With Capital Fading, HomeFed Stock Dives

HomeFed Corp.'s common stock plunged to about 3 cents a share Wednesday, from $1.50, following the San Diego thrift company's announcement that third-quarter losses could wipe out its $513 million in equity capital.

Trading in HomeFed's stock was halted Tuesday before the announcement and did not reopen until Wednesday morning. The sharp drop in value reflected widespread opinion that the government is likely to seize HomeFed.

One prominent thrift analyst called the decision to take massive loan-loss provisions and chargeoffs a "capitulation" by the new chief executive. "If I were a shareholder in HomeFed, I'd be damned angry," said Jonathan E. Gray, analyst for Sanford C. Bernstein & Co.

Chief Executive Denies |Capitulation'

Mr. Gray suggested that chief executive Tom Wagemen, widely perceived as having been brought in at the behest of regulators in July, was not working in the best interest of shareholders - as he is legally obliged to do.

The charge bought a heated denial from Mr. Wagemen. "I didn't capitulate. That just isn't isn't in my vocabulary," he shot back. "You have to support what you are going to do with the facts. We told everybody we were going to do a substantive review of the real estate portfolio - and we did it."

Mr. Wagemen said he remains confident he can restore shareholder equity, building on a stong consumer bank, and good trust and insurance businesses.

Mortgage Portfolio

The analyst said HomesFed has $7 billion of adjustable-rate mortgages that could be sold at a profit of $250 million in today's market, and that its system of 205 branches also could be tapped to help protect what little shareholder value remained in the company.

HomeFed, with $16 billion in assets, operates the nation's seventh-largest thrift.

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