Shrugging off its failure to win the takeover battle for Great Western Financial Corp., H.F. Ahmanson & Co. reported a 68% increase in net income for the second quarter, to $115.7 million.
On a per-share basis, the net rose 102%, to $1.01.
Excluding one-time events-a gain on the sale of the Irwindale, Calif., company's western Florida branch network and the costs of the Great Western bid that it withdrew June 4-Ahmanson earned $94.3 million, or 82 cents a share. That was 5 cents better than the First Call Corp. analysts' consensus.
"You could think that Ahmanson was not keeping its eye on the ranch while it was involved in the Great Western issue," said David S. Dusenberry, analyst with Credit Suisse First Boston. "This is tremendous proof that they stuck to it during the quarter."
Most impressive, analysts said, was a healthy decline in credit problems. Nonperforming assets fell by $102 million, the fifth consecutive period of decline in this category. It was 13% lower than a year earlier, the thrift reported.
Caren Mayer, an analyst with Montgomery Securities in San Francisco, said the improvement in nonperforming assets, which amounted to a 30% decrease annualized, will likely only get better.
"Credit recovery really does seem to be taking place," Ms. Mayer said. "It has happened a lot faster than expected."
Ahmanson also continued to tighten its belt in the quarter, lowering its efficiency ratio to 48.7%, from 52.8% in the year-earlier quarter.
Losing out to Washington Mutual Inc. in the war for Great Western cost Ahmanson $23.1 million on a pretax basis, consisting of legal and financial advisory, advertising, printing, and other related expenses.
Those costs were largely offset by the sale of 3.6 million shares of Great Western stock, which Ahmanson bought when it launched its hostile approach in mid-February. That sale led to a pretax gain of $17.6 million.
All told, therefore, the Great Western battle cost Ahmanson a mere $3.2 million after taxes, Ahmanson said.
Ahmanson continued its aggressive capital management in the quarter, buying back 3.4 million shares for $135 million, it reported. Since October 1995, the thrift has bought back 19% of its outstanding shares. The program has contributed to a strong return on equity of 15.9%, excluding the nonrecurring factors in the second quarter.