Valley Federal May Resume Some Lending

Valley Federal Savings said the federal Office of Thrift Supervision lifted restrictions imposed on it in January that prevented it from making new loans or accepting uninsured deposits.

The limits were lifted as the Van Nuys-based thrift’s board of directors reached an operating agreement with the OTS formalizing the firm’s plan to boost its capital reserves.

The restrictions were imposed because Valley Federal fell short of tougher capital requirements established last year to ensure that savings and loans have adequate financial resources to cushion against losses.

Because of writeoffs at a unit that made mobile-home loans, Valley Federal, with about $2.9 billion in assets, still had a negative net worth and a shortfall of capital--according to one interim measure--of about $78 million on March 31.

But after Valley Federal reported a profitable first quarter, the OTS on May 1 approved the thrift’s plan to come into compliance with permanent capital regulations--even tougher than the interim ones--by July, 1991. Valley Federal has said that it must sell itself to raise the capital that soon.

Valley Federal said the OTS also approved the previously announced appointment of Scott A. Braly as president and chief executive of the thrift.

The lifting of the restrictions will allow Valley Federal to do “a very modest amount” of lending, Braly said. He added that Valley Federal now may also “selectively” roll over some large uninsured deposits that mature, instead of paying them off as the restrictions would have required.

The thrift will still be barred from paying dividends to stockholders.