ANNUAL MEETINGS : FCA’s American S&L; to Offer Adjustable-Rate Mortgages

With rising interest rates threatening its slim hold on profitability, Financial Corp. of America has joined its competitors in the savings and loan industry in emphasizing adjustable-rate mortgages, rather than fixed-rate loans.

Chairman William J. Popejoy told shareholders at the Irvine-based company’s annual meeting that critics will be surprised at the aggressiveness with which the company’s American S&L; unit will move in adding the industry-favored adjustable-rate loans.

“For some of our competitors who have been criticizing us for not making adjustable-rate loans, they’ll now be complaining about us doing it too aggressively,” Popejoy said at a press conference after the meeting.

The move toward ARMs comes at a time when Popejoy’s efforts to reap gains in selling mortgage-backed securities face an uncertain future with recent hikes in interest rates.

Because of lower earnings from securities sales, Popejoy said he could not predict that FCA will post a profit in its second quarter, a prospect that would end seven straight profitable quarters.

He also said there is a “high probability” that the company will show an operating loss for the quarter. He has not been able to erase the red ink from operations since he took over in August, 1984, when federal regulators ousted Charles Knapp, the previous FCA chairman.

Popejoy said the company still has more than $3 billion in bad loans from the Knapp era that have been keeping the institution from posting operating profits.