More S&L; Companies Post Sharply Higher Earnings
The parade of upbeat news for the savings and loan industry continued Thursday as some of the largest and best-known S&L; names in California reported much improved profits in the third quarter.
Columbia Savings & Loan Assn. and the parent companies of California Federal Savings, Gilbraltar Savings and Home Savings of America were among the financial institutions reporting that net income from July through September was markedly improved over last year’s levels.
Profits are recovering industrywide because deposit costs are down due to lower interest rates while real estate loan volume is surging. On Wednesday, Great Western Financial, Great American First Savings Bank and First Nationwide Financial reported sharply higher earnings. Financial analysts say that most of the large California savings and loans are among the healthiest in the industry because they are generally more diversified, better capitalized and--with a large amount of their assets in adjustable-rate loans--better able to withstand interest-rate swings.
CalFed Inc. said its quarterly earnings rose to $40.7 million, a record level and more than 13 times what it made in the third quarter of 1984. “We look forward to continued strong earnings for the remainder of the record year,” said George Rutland, CalFed’s chief executive.
At H. F. Ahmanson & Co, parent company of Home Savings, earnings went to $60.1 million in this year’s third quarter from $3.23 million a year ago. Home Savings’ cost of money was 8.27% on Sept. 30, the lowest level in six years, while real estate loan originations reached $1.75 billion, second highest in its history.
Columbia Savings reported net income of $33.6 million, nearly five times what it earned last year.
Columbia’s profits were aided by a $54.8-million gain on the sale of investment and mortgage-backed securities but were hampered by a $4.59-million addition to reserves on its investment portfolio and a $1.03-million write-down on the value of a Los Angeles office building that it wants to sell.
Gibraltar Financial Corp., meanwhile, posted earnings of $8.98 million, 44% higher than last year.
Herbert Young, Gibraltar’s chairman, said the increase would have been greater had it not been for the S&L;’s strategy of restructuring its balance sheet. That restructuring has raised Gibraltar’s cost of funds but reduced its sensitivity to interest-rate swings by adding more adjustable-rate mortgages to its loan portfolio.
