HomeFed Bank's loan portfolio stabilized somewhat in July after three months of rapid deterioration, according to monthly data released Tuesday by the savings and loan.
HomeFed reported that its non-performing assets--loans in foreclosure or those delinquent 90 days or more--were $717 million or 3.76% of its $19.09 billion in assets as of July 31. That compares with a bad loan portfolio of $708 million or 3.73% of $18.96 billion in assets as of June 30.
The $9-million increase in bad loans at the end of July is an improvement over the three months ended June 30 during which time HomeFed's nonperformers jumped by $254 million over the second quarter. The increased bad loans and the loan-loss reserves that HomeFed set aside to account for them resulted in the thrift reporting a second-quarter loss of $108 million.
The loan problems, which HomeFed began reporting monthly in May, caused a sell-off in HomeFed stock, particularly by institutional investors, and a precipitous drop in price.
"According to these (July) numbers, the company looks like it's in stable condition and not deteriorating. But one month does not make a trend," said David Hochstim, a savings and loan analyst with Bear, Stearns & Co. in New York. "To reassure investors, we probably need a few more months of stable or improving asset quality."
Financial stocks, including HomeFed's, have dropped significantly in the last few weeks because of concerns about real estate generally and California specifically, Hochstim said. HomeFed shares closed Tuesday at $7.75, down $.125 in New York Stock Exchange Trading. Over the past year, the shares have traded as high as $47.50 each.
HomeFed President Robert Adelizzi described the July report as "sort of neutral news. Some people interpret it positively, others will interpret it differently. Month to month, these numbers don't mean very much. What is important is over time."