FarWest Savings’ Parent in Red

The parent company of Newport Beach-based FarWest Savings on Friday reported a loss of $46.1 million for 1989, suffering from a $105.9-million decline in the value of its junk bonds.

In the previous year, the company reported net earnings of $8.6 million.

Losses at the thrift have continued into this year, and it now meets none of three federal standards on how much capital it must have. At the end of 1989, the savings institution had met one of the tests.

FarWest officials said the thrift, owned by FarWest Financial Corp. of Los Angeles, is still solvent. They are talking with regulators about a plan to raise the thrift’s level of capital, its final reserve against losses. The plan includes shrinking the firm, cutting costs and altering the S&L;’s business focus.

“In one way, this loss demonstrates the resiliency of the company,” said Charles H. Green, the thrift’s president. “To see that the company was able to absorb that hit and still meet one capital test shows the company’s strength.”

The annual loss at the parent firm, which is controlled by the Belzberg family of Canada, also reflects a $45.1-million writedown in assets other than junk bonds.

FarWest had about 14% of its assets in high-yield, high-risk corporate securities known as junk bonds when Congress passed a law in August to rescue the beleaguered thrift industry’s deposit insurance system. The huge restructuring of the industry included a provision requiring thrifts to divest themselves of all junk bonds within five years. At the end of December, FarWest held about $535 million in junk bonds, or about 12% of its assets.

Green said the thrift has reduced its assets to about $4 billion at the end of March from $4.3 billion three months earlier and a peak of $4.7 billion last summer.