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.
Union Bank Warns on Credit Losses, Slowing Homebuilding
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