Redfed Bancorp, the holding company for Redlands Federal Bank, cut its losses substantially in 1995.

The $872 million-asset Redlands, Calif., company lost $8.1 million on the year, compared with $26.3 million in 1994.

Anne Bacon, hired last April to take over for retiring chief executive Robert G. Wiens, initiated a cost-cutting drive and began shedding the thrift's high number of nonperforming multifamily loans.

"I'm cautiously optimistic about the future," Ms. Bacon said. "If the economy remains as it is, we should continue to show improvement."

Much of Redfed's trouble stemmed from nonperforming multifamily real estate. Based in San Bernardino County, which has lost three air bases and a large number of aerospace jobs, Redfed suffered as the rental market crashed.

But Ms. Bacon said she expects the area economy to show 2% growth in the upcoming year.

"Many of our problems were related to the California economy and we're coming out of that now," she said. "I'm optimistic about the future."

Redfed was able to close sales on its two largest multifamily properties earlier this month, reducing multifamily real estate owned from $14.5 million in December to less than $1 million.

"Obviously our focus has been on reducing nonperforming assets ," she said. "Now I think our asset base is where we want it to be. We have a nice stable of quality loans."

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