Greater New York Savings Bank is hoping to complete quickly a four-year campaign to cut nonperforming assets.
The thrift disposed of $22 million in bum assets in a December bulk sale and charged off nearly another $21 million in the quarter.
The combination of the sale and chargeoffs brings nonperformers down to $55.8 million, or 2.16% of total assets. That is a reduction from $98.2 million, or 3.82% of total assets, at the end of the third quarter.
And officials at the $2.6 billion-asset thrift hope to reduce the total even further this year, having already signed sales contracts for $6.3 million more.
Despite the chargeoffs, moreover, the New York City-based thrift increased earnings to $4.7 million in the fourth quarter, from $3.7 million in the same period of 1994, mostly due to an early recognition of about $36.4 million in deferred tax benefits.
Greater also reported income of $19.2 million for the year, up from $13 million in 1994.
Capital also remains high, with a Tier 1 leverage capital ratio of 6.02% at Dec. 31. The thrift remains under a memorandum of understanding with state regulators and the Federal Deposit Insurance Corp., but officials hope the memorandum will be rescinded soon.
"It's terrific to be able to say that our problems are behind us," said Gerard C. Keegan, president and chief executive. "We don't have to focus on nonperformers. We can focus on expanding our business and our very valuable branch franchise in Brooklyn."
Analysts also responded positively to the disposition plan. First Albany Corp. analyst Kevin Timmons, for example, upgraded his opinion on the thrift's stock to "buy" from "neutral."
"It was really a turn of the page for Greater when that happened," said Thomas O'Donnell, senior thrift analyst at Smith Barney. "It put their problems behind them, and now it's on a par with other companies that also put the problems of the 1980s and early '90s behind them."
The chargeoffs mean that most of the remaining nonperforming assets are already being carried at their likely sale prices, minimizing prospective losses.
For the quarter, in addition to the $20.8 million in chargeoffs and the $9.3 million loss on the bulk sale, the Greater also set aside $8 million as a loss provision. The increase in loss reserves doubled the thrift's coverage of nonperforming assets to 46%.