Moody’s downgraded the securities of two banks.

The New York rating agency lowered securities ratings on BankAmerica and Manufacturers Hanover, citing problem loans and reduced earnings. The changes dropped ratings on some bonds, notes and preferred stock issues from high-quality to upper-medium grade. Although the downgradings left both banking companies’ rankings well above speculative grades, the lower ratings generally lead to higher borrowing costs. BankAmerica, the nation’s second-largest bank holding company, said that it expected the action and that it would not further affect its cost of funds. Manufacturers Hanover, parent of the nation’s fourth-largest bank, protested the Moody’s rating, saying its performance and prospects were improving.