancal set aside $30 million as provisions for credit losses in the fourth quarter, up 50% from a year earlier. Net writeoffs were $17 million during the quarter.
In an announcement Friday, the company said it expects the bank to meet analysts' earnings estimates of 82 cents a share for the first quarter.
Unionbancal said it plans to accelerate its share buybacks "in response to this unexpected decline" in share prices. Unionbancal shares have fallen 34% this year.
- Bloomberg News