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 SEC's 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 Continental's 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 SEC's objections and to report to its
shareholders a summarized version of the SEC's 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 company's
earnings for that period.
 Reuter
