Sun S&L; Loses $511,000 as Loss Reserves Grow

Sun Savings & Loan Assn., forced to add $1.4 million in loss reserves and adversely affected by non-performing assets that grew 14% to $43.8 million, on Friday reported a third-quarter net loss of $511,000. That compared to a $1.5-million net loss a year ago.

For the nine-month period, Sun reported a $491,000 net loss, contrasted with net income a year ago of $151,000.

Although Sun President and Chief Executive John M. McEwan called the nine-month performance “disappointing,” he added that Sun managed “additional reserves and write-offs in excess of $2 million while sustaining a net loss of less than $500,000 for the period.” Sun, he added, is continuing its “aggressive workout and recovery program, which includes substantial legal and related expenses.”

The $1.4-million loss reserve for non-performing loans, real estate acquired through foreclosure and actual losses realized from the sale of foreclosed real estate was 133% higher than the $579,000 in loss reserves absorbed during the previous quarter.

Sun’s scheduled items, primarily consisting of loans delinquent 90 days or more, and foreclosed real estate amounted to $43.8 million for the quarter, compared to $38.3 million for the second quarter.

Sun’s net worth fell 7% to $5.9 million, leaving the association with a capital-to-assets ratio of 1.34%, which is below the federal minimum regulatory net worth requirement that calls for a 3% ratio.

McEwan said that the firm of Drexel, Burnham, Lambert had been retained to “provide financial advisory and investment banking services” as the association continues discussions with “several interested parties that could result in recapitalization of the association at or above the 3% capital-to-assets ratio” that was to have been reached through an ill-fated public offering last month.