SAN FRANCISCO -- Two big California thrifts announced strategic moves aimed at restoring normal operations following recapitalizations this year.
Confirming previous reports, Los Angeles-based California Federal Bank said Thursday it plans to sell in bulk $300 million of nonperforming real estate assets by yearend to help cleanse its balance sheet.
Meanwhile, Glendale Federal Bank scrapped plans to sell 23 branches in western Florida now that it has boosted its capital levels above regulatory requirements. The move will help rebuild the thrift's earnings stream, chairman and chief executive Stephen J. Trafton said in a telephone interview.
In opting for a bulk sale of problem assets, California Federal is following the lead of the nation's two largest thrift companies, H.F. Ahmanson & Co. and Great Western Financial Corp.
California Federal has hired Cantor Fitzgerald Brokerage to hold an electronic auction in December.
Loans to be auctioned include $160 million in apartment loans, $80 million in commercial income property loans, and $60 million in single-family residential loans, all mainly in Southern California. The thrift said a successful sale would trim nonperforming assets from 7.59% to 5.90% of total assets on a proforma basis.
In connection with the sale, California Federal will take an unspecified loss provision in the third quarter, which could reduce its core capital ratio below the psychologically important 5% level.
Glendale Federal's recent common and preferred stock offerings raised $76 million more than originally budgeted, Mr. Trafton said, eliminating the need to sell the Florida branches.
Revenue from Florida "is a critical link in returning [the thrift] to profitability," he said. Including the Western Florida operations plus offices in the Miami and Palm Beach areas, the thrift has 60 branches in Florida.