Local S&Ls; Had $151 Million Loss in First Quarter
The red ink continued to flow during the first three months of 1988 at Orange County’s 37 savings and loans, which reported a combined quarterly loss of $151 million.
But the figures, released Wednesday by the Federal Home Loan Bank of San Francisco, indicate that the county’s S&Ls; could end the year with a smaller combined loss than last year’s record $920 million deficit if they continue performing at the same rate.
The county loss represents about 4% of the $3.8 billion in combined first-quarter losses reported by the nation’s 3,118 federally insured thrifts.
California S&Ls;, which account for more than 25% of the industry’s deposits and assets, had a combined profit of nearly $35 million during the first quarter.
As usual, a few large, ailing S&Ls; dragged down the rest of Orange County’s savings industry. Eight insolvent S&Ls; posted losses of $169 million. Without them, the rest of the county’s S&Ls; showed a combined profit of $18 million.
In 1987’s first quarter, 38 Orange County thrifts posted a combined loss of nearly $151 million.
The 1988 first-quarter results revealed that more Orange County institutions are losing money. A total of 22 institutions posted losses this year, compared to 13 a year earlier.
New accounting rules and smaller profit margins are causing even healthy S&Ls; nationwide to realize lower profits, and that trend should continue through the rest of the year, said Salvatore Serrantino, a Santa Monica consultant.
“Profits across the board are 20% to 70% off from last year’s figures,” Serrantino said. “It’s going to be very difficult for S&Ls; to show performances as good as last year’s.”
The outlook for county S&Ls; should improve during the next three quarters because one of the biggest money-losers--American Diversified Savings Bank in Costa Mesa--has been closed.
Regulators paid out a record $1.35 billion to depositors of American Diversified and North America Savings, also in Costa Mesa, after closing both insolvent S&Ls; on June 6.
American Diversified lost $21.5 million in the first quarter. North America Savings lost $4.2 million.
Also gone is insolvent Ramona S&L; in Orange, which regulators closed in February. Its performing assets and deposits were sold to a Minneapolis thrift.
But replacing Ramona on the list of insolvent S&Ls; is American Savings, which is operated from the Irvine headquarters of its parent company, Financial Corp. of America. American lost $97.3 million in the first quarter.
American’s financial decline has skewed the county’s combined statistics. Its slide into insolvency put the combined net worth of the county’s S&Ls; $546 million in the red. A year earlier, Orange County thrifts had a combined net worth of $456 million.
The first-quarter figures are unaudited and subject to change. While Beverly Hills Savings, for instance, initially reported a quarterly loss of $21.6 million, it has since revised the figure to $27 million.
The county’s other insolvent S&Ls;, all under direct regulatory control, are Beverly Hills, Perpetual, First California, Butterfield and Pacific Savings.
Two other S&Ls--Western; Empire and Huntington Savings--had nearly exhausted their capital base by the end of March.
“The situation with insolvent thrifts is deteriorating and losses are increasing,” Serrantino said. “Regulators are not able to liquidate the institutions because the federal insurance fund can’t take the hit. So they have to keep these S&Ls; open for awhile.”
HOW COUNTY-BASED THRIFTS DID IN FIRST QUARTER in thousands of dollars
Thrift Regulatory Capital Net income At end of 1st quarter (loss) (negative capital) for 1st quarter Downey $219,003 $6,195 Western Financial 191,999 3,314 Guardian 15,550 3,247 Far West 177,078 2,675 Mercury 86,026 2,186 Household 186,742 1,735 San Clemente 10,681 1,014 Newport Balboa 31,822 960 Sterling 14,857 534 Fullerton 20,195 504 Universal 9,507 155 Westport 6,821 95 Standard Pacific 10,109 49 Plaza 3,140 12 Huntington 264 7 Cornerstone 3,745 (5) Security Federal 2,284 (8) Delta 1,525 (9) Charter 9,841 (30) Beach 4,392 (90) Constitution 2,484 (116) Malibu 8,286 (129) Irvine City 4,300 (134) Pioneer 849 (146) Sherman Oaks 3,492 (160) American Interstate 2,073 (160) Western Empire 123 (447) United California $35,250 (703) Perpetual (10,037) (804) Lincoln 252,542 (2,418) First California (67,212) (2,872) North America (117,454) (4,248) Pacific (179,272) (6,111) Butterfield (122,815) (15,054) Beverly Hills (561,510) (21,551) American Diversified (656,170) (21,544) American (147,057) (97,285) Total (546,547) (151,342)
Source: Federal Home Loan Bank of San Francisco
