Thanks to an increase in revenue from...
Thanks to an increase in revenue from its real estate development operations, HomeFed Corp., parent of Home Federal Savings & Loan, reported an improved second-quarter net income of $28.1 million, up from $26.5 million in the same three-month period last year.
HomeFed’s real estate revenue during the quarter was $19.8 million, up from $11.9 million in second-quarter 1988. The recent quarter’s real estate revenue was the highest ever from its development activities.
The S&L;'s results from lending activities did not show a similar improvement, however. Home-Fed’s net interest income, less provision for loan loses, was $86.4 million for the quarter, up only slightly from $85.1 million for the same period the year before.
HomeFed blamed the tepid interest income on a shrinking interest rate spread, or the difference between what the S&L; pays on its liabilities, including deposits, and what it earns on its assets, such as loans. Figured as a percentage of HomeFed’s $17.7 billion in assets, the interest rate spread was 2.57%, down from 2.71% for the same period the previous year.
Still, one analyst, Joseph Jolson of Montgomery Securities of San Francisco, said the performance was above expectations. “The per-share profit of $1.20 was slightly better than the $1.15 we were looking for,” Jolson said.
Loan originations were down 26% for the second quarter. But, at $3.1 billion for the first two quarters of the year, they are down only slightly from the $3.2 billion in loan originations over the first six months of 1988.
HomeFed’s non-performing loans as of June 30 totaled 2.45% of assets, down from 2.47% at the same time last year. HomeFed’s provision for probable loan losses in the recent quarter was $10 million, down from $15 million for the year-ago quarter.
For the six months ended June 30, HomeFed’s profit was $58.6 million, up from $51.2 million for the same two quarters last year.