H. F. Ahmanson & Co., parent of Home Savings of America, on Wednesday reported a 66% drop in first-quarter earnings largely because of sharply lower gains on the sale of loans and mortgage-backed securities.
Earnings for the three months that ended March 31 at the nation's largest thrift company fell to $30.1 million from $89.3 million in the same period last year. The year-ago results had been restated to reflect a change in accounting rules for loan fees, which increased 1987 first-quarter earnings by $6.9 million.
But the bulk of the decline in first-quarter earnings came from a 92% drop in after-tax gains from the sale of loans and mortgage-backed securities to $4.2 million from $51.2 million in the first quarter of last year. In the 1987 period, gains from such sales made up more than 57% of net earnings for the quarter.
An Ahmanson spokeswoman said the company decided in the second quarter of last year to sell fewer loans because loans are earning more than the cash the company would get for selling them. Also, prices began to decline in the secondary market during that quarter, she said. Ahmanson sold $311 million in loans during the first quarter of this year, down 78% from the $1.4 billion sold in the same period last year.
In addition, earnings fell because of a two-month delay, until March 31, in getting federal approval to transfer about $1.5 billion of adjustable-rate mortgages from Home Savings to the company's recently purchased Bowery Savings Bank subsidiary, the company said.
Richard H. Deihl, Ahmanson chairman and chief executive, said the company is "confident that earnings for the full year will exceed 1987's performance. Core earnings can be expected to increase substantially from quarter to quarter throughout the year."
First-quarter loan originations were the highest in company history, rising 44% to $2.28 billion, he said. Deihl said the company's goal is to lend $12.5 billion this year.