Union Bank Warns on Credit Losses, Slowing Homebuilding
Saying it was feeling the effect of "weakening operating conditions for the homebuilding industry," UnionBanCal Corp. said that it has increased its total provision for credit losses to $60 million for the fourth quarter. The parant of Union Bank of California, NA, had earlier forecast $15 million in loss reserves for the quarter. UnionBanCal now holds roughly $100 million in reserves against its homebuilder portfolio, it said, although the no net charge-offs were recorded against reserves during the fourth quarter of 2007. The $60 million charge will be more than offset by an after tax-gain of $61 million on the sale of Union Bank's retirement recordkeeping business to a subsidiary of Prudential Financial, Inc., the company said. Excluding gain-on-sale, earnings per share are expected to be between $0.76 and $0.81, compared to an October forecast of $1.07 to $1.12 per share. Consolidated net income, however, is expected to fall between $1.17 and $1.22 when accounting for the after-tax gain. It's always a plus when a well-timed sale can mask losses, isn't it? For more information, visit http://www.uboc.com. Disclosure: When this post was published, the author held no positions in UB.