Financial Corp. of America Chairman William J. Popejoy said Tuesday that he believes FCA’s assets will grow to nearly $30 billion by the end of 1985 instead of shrinking to $24.5 billion as previously intended.
Popejoy said a revised business plan, yet to be approved by federal banking regulators, calls for FCA’s assets to grow to $29.7 billion by year-end if interest rates stay the same or “increase slightly.” Assets stood at nearly $28 billion on March 31.
Popejoy, talking to reporters following the company’s annual meeting in Irvine, said the reversal was prompted in part by continued high interest rates, which haven’t allowed the financial institution to sell assets profitably. The increase will come because the company plans to make $3.5 billion in loans by the end of 1985, he said.
Irvine-based FCA is the parent of American Savings & Loan Assn., the nation’s largest S&L.; Popejoy took over as chairman and chief executive last August in the midst of a deposit run that forced Charles W. Knapp, the previous chairman, to resign.
After taking over, Popejoy stemmed the run through heavy borrowings and increased the company’s loan-loss reserves to $472 million, up from $90 million, to cover problem loans made during the company’s extremely rapid growth of recent years.
The shareholders meeting was mostly a tranquil affair considering what has happened to FCA’s stock in the past year. FCA’s shares closed Tuesday at $6.675 on the New York Stock Exchange, up 12.5 cents but down sharply from a 52-week high of $17.25.
Popejoy gave the shareholders a pep talk, saying he’s betting his own money--the purchase of 10,000 shares of stock--that the financial institution will survive.
“If not,” he added, “then (the job of saving the company) won’t be humanly possible.”
Commenting on FCA’s other problems, Popejoy later told reporters:
- Negotiations are under way with two companies--one a large insurance firm, the other a real estate investment company--to sell a large portion of the firm’s $1.1-billion portfolio of problem loans. Nearly $400 million of those loans are tied up in litigation and another $160 million are in the process of being sold. But the other $540 million are for sale, he said.
- He’d welcome a buyer for FCA if the acquiring company could pump $1 billion into its sagging net worth. However, any potential acquirers are probably waiting to see how FCA performs in the next two quarters, he noted. Mentioned as possible suitors are large retailers or industrial firms wanting to enter the financial-services market in California.
- He predicts that FCA will be in the red in 1985, although it may make money in the third and fourth quarters. The company lost $38.1 million in the first quarter of 1985 and $591 million in 1984, losses that reduced shareholders equity to $193 million.
- FCA is having documentation problems on about $800 million in loans bought from other mortgage lenders. “There are appearance of some fraudulent transactions” in some of these loans, he noted, but he declined to elaborate.
- The company’s legal bills are running at about $1 million a month because it is involved in about 1,200 lawsuits. “Our legal bills are horrendous,” Popejoy said.