LIKE A SPENT HURRICANE, Southern California's real estate slump is gradually losing its force.

In the devastated Los Angeles and Orange County areas, there are few signs of a recovery in commercial property values, but "the market is no longer in free-fall," says analyst Charlotte Chamberlain of Wedbush Morgan Securities.

This stabilization has been a blessing for the region's exhausted banks and thrifts. Many commercial real estate lenders find that the inflow of problem loans has dropped significantly.

What's more, with prices no longer plummeting, it's easier to sell foreclosed property. BankAmerica Corp., Union Bank, and H.F. Ahmanson & Co. recently demonstrated the point with bulk asset sales.

"There is more liquidity in the market," said Stan Ross, a Los Angeles real estate expert with the accounting firm Kenneth Leventhal & Co Nevertheless, Mr Ross warned, condition and project category.

In prime areas, affordable housing developments and retail properties are fetching reasonable prices. Depending on location, apartment prices are leveling off. But industrial property values are still eroding. And, despite some gains in occupancy rates, the decline in office building prices has slowed but not stopped.

The confused state of the market is reflected in the diverging earnings of Southern California leaders.

Results "depend on the makeup of your portfolio, the locations you are concentrated in,[and where] you have already addressed your problems," said Babette Heimbuch, president of Santa Monica-based Firstfed Financial Corp.

In the second quarter, profits rose for lenders who had already set aside enough reserves to cover uncollectable loans and for those in more stable sectors of the realty market.

The region's major banks, Bank America, Wells Fargo & Co., and First Interstate Bancorp, were able to trim nonperforming loans and boost profits because they had previously made massive provisions for loan losses. That permitted them to sell foreclosed property at a rate exceeding the addition of new nonperforming loans to their books.

But Los Angeles-based California Federal Bank lost $45.4 million, reflecting the sale of foreclosed apartment buildings during the quarter at prices significant lower than the properties' already-discounted carrying values on the thrift's books.

"It's a question of when does management perceive the problem'" said Ms. Heimbuch. "We saw the downturn [in apartment values] in the first quarter."

Firstfed was able to post an $8.3 million profit in th second quarter, although about 40% of its $2.6 billion in loans are for multifamily housing.

The thrift took its medicine at the beginning of the year when it provided $44.1 million for loan losses and recorded a $16.4 million loss.

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