Hartford Courant from Hartford, Connecticut • Page 21

BOTH SIDES Slje Jfaftfbfii iToufanl 2nd ed. edr1 WEDNESDAY APRIL 10, 199t BUSINESS Study says state banks have highest ratio of bad loans By JOANNE JOHNSON Courant Staff Writer Connecticut banks continued to have the highest proportion of bad loans in the country at the end of 1990 as New England's economic and real estate woes deepened, a study released Tuesday says. Seven of the nation's 10 states with the highest percentage of bad loans were in the Northeast, said the year-end study by Alex Sheshunoff Co. Connecticut banks led the group with bad loans totaling 10.38 percent of all loans, according to the consulting firm, considered a leading authority on the banking and savings and loan industries. Experts said that while the statistics showed most banks in the nation are profitable and well-capitalized, Connecticut banks remain strained because of declining real estate values.

"The figures speak for themselves," Tracey J. Stangle, an analyst with First Albany Corp. of Hart- ford, said. "There's a preponderance of non-performers in the real estate sector and there's very little movement in that area, particularly in commercial real estate, though residential real estate's picked up a little," Stangle said. Stangle said he does not expect any marked improvement in the level of Connecticut banks' nonper-forming loans at least until the middle of 1991.

"If you look back in history, even if The Sheshunoff firm said earlier that Connecticut banks led the nation in the highest percentage of bad loans at the end of the third with 7.5 percent of total loans as of Sept. 30, 1990. Connecticut also led the country in the growth of bad loans and other so- called nonperforming assets at the end of 1989, Sheshunoff said. As of Dec. 31, 1990, Sheshunoff said banks nationwide reported prof-' Please see State, Rage C2 we do get a pickup in the economy, the nonperformers may not come down for some time afterwards," Stangle said.

Statistics for individual banks were not immediately available Tuesday. But Alex Sheshunoff, who is head of the Austin, company, said Connecticut also was the state hit hardest in New England in terms of bank profits, with only 25 oi 67 banks recording earnings at the end of the year. Citytrust losses top $64 million; FDIC aid sought By ANDREW JULIEN and JOANNE JOHNSON Courant Staff Writers Citytrust Bancorp problems intensified Tuesday as the Bridgeport banking firm said its losses for the last quarter of 1990 were double initial projections and that it was asking the government for help. The parent company of Citytrust bank lost $64.47 million in the quarter, twice the $32 million bank officials projected in January. The continued deterioration of the state's real estate market led to greater losses than originally anticipated, officials said.

The fourth-quarter loss makes both the bank and the holding company technically insolvent which means they owe more than they own. The bank had negative net worth of $30.6 million; the holding company, $55.3 million. The company also lost $122,602,000 for the year, compared with a net loss of $84,771,000, for the year before. Regulators say most customers of troubled banks do not nave to worry because deposits up to $100,000 are covered by the Federal Deposit Insurance Corp. Also, the bank has cash to meet depositor demands, a bank spokeswoman said.

The company also said it was asking the FDIC for open bank assis tance, a means by which banks seek isuiuw svviL I -t- fit '1 mat. Stephen Dunn The Hartford Courant It was standing room only at the annual meeting for shareholders McCarte of Hartford, an employee in the company's human re-of Travelers Corp. on Tuesday in Hartford. In the foreground is Liz sources claim department. Travelers' results get mixed reaction A lease 11 UOf A ctr1-It-o cirfric riff see Citytrust, "Whether you look at it as 62.7 percent losing money, or 37.3 percent making money, the net result is a very tough environment for both local banks and businesses," Sheshunoff said.

"We are witnessing the troubled recent history of Texas banks repeat itself in New England as regional bankers combat their myriad real estate loan problems and out-of-state institutions conduct a bidding war for the failed institutions," he said. i ed' by scaling back or eliminating rebates effective April 1 on some popular lighting equipment. Other rebates were unchanged. "We are not going to walk away from the program or stop it this year, but hold at a position where we feel we have some control," said Earle F. Taylor, the company's director of conservation and load management.

"Customers pay for the programs and we don't want to pay more than Volume on the floor of the Big Board came to 169.94 million shares, against 138.59 million Monday. Many stock analysts closely watched the Fed's market activities for signs the central bank would ease interest rates. Economists have widely anticipated a cut in interest rates to stimulate the economy since last Friday's release of the March unemployment report It showed the nation's jobless rate at 6.8 percent, the highest level in four years. "It's still a question of waiting around to see what the Fed is going to do," said Hildegard Zagorski, vice president Prudential Securities Co. By noon, the Fed entered the government bond market but didn't show any sign of easing credit.

The Dow Jones average promptly headed downhill. "There was no impetus to buy," said Jack Solomon, a vice president at Bear Stearns Co. He suggested $23.75, at the "The resulted in company on part of those said said she had years. The cut her annual company that shaky image," But Steven and shareholder has treated "You because Travelers investment of commercial after six-year battle close of trading Tuesday. performance during the past year has a great loss of confidence in the my part certainly, and also on the potential customers and stockholders," Doris Trowbridge of Willimantic, who been a Travelers stockholder for 50 in dividends, she said, has reduced retirement income nearly $3,000.

"A cuts its dividend projects a very she said. L. De Mino, a Travelers agent from Florida, said the company him well. He said he tells customers, don't throw away 125 years of credibility of some lean times." has put part of the blame for troubles on the nation's oversupply real estate. Please see Travelers, Page C2 By DIANE LEVICK Courant Staff Writer Shareholders voiced a mix of faith and bitter disappointment in Travelers Corp.

Tuesday as executives explained the company's financial troubles at the annual meeting. Travelers has slashed its shareholders' dividend from 60 cents to 40 cents a share. Its stock price tumbled from around $21 a share to $11.50 a share last fall after the company announced the dividend cut and disclosed problems in its real estate and mortgage loan portfolio. About 10 lawsuits by shareholders against Travelers are pending. Travelers posted a $178 million net loss for 1990 after boosting reserves for problem investments to $1.1 billion.

The company's stock has been trading in the $23 to $24-a-share range, but some shareholders were still concerned Tuesday. Travelers stock was down 62 cents, to financial help from the government. Citytrust has also asked regulators to relax the terms of previous agreements. "We're looking for additional time as well as capital from the government," said Elizabeth T. Doetzel, an executive vice president at City-trust Regulators have not said whether any aid would be available, bank officials said.

James V. McFarland, deputy regional director of the FDIC in Boston, said requests for financial help are usually made after a bank has lined up a private investor to contribute, but Citytrust's proposal has no such investor. He declined to say how much capital Citytrust is seeking. The request, as well as a Citytrust plan to raise capital to regulatory minimums by 1994, are being reviewed in Washington, D.C., he said. "While the situation is of concern to us and the FDIC, it would be inappropriate to comment further on it," Ralph M.

Shulansky, the state banking commissioner, said in a statement. The company is working with federal and state regulators, investment bankers and others to try to return to solvency, Doetzel said. Those plans include a search for investors. Please Page C2 nications Commission, if too much time expires before another buyer is found, the license will revert back to the FCC and may be subject to a freeze on new licenses. Krechevsky gave Astroline 60 days to file schedules of administrative claims or debt that were incurred since Astroline filed for Chapter 11 bankruptcy in 1988.

The filing gave the company protection from its creditors while it tried to work out a court-approved plan to repay its debt During the next 60 days, a creditors meeting will be held and a permanent trustee will be appointed. The company's major creditors, which include large televison programmers such as Lorimar, Orion and MCA, had forced it into bankruptcy in 1988. In January, these same creditors, represented by Stamford Attorney John S. McGeeney, asked Krechevsky to covert the filing to Chapter 7, which is liquidation of assets. He declined to comment to The Courant throughout the case.

Since acquiring the station in 1985, Astroline was plagued by a series of Please see Judge, Page C2 Today's data DOW JONES AVERAGE (Tuesday's close) 30 Industrials 2,873.02 Down 45.54 T-BILLS 12-month 6.26 (average) 6-month 5.68 3-month 5.60 MORTGAGES (Average, based on local survey) Adjustable, 1 yr 9.28 Fixed, 30 yr. 9.78 Inside Retail executive faults deregulation Deregulation of American industry is a root cause of today's economic problems, Philip T. Davidson, a New Britain retail executive, tells the Hartford Area Business Economists. Page C2. By STEPHEN M.

WILLIAMS Courant Staff Writer WHCT-TV, Channel 18, signed off the air about 4 p.m. Tuesday shortly after U.S. Bankruptcy Judge Robert L. Krechevsky ordered the station liquidated to pay off more than $11 million in debts. The judge's order capped a six-year struggle for survival by Astro-line Communications Co.

which purchased the Hartford television station for $3.1 million from Faith Center Inc. in 1985. EDWARD H. BUDD Chairman, Travelers Corp. Power company cuts back efficiency rebates businesses with 10,000 to 60,000 square feet of space.

But before March was over, applications for $9.5 million in rebates were submitted by business customers who had replaced their standard lighting fixtures with more energy-efficient equipment. The company expects $5 million more in applications to be submitted by the end of the month. The company, a regulated subsidiary of Northeast Utilities, respond Stock market drops; Dow "I am saddened by it and disappointed," said Terry Planell, general manager of Astroline. "We've done everything possible that we could to ensure the viability of the business and prove to the creditors that this business was worth keeping." Martin Hoffman, who was appointed Tuesday as interim U.S. Trustee to oversee the liquidation, said he will preside over the complicated process of sorting out which creditors get paid, and how much.

It is not yet clear if the station's equipment will be sold individually or the trustee will seek a buyer for the entire station and the license. According to the Federal Commu- Service sector seen as best for job growth By MARC RICE Associated Press ATLANTA Nurses, bartenders and prison guards should not have trouble finding work this decade, but it may be tough going for meter readers, electronics assemblers and farm workers. Job opportunities in the 1990s will be mainly in areas that require considerable education and training, according to a University of Georgia study. Jeffrey M. Humphreys, director of economic forecasting at Georgia's Selig Center for Economic Growth and author of the study, said the overall economic expansion of the '80s concealed occupational trends Please see Study, Page C4 By SUSAN E.

KINSMAN Courant Staff Writer Because of popular demand, Connecticut Light Power Co. is cutting back the rebates it offers to commercial and industrial customers to install energy-efficient lighting. The company's $60 million budget for conservation and related programs paid for by utility customers included $7 million this year for the lighting program, aimed at Gold prices Gold prices were $364.90 in the Tuesday settlement price on the New York Commodity Exchange. DOLLARS PER TROY OUNCE 365 360 5 ill iii LU 26 27 28 1 2 3 4 5 8 9 355 350 needed to encourage" customers to install energy-efficient Taylor said. The decision was made after dis-, cussions with electrical contractors and the non-utility groups who help to plan and oversee conservation programs.

The new rebates are also being reviewed by state utility regulators. The company will provide rebates Please see Page C2 loses 45.54 traders were hedging in case Thurs- day's producer price index report and Friday's consumer price report show higher-than-expected inflation. Many economists believe the Fed is delaying an interest rate reduction until the release of those key inflation reports. Market strategists also kept a close eye on the release of new earnings reports. Bank of New York Co.

Inc. reported it lost $63 million, or $1.02 a share, in the first quarter of 1990, compared with a profit of $102 million, or $1.37 a share, for the same period a year ago. The bank reported bad loans rose by $254 million in the quarter to $1.85 billion. Bank of New York's stock slid $1.50 at $27.12. Among the blue chips, Boeing fell $1.12 to Ford Motor rose 50 cents to and International Business Machines dropped $1.75 to $111.25.

Associated Press NEW YORK Stock prices fell sharply Tuesday, weakened by disappointment with the Federal Reserve's interest rate policy as well as heavy bouts of computerized selling. The Dow Jones average of 30 industrials fell 45.54 points, to 2,873.02, the average's sharpest point drop since March 19, when the widely watched index fell 62.13 points. During Tuesday's trading, the average fell more than 50 points. That triggered a New York Stock Exchange limitation on the computerized trading strategy used by large brokerage houses that involves tee sudden sale or purchase of enormous amounts of stocks. Declining issues outnumbered advances by nearly 2-to-l in nationwide trading of NYSE-listed stocks, with 1,043 down, 576 up and 477 unchanged..