HomeFed Is Still Slipping, Stock Drops 47% in Month
HomeFed Corp. stock continued to slide Wednesday, losing $.50 to close at $17.50 in New York Stock Exchange trading. HomeFed stock has now lost 47% of its value since June 14, when it closed at $33 a share.
A HomeFed spokeswoman said the company, which is the parent of 211-branch HomeFed Bank savings and loan, said it knows of no recent news or events that could have triggered the stock’s fall in recent days.
However, HomeFed announced last month an increase in nonperforming assets, and the spokeswoman said the stock market may be anticipating a negative earnings impact of the increase in bad loans. HomeFed expects to release its second-quarter earnings statement July 18.
Wall Street has turned increasingly skittish about S&L; stocks in general because of fears about possible deflation in California real estate. Dropping real estate values generally lower the security of home loans and make its harder for lenders to recoup their loans.
HomeFed, with $18.2 billion in assets, reported an $81-million increase in its nonperforming loans during May. An increase in nonperforming loans--those in foreclosure or delinquent 90 days or more--often cause an S&L; to set aside additional loan-loss reserves, which reduce earnings.
The addition of May’s bad loans brought HomeFed’s total nonperformers to $579 million, or 3.12% of assets, as of May 31.
The S&L; parent company also said last month that it was reviewing its entire loan portfolio to ascertain whether its under-performing loans had been adequately reserved for. The results of that review will be reflected in the second-quarter earnings statement, the spokeswoman said.
