Amadeusz Juskowiak

Continental ill cil to recharacterize loss

Continental Illinois Corp settled an administrative complaint by the Securities and Exchange Commission by agreeing to recharacterize 425 mln dlrs previously reported in the second quarter 1984 as a loss of sale on loans

Under the settlement which was announced simultaneously with the filing of the SECs administrative action Continental agreed to restate earlier financial reports to single out the 425 mln dlrs as a separate loan loss item instead of lumping it together with another item The bank holding company said the change does not affect its operating results for 1984

The SEC stressed in the complaint that it was not challenging Continentals reported net loss for the second quarter of 1984

But it said it was misleading for the bank to split the 950 mln dlr loan loss provision in half attributing 425 mln dlrs of it to the event of sale

The 425 mln dlrs should have been part of a 950 mln dlr billion dlr loan loss provision required by the Office of the Comptroller of the Currency the SEC said

Continental had originally listed 565 mln dlrs of the loan loss provision as a credit loss and another 425 mln dlrs as a loss on sale of loans the SEC said

It was misleading for the bank to list the 425 mln dlrs as loss on sale which implied the loss would not have occurred had there not been a sale of distressed loans to the Federal Deposit Insurance Corp the SEC said

The bank should have listed 990 mln dlrs as a credit loss instead of 565 mln dlrs and should not have charecterized the other 425 mln dlrs as a provision for loss on sale of loans the SEC said

Continental agreed to the settlement with the SEC without admitting or denying any violations the SEC said

But it agreed to restate its 1984 financial statements to accommodate the SECs objections and to report to its shareholders a summarized version of the SECs administrative action against it the agency said

A Continental official stressed that the settlement in no way will result in any change or restatement of the companys earnings for that period

Reuter