Midsize California thrifts showed financial strength in the fourth quarter. Asset quality throughout the region, though checkered in some instances, is improving, analysts said.
"We're definitely seeing declining nonperforming assets in that whole group in California," said David Dusenberry, a thrift analyst at Credit Suisse First Boston. "It's not a huge decline, but little by little, which is positive."
At Glendale Federal Bank, nonperforming assets decreased by 22% to $224.7 million, or 1.49% of total assets-further evidence of a turnaround in the southern California economy.
The $15.1 billion-asset thrift earned $23.2 million in the quarter, or 29 cents a share, 2 cents below analysts' expectations. Glendale registered a loss in the equivalent quarter a year earlier, due to one-time events.
Wider margins and higher net interest income helped produce the favorable returns, analysts said. A push to increase lower-cost deposits also made progress, with 10.5% of its deposits in checking accounts, compared with 7.8% a year earlier, the thrift said.
Expenses were up by 14% from the previous year's quarter, mainly due to the costs of a goodwill lawsuit against the federal government.
Smaller rival Coast Savings Financial Inc., an $8.7 billion-asset Los Angeles thrift, did not see much improvement in asset quality or expense levels, but its earnings of 50 cents a share matched analysts' consensus estimates.
The thrift earned $9.6 million for the quarter, an increase of 7% from the fourth quarter 1995, the company said. Nonperforming assets were $124 million, up from $113 million in the year-earlier quarter. Expenses remained about flat at $38 million.
The Hawaiian economy is still lagging California's, and consequently, the island's largest bank, Bancorp Hawaii Inc., had mixed results in the quarter.
The $14 billion-asset Honolulu bank earned $34.5 million in the quarter, up 7.4% from the year-earlier period. Its earnings per share of 84 cents were a penny better than the analysts' consensus.
"We're seeing an uptick in nonaccruals here and there, but their performance was not bad considering the lethargy that still exists in the Hawaiian economy," said Thomas D. McCandless, a banking analyst at Natwest Securities Corp.
The bank's loss reserve as a percentage of total loans was 1.97% at the end of 1996, compared with 1.90% at the end of 1995, the company reported. On a yearly basis, loans increased by just 6.3% to $8.3 billion at the end of 1996, the company said. Profitability improved slightly, with returns on equity and assets at 12.43% and 0.99%, respectively.
Bay View Capital Corp. of San Mateo, Calif., began to show the fruits of recent turnaround efforts. The $3.4 billion-asset thrift company reported $4.9 million in net income for the quarter, an 81% increase from the fourth quarter 1995, excluding one-time charges from that year.
The performance matched analysts' consensus estimates of 72 cents per share.
"They've had a lot of problems for several years, but things have really improved," said Trudi Amundson, an analyst at Sandler O'Neill Partners in Walnut Creek, Calif.
Credit quality was better, with nonperforming assets as a percentage of total assets declining to 0.74% for the quarter, compared with 1.29% in the fourth quarter 1995, the company reported.
Sumitomo Bank of California, a $5 billion-asset San Francisco-based bank, reported a 15% decline in net income for the quarter, to $11.7 million. Despite the decrease, the bank made big strides in the year, recovering from a net loss of $107 million for all of 1995.