Ford Unit Loses $6.5 Million in Second Quarter
SAN FRANCISCO - First Nationwide Financial Corp. reported a second-quarter loss of $6.5 million on Thursday and said it plans to trim its work force by 10%, or about 420 employees.
The loss was narrower than the $20.9 million deficit First Nationwide reported in the first quarter. But credit problems continued to worsen, although more slowly than in previous quarters.
|Rough Times Ahead'
Nonperforming assets in the second quarter increased by 9% to $1.2 billion from the end of the first three months.
"They haven't done much yet in taking chargeoffs," said Todd A. Jacobs, an analyst with Sanford C. Bernstein & Co. "The company still has some rough times ahead."
First Nationwide added $81 million to its loan-loss reserves, compared with a $90 million provision in the first quarter. The company's problem loans are concentrated in a $660 million portfolio of apartment and other multifamily credits in the New York City area.
First Nationwide lost $27.4 million in first-half '91 compared with net income of $77.2 million for the same period last year. The company earned $41.3 million in second-quarter 1990.
First Nationwide's job cuts will not be focused on any business unit, a spokesman said. The layoffs should be completed by yearend. The company, a unit of Ford Motor Co., laid off 10% of its staff about a year ago.
Financial Services Strong
Ford's financial services group earned $243 million, thanks to strong results at Ford Motor Credit Co. and the Associates, Ford's nonautomotive finance subsidiary. Financial-services income partially offset a $565 million loss in auto operations, resulting in a consolidated loss of $324 million for the No. 2 automaker.
Ford's strategy of diversifying into financial services continues to bear fruit as a counterweight to the ups and downs of the auto business.
First Nationwide operates Columbia Savings, Denver; Pathway Financial, Chicago; and Cardinal Federal Savings Bank, Cleveland, in addition to its flagship First Nationwide Bank. Total assets at the end of the second quarter were $26 billion, down 10.65% from a year ago.