CHATSWORTH, Calif. -- The giant California thrifts appear to have made significant progress in dealing with nonperforming loans in the third quarter.
Great Western Financial Corp. took a charge of $100 million in anticipation of the sale of distressed real estate in the fourth quarter. As a result, it reported a third-quarter loss of $17.5 million.
The Chatsworth-based company said the disposition would reduce nonperformers to about 3%, against about 3.75% now and 5.2% early this year. James Montgomery, chairman and chief executive, has said reduction of nonperforming assets is the company's No. 1 priority.
|We're Quite Pleased'
"We will have disposed of $1.4 billion in distressed assets this year, and we're quite pleased with that level of activity," a company spokesman said.
In Irwindale, H.F. Ahmanson & Co., parent of Home Savings of America, the nation's largest thrift, reported a sharp increase in profits, to $70 million from $50.7 million a year earlier.
Chairman Richard Deihl attributed much of the gain to a reduced provision for loan losses and said sales of foreclosed assets had been "robust."
A spokeswoman said that the company had disposed of $228 million of shaky assets.
Jonathan Gray, an analyst with Sanford C. Bernstein & Co., said the two continue to experience new dafaults on residential loans at a fairly high rate, but that the rate has stabilized.
"This stability is good," he said. "These companies deserve some credit for having weathered a recession that dwarfs what happened in the energy patch. They are bloodied but unbowed, their capital is above requirements, they are ready to make money once the operating environment proves less toxic."
Peter Treadway, an analyst with Smith Barney Shearson in New York, said the announcements contained no surprises.
"One of Great Western's planned dispositions was news, but the other two weren't," he said. "But we like what they're doing. They're headed in the right direction.
Down to Comfortable Levels
At Ahmanson, the sale of foreclosed property helped bring nonperformers down to about 2%, from about 4.4% at the end of March.
Now both Ahmanson and Great Western have brought their bad loans down to levels that are considered comfortable in the banking industry.
Bruce Harting, an analyst with Salomon Brothers. New York, took a fairly somber view of Ahmanson's results. "This is as clean quarter as Ahmanson has had in three years, but they made just 50 cents a share," he said. "Where is the core income going to come from? The bad news is, welcome to the land of clean financial statements, where there's margin compression and no asset growth."
Golden West's Profits Slip
In Oakland, Herbert Sandler, co-chairman of Golden West Financial Corp., said the company's earnings slipped by about 8%, to $63.8 million from $69.7 million, largely because of tax and accounting changes. Bad loans have not been a significant problem for the ultraconserva-company. But Golden West did report an increase of about $5 million in loan-loss provisions in the third quarter.
The slowdown doesn't seem to have dimmed Golden West's luster as a favorite of securities analysts. Gareth Plank of Mabon Securities in San Francisco said he has maintained his buy recommendation on the stock but cut his 1993 earnings estimate to $4.31 a share, from $4.51, because of slower-than-anticipated asset growth.