Ford’s Earnings Fall 78% During Third Quarter : Autos: Troubles at its First Nationwide Financial unit in San Francisco were partly to blame. The car maker says things will remain tough for a while.

Reporting bad news and offering a gloomy outlook for the auto industry, Ford Motor Co. said Tuesday that its earnings tumbled nearly 80% in the third quarter from a year earlier, a performance brought on by a weak auto market and deepened by problems at its California-based savings and loan operation.

“There will probably be bad times for a while,” said David N. McCammon, vice president of finance and treasurer at the nation’s No. 2 car maker. “We’re in a mild recession, which will continue into the first and maybe the second quarters.”

A falloff in earnings was expected, but Ford’s results--a 78.7% drop to $102 million--were worse than analysts had forecast, partly because the company had to set aside $115 million to cover possible bad loans by First Nationwide Financial, its San Francisco-based savings and loan unit.

Still, if it weren’t for profit from its finance operations, Ford would have been deeply in the red. The company said it lost money on almost all its automotive operations, even though it sold more vehicles than a year ago.

Ford paid for its increased car sales with a $200-per-car average hike in discounts and rebates offered to buyers. “We had hoped with the new model year we’d be able to reduce incentives,” McCammon said. “But then came the Iraqi invasion of Kuwait.”

Ford’s vast overseas operations lost $89 million, compared to a profit of $324 million last year. The company managed a narrow profit in the U.S. auto market only by using a more favorable depreciation schedule.

“There were deteriorating profits everyplace,” McCammon said. “It’s one of these years in which everything is hitting adversely.”

Although Ford’s financial services group accounted for all of its third-quarter earnings, its contribution was diminished by falling commercial real estate values and increased loan delinquencies at First Nationwide.

First Nationwide Financial lost $44.8 million in the third quarter, Ford said. The $115 million that was set aside for bad loans, made after a review of its First Nationwide Bank unit by federal regulators, included $92 million reserved against unspecified losses in the future. Savings and loans have been building such reserves only recently, as they adopt more stringent, bank-like standards.

First Nationwide Financial’s difficulties come as the nation’s real estate market is softening, causing big losses for thrifts and banks that bet heavily on real estate during the 1980s.

Most of its real estate problems involve loans made on apartments, shopping centers, self-storage buildings and office buildings. The thrift said the problem loans are mostly in the New York area, although worries are increasing in Florida and, modestly, in California.

Ford will be pumping an additional $250 million into First Nationwide next month to bolster the thrift’s capital--the financial safety net it is required to maintain to protect against losses. First Nationwide Bank is California’s fifth-largest savings and loan.

First Nationwide Financial also indicated that it is in a dispute with regulators over two accounting issues that could hurt earnings further. One involves valuing mortgage-related securities; the other has to do with accounting for intangible assets. First Nationwide said it expects to resolve the dispute in six to nine months.

McCammon sidestepped questions about Ford’s profitability in the fourth quarter, but conceded that things aren’t getting any better in the car market. In addition, he said, the cost of Ford’s new labor agreement with the United Auto Workers will make itself felt in the fourth quarter.

Amy Harmon reported from Dearborn, Mich., and James Bates from Los Angeles.

Ford’s Profit Picture Ford Motor Co. annual profit/loss. . . in billions of dollars and the last 13 quarters in billions of dollars 3rd quarter, ‘90: $101.7 million, down 78.7%