Columbia S&L;’s Profit Falls as Securities Income Plunges

Columbia Savings & Loan’s profit plunged 76% in the second quarter, reflecting a big drop in the firm’s gains from its securities-investment activity.

The Beverly Hills thrift, by far the largest investor in high-risk, high-yield junk bonds among the nation’s savings and loans, reported Friday that it earned $6.4 million in the quarter ended June 3, compared to $27.1 million in the same period in 1988.

Columbia’s gain on investment securities tumbled to $7.8 million from $24.9 million a year earlier. In addition, Columbia showed a $3-million loss in the quarter on sales of loans, including mortgage-backed securities, compared to a $2.3-million profit a year earlier.

Columbia has about 30% of its $13.1 billion in total assets invested in junk bonds. The savings and loan bailout legislation signed into law this week by President Bush requires that savings and loans sell their junk bonds within five years.

In the future, thrifts will have to invest in such bonds through separately capitalized affiliates rather than using government-insured deposits.

Columbia officials were not available Friday to answer questions about the financial results.