Glenfed Sees Big Loss for Quarter
$225 Million Earmarked for Loan-Loss Reserves
LOS ANGELES -- Glenfed Inc., Glendale, Calif., announced Wednesday that it will report a $140 million loss in its fiscal fourth quarter after increasing its loan-loss reserves by $225 million and charging off $30 million in assets.
These reserves were taken after a "detailed, asset-by-asset review, in conjunction with the regulators," said Norman M. Coulson, chairman and chief executive, "and we are feeling comfortable that we will have no more surprises."
Allocating Loss Reserves
Glenfed said about $135 million was put in reserve for its commercial finance subsidiaries and its investment lending portfolio, which it defines as loans of more than $1 million. About $90 million is for anticipated losses on the sale of foreclosed properties and real estate in its real estate development subsidiary.
The company said it still expects its main subsidiary, Glendale Federal Bank, the country's fourth-largest thrift, with $22 billion in assets, to meet capital requirements at June 30. About $700 million in assets will be classified as nonperforming at June 30, Mr. Coulson said.
Glenfed reported a $140.8 million loss in its fiscal second quarter, ended Dec. 31. It expects to report a loss of about $235 million, or $6.88 per share, for the fiscal year that will end June 30. That compares with a profit of $117.2 million in its 1990 fiscal year.
Analysts had expected a large provision but not this large. Investors were not terribly shaken by the news: In midafternoon trading, Glenfed's shares were up 25 cents, to $5.
The company is in the middle of a major reorganization that included laying off one-quarter of its work force and that is expected to cut about $160 million of expenses. Glenfed's non-interest expense was $451 million in fiscal 1990.