Standard & Poor’s, reacting to Great American...

Standard & Poor’s, reacting to Great American Bank’s first annual loss since 1983, has lowered its investment rating on two classes of the S&L;’s debt. S&P; lowered its rating of Great American’s subordinated debt from B-plus to B-minus, and lowered its rating of Great American certificates of deposit.

The ratings affect about $75 million of Great American’s outstanding debt.

S&P; linked the downgrades to the S&L;’s “diminished profitability and capital levels due to high nonperforming asset levels in weak real estate markets.” Great American last week reported additional heavy loan-loss provisions during the fourth quarter that led to a $123.9-million net loss for 1989.

Most of the loan-loss provisions were linked to Great American’s problem loans in Arizona.

“Low risk-adjusted capital levels and low reserve coverage of nonperforming assets reduce the thrift’s financial flexibility,” an S&P; report said. “The uncertainty in the Arizona real estate markets indicates that Great American faces a long workout period for this real estate portfolio and is at risk to further declines in asset quality.”