SAN FRANCISCO -- California Federal Bank, which is in the final stages of executing a strategic plan, reported second-quarter earnings of $6.6 million, compared with a $45.5 million loss in the same period last year.

The Los Angeles-based thrift's profit was its first in more than a year.

California Federal's move into the black reflected its success with one of the key elements of its strategy: slashing problem assets through bulk sales of loans and foreclosed properly.

After completing several bulk transactions during the quarter, nonperforming assets fell 60.4% from the end of March, to $288.4 million, or 1.96% of assets.

More Bad Assets

Still, California Federal had an inflow of $123 million in new nonperforming assets during the quarter, partly due to the Los Angeles-area earthquake in January.

The thrift said it will hold an additional sale of $181.9 million in problem assets during the third quarter to further improve credit quality

Following the appointment of Edward G. Harshfield as president and chief executive last year, California Federal developed a five-part plan to raise capital, trim problem assets, and restore profits.

In remarks to analysts, Mr. Harshfield called the second quarter "marginally profitable," adding that the thrift will not achieve a normal earnings level until the first quarter of 1995.

California Federal's chief said profits for the rest of 1994 will be constrained by costs associated with the upcoming sale of Florida operations to NationsBank and residual expenses of managing problem asset portfolios.

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