Great American Bank Reports Best Quarterly Profit; Growth to Slow
Citing gains on the sale of loans and marketable securities, Great American First Savings Bank reported first-quarter net income of $30 million at its annual shareholders meeting Wednesday, the best three-month profit in the institution’s history. Equivalent to $1.10 per share on a fully diluted basis, the earnings compare with net income of $16.1 million, or 72 cents per share, for first-quarter 1986.
The Great American board of trustees also approved a boost in the bank’s quarterly dividend to 15 cents per share, up from 10 cents previously.
Shareholders also were told of Great American’s explosive 1986 growth, achieved primarily through acquisitions, which catapulted the San Diego-based institution (assets: $13.1 billion) to ninth-largest S&L; in the United States as of Dec. 31.
But Great American executives plan to pull in the reins on growth in 1987 because of a more competitive and risky loan environment, said senior executive vice president Barry Newman. After watching Great American’s assets grow by 58% in 1986, Newman said assets may grow only 10% in 1987, closing this year at between $14 billion and $15 billion.
Shareholders elected Edward Wedbush to its board of directors. Wedbush, president of Wedbush Securities in Los Angeles, controls 10.3% of outstanding Great American shares. In an interview after the meeting, Wedbush said he has bought the shares over a four-year period for investment purposes only and has no intention of mounting a takeover battle for control of Great American management.
Wedbush also owns 5% of the outstanding shares in Glenfed Inc., the parent company of Glendale Federal Savings & Loan Assn.
Now operating 181 branches in three states, Great American assets totaled $13.5 billion as of March 31, up from $10.6 billion the prior year. Over the same period, deposits grew to $9.2 billion from $7.6 billion a year ago while total loans receivable dropped to $8.7 billion from $8.9 billion a year ago. Revenues for the quarter increased 47% to $372.9 million.
First-quarter net income benefited from gains totaling $80 million on the sale of $1.1 billion in loans and marketable securities. About $64 million of the gain was recorded as pretax earnings, with the balance set aside to create various reserves, Senior Executive Vice President Roger Lindland said.
Most of Great American’s asset growth over the past year has resulted from three acquisitions: the purchase of the $2.4-billion Home Federal Savings & Loan Assn. of Tucson in March, 1986; the acquisition of Los Angeles Federal Savings, a $659-million institution, in May, 1986, and the purchase last month of First Security Savings & Loan Assn., an insolvent S&L; with $58 million in assets based in Grand Junction, Colo.
In January, Great American and Capital Savings Bank of Olympia, Wash., a 42-branch, $725-million S&L;, announced plans to merge this summer.
Lindland said Great American has “no intention” of following rival Home Federal Savings & Loan’s lead in applying for a state banking charter in order to avoid increased insurance premiums paid to the Federal Savings and Loan Insurance Corp., the federal agency that insures S&L; deposits.
