Constitution Federal S & L Reports Income After Six Years of Losses : BANKING/FINANCE
After six straight years of losses totaling $6.7 million, Constitution Federal Savings & Loan posted net income of $1.4 million last year, and the new people operating the Tustin-based institution are breathing a bit easier.
Though the profit came entirely from the sale of two branch buildings, Constitution Federal is emerging from two years of ownership battles and leaving its losing ways behind, said Joseph Helleis, chairman, president and chief executive officer since August.
Two years ago, New York tax shelter specialist Burton H. (Barry) Trupin bought about 64% of the S & L from former chairman Mario DiBella and his family. Trupin talked of pushing Constitution Federal, then in Monterey Park, into the big leagues by building its assets to $2 billion from about $100 million.
Trupin agreed to pay DiBella $5 million in cash, but later wanted regulators to approve a different deal that included promissory notes in place of some of the cash. Regulators eventually rejected the deal, but Trupin had control for a year, Helleis said. A series of lawsuits followed--none of which involved the S & L directly.
Trupin, who reportedly is trying to sell his stock, is still a director but has not attended meetings or been active in the association since last April, Helleis said. Trupin could not be reached for comment.
“The important thing is that despite all these disruptive factors, we’ve pretty much blown the smoke away from us,” Helleis said. “Fortunately, we’ve been able to sell two assets and get capital to function. And we’ve done much better than survive.”
He said the S & L has been sporadically profitable during some of the past five months and should return to profitability on a continuous basis next month.
In the last quarter of 1987, Constitution Federal sold its Monterey Park branch and leased it back. It also sold its Westminster location, merging that branch’s operations into a nearby branch in Cypress. It also plans to sell the Cypress and Tustin branches this year in lease-back deals, Helleis said. The S & L does not want non-earning “bricks and mortar” assets, he said.
In 1987, Constitution Federal earned $1.4 million on total revenue of $11.4 million, contrasted with a net loss of $1.1 million in 1986 on total revenue of $9.2 million. In the fourth quarter of 1987, the S & L had a net income of $2.4 million on $5.7 million in total revenue, contrasted with a $1.2-million loss on $2.3 million in revenue during the final quarter of 1986.
The association’s assets shrunk 4.6% to $86.6 million at the end of December from $90.8 million a year earlier. Total deposits grew 5.4% to $82.6 million from $78.4 million at the end of 1986, but total loans fell 23.4% to $55.9 million at the end of the year from $73 million a year earlier.
