CalFed Posts Surprise Loss, Halts Dividend
LOS ANGELES - CalFed Inc. on Thursday reported an unexpected $10.9 million loss in the second quarter and suspended its dividend.
Meanwhile, H.F. Ahmanson reported that its second-quarter earnings fell 3%, to $60.8 million, or 52 cents per share, and Coast Savings Financial announced it earned $21.8 million, or $1.39 per share.
California's financial institutions are struggling with the softening of the state's real estate markets. With housing salws slow, the thrifts are generally suffering deops in loan originations.
Increase in Nonperformers
And, like their commercial bank counterparts, many are seeing jumps in nonperforming loans.
But there are signs that a pickup may be near. Many analysts believe that the level of bad loans has almost peaked. And lower mortgage rates and improved consumer psychology have boosted housing acitivity.
"In the second half, loan originations should be up over last year," predicted Joseph Jolson, thrift analyst at Montgomery Securities.
Another positive sign is that the rates that thrifts pay on deposits are falling faster than the rates they charge on their adjustable-rate margins.
CalFed, however, is still battening down the hatches. While its loss in the latest period was smaller than the $53 million deficit it racked up in the comparable period a year ago, some analysts expected CalFed to report a profit.
CalFed, Los Angeles, suspended its three-cents-a-share dividend, reflecting its "increased need" to preserve capital, the company said. The company is still in compliance with regulatory capital requirements.
More Reserves for Losses
CalFed set aside $59.6 million for losses on loans and real estate activities in the quarter ended June 30, compared with $99.1 million set aside in the same quarter of 1990. It was also forced to set aside $5.3 million for a reserve related to some litigation.
The deteriorating real estate markets pushed nonperforming loans at CalFed to $944.3 million, or 4.72% of assets. That is up 9%, from $866.1 million, or 3.69% of assets, at March 31, and up 57% from the $601 million, or 2.36% of assets, at June 30 a year ago.
For the six months, CalFed lost $6 million, or 23 cents per share, compared with a loss of $34.1 million, or $1.35 per share, in the six months ended June 30, 1990.
Things look considerably brighter at Ahmanson, the nation's largest thrift company, with $48 billion in assets. Ahmanson is the parent of Home Savings of America. Although its earnings were flat, the company's earnings were boosted a year ago by a tax benefit.
Ahmanson booked $2.4 billion in new loans in the latest quarter. Although that is down 43% from the $4.2 billion in the comparable period a year earlier, it is 50% higher than the first quarter, when Ahmanson booked $1.6 billion in mortgages.
Ahmanson also reported that it's examination by regulators was finished in early June. The examination "confirmed the adequacy of our current system for monitoring and estimating potential loan losses," said Ahmanson's chairman and chief executive Richard H. Deihl.
Still the company set aside $57.4 million for possible loan losses, which was down 7% from the $61.8 million set aside in the second quarter of 1990. For the six months, Ahmanson earned $116.6 million, or $1.00 per share, down 10% from the $128.7 million, or $1.10 per share, earned a year ago.
The sale of its San Diego branches helped Coast Savings boost its profits and put the thrift back into capital compliance. However, analysts warned that the company may have trouble staying in compliance as the hurdles are raised.