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BANKING / FINANCE

Compiled by James S. Granelli, Times staff writer

Local banks and savings and loans, long in need of capital, are under more pressure than ever before to raise their levels of capital--the basic fund that protects them from unforeseen losses.

New regulations coming out of Washington are requiring banks and S&Ls; to bolster their capital base, and those regulations are forcing the traditionally lower-capitalized S&Ls; to come up with hard-to-get dollars.

The easiest place to get that cash for some institutions is to cut out dividends, and two major S&Ls; in Orange County have done just that.

The latest, the parent of FarWest Savings & Loan in Newport Beach, said recently that it was terminating its quarterly 10-cent-per-share dividend “for the foreseeable future.”

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Previously, Mercury Savings & Loan in Huntington Beach had stopped making its quarterly dividend of 10 cents a share.

But some of the stronger S&Ls;, as well as most banks, which typically have twice as much capital as thrifts, are continuing to pay cash dividends.

One parent of a local bank, Eldorado Bancorp in Laguna Hills, said it was increasing its quarterly cash dividend by a penny, to 7 cents a share. In August, Eldorado raised the dividend to 6 cents from a nickel a share. The company, which operates eight Eldorado Bank branches in Orange, Riverside and San Bernardino counties, said the increases reflect the company’s strong earnings and its effort to return about 20% of those earnings to shareholders.


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