Barely five months after losing a hostile bid for Great Western Financial, H.F. Ahmanson & Co. showed it can boost earnings anyway.
Ahmanson, based in Irwindale, Calif.-based, reported Tuesday that it earned $95.5 million in the third quarter, 30% more than a year earlier. Per-share earnings jumped 50%, to 84 cents-1 cent more than the First Call Corp. consensus.
The news was so good that analyst Charlotte A. Chamberlain of Jefferies & Co. Inc., Los Angeles, pronounced it positively "boring," quickly adding that "boring is beautiful."
The earnings growth, which excludes the effects of one-time costs last year to recapitalize the Savings Association Insurance Fund and buy 61 branches from First Interstate Bancorp, underscored the favorable conditions for thrifts in California.
Shares of most of the state's thrifts were barely changed, however, on a lackluster day of trading.
Ahmanson's stock slipped 25 cents, to $57.25, while the shares of its rival in the bidding for Great Western, Washington Mutual, fell 37.5 cents, to $66.625
Reflecting strong job growth and home sales in the state, Ahmanson's credit costs in the third quarter fell by 52% to $29 million.
Third-quarter credit costs, which include the provision for loan losses and expenses for managing foreclosed real estate, were down substantially- down 27%, in fact, from the June 30 level.
Loan chargeoffs also fell-to $22.8 million from $34.7 million in the third quarter of 1996. Nonperforming assets declined for the sixth consecutive quarter to $370.6 million, their lowest point since August 1990.
A share buyback program was another earnings-booster, with Ahmanson repurchasing 3.2 million shares in the third quarter.
With two-thirds of its authorized $250 million buyback complete, Ahmanson is likely to launch another buyback program, said analyst Thomas O'Donnell of Smith Barney, noting that the thrift had $350 million in cash on Sept. 30.
The surplus cash is being generated, in part, because the $46.8 billion- asset thrift continues to slim down.
A year ago it had $50.6 billion of assets. Net interest income was lower: $302.8 million in the third quarter versus $306.2 million a year earlier.
Mortgage originations grew by $100 million from the third quarter of 1996 to $1.4 billion. Consumer loans, which the thrift prefers to mortgages, showed stronger growth. Ahmanson originated $207 million, compared with $98 million a year earlier.
Seattle's Washington Mutual Inc., which won Great Western Financial, reports its earnings next week. +++
H.F. Ahmanson & Co. Irwindale, Calif. Dollar amounts in millions (except per share) Third Quarter 3Q97 3Q96* Net income $95.5 ($79.5) Per share 0.84 (0.85) ROA 0.81% (0.65%) ROE 15.85% (11.77%) Net interest margin 2.70% 2.59% Net interest income 302.8 306.2 Noninterest income 64.1 57.3 Noninterest expense 203.6 496.7 Year to Date 1997 1996 Net income $314.3 $54.0 Per share 2.69 0.16 ROA 0.87% 0.15% ROE 17.50% 2.53% Balance Sheet 9/30/97 9/30/96 Assets $46,799.2 $50,588.2 Deposits 32,447.3 35,399.4 Loans 43,840.9 46,717.3
* 3q 1996 includes one-time SAIF assessment ===
