PASADENA, Calif. -- Southern California thrifts are suffering weak residential loan demand, but you wouldn't know it by looking at the balance sheet of Cenfed Bank.

In a region that could be called the cradle of the S&L crisis, and where thrifts are still having trouble making a lot of money, the $1.4 billion-asset Cenfed stands out. In the past two years, the Pasadena-based thrift posted solid growth in assets and earnings after a $3 million loss in 1990. In Los Angeles County, where thrifts abound, Cenfed is the only one to post of double-digit growth in loans this year - 20%.

The vast majority of thrifts here are seeing a net reduction in loans this year, according to data compiled by Sheshunoff Information Services.

"Ever since we got out capital [in a 1991 stock conversion], we've been doing a lot of things," said D. Tad Lowrey, chief executive of Cenfed. "We've been buying loans, buying deposits, and revving up our loan originations."

Cenfed's latest purchase closed last week, when the thrift bought the two branches and $219 million of low-cost core deposits of Pasadena's Mutual Savings and Loan Association. Mutual's owners decided to get out of the regulated S&L business, and Cenfed pounced.

"They approached us," Mr. Lowrey said. "They wanted a local buyer and one that meshed with their operating style." Cenfed also bought $81 million of single-family loans in the transaction.

The Mutual acquisition capped a two-year buying spree in which Cenfed bought $390 million in core deposits, $73 million of it from the Resolution Trust Corp.

The acquisitions are part of Cenfed's five-year plan, begun in 1990, to recast the institution. Mr. Lowrey, who joined Cenfed in 1988, has stripped the institution of its more esoteric assets - such as a disastrous portfolio of autolease financings that caused the 1990 loss and a small junk bond portfolio - and consolidated its "scattered" branch network.

Even with the two new Mutual branches, Cenfed's 18 locations are three fewer than it had three years ago.

Cenfed has been lucky in many respects. In preparation for its 1991 conversion from mutual to stock ownership, Mr. Lowrey held off aggressively lending in 1990-91 while he prepared the thrift for an initial public offering.

As a result, Cenfed did not aggressively lend on new homes built in the Los Angeles area during that period, most of which have since declined in value by at least 25%, he said.

"We're just really happy we've been able to keep our nonperforming ratio below 2%," Mr. Lowrey said.

Still, the operational changes and the growth haven't reached full fruition. Cenfed's earnings have been dragged down by heavy loan-loss reserves. In the June quarter, the latest for which data is available, Cenfed only earned a 0.6% return on assets and about a 10% annualized return on equity.

Mr. Lowrey said that the heavy reserving was a result of the old auto-leasing portfolio for which the thrift took an $8 million hit in 1990. Those reserves, he said, could be put back into earnings in the near future as the last of the leases run off.

"I've told our shareholders that by 1995, we'll have a 15% return on equity," Mr. Lowrey said. "I'm confident we can hit it by then."Cenfed FinancialAt a GlanceHeadquarters Pasadena, Calif.CEO D. Tad LowreyAssets $1.3 billionBranches 18ROA 0.69%ROE 10%Data as of June 30Source: Cenfed Financial Corp.

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