BANKING/ FINANCE : Union Federal Triples Reported Capital Shortfall
UnionFed Financial Corp. rebounded from a big loss last year by posting earnings of $906,000 for the first quarter of its current year. At the same time, however, the Brea financial institution revealed Tuesday that the shortage of capital at its savings and loan unit is more than triple the amount reported last week.
The company, which owns Union Federal Savings Bank in Los Angeles, said the thrift’s shortfall in meeting one of three required levels of capital had jumped to $18 million from $5.2 million because of new regulatory requirements and a dispute with regulators over new investments.
The 27-branch S&L; is asking federal regulators to reinstate $14 million of the shortfall. The thrift exceeds two other strict levels of capital imposed by last year’s federal thrift industry restructuring law.
The company’s earnings for its fiscal first quarter, which ended Sept. 30, are down 82% from earnings of $5.1 million for the same quarter last year. UnionFed blames declining revenue from its real estate operations and interest- bearing assets.
Total assets at UnionFed rose 4% to $2.5 billion at the end of September from $2.4 billion a year earlier.
UnionFed ran into problems in September when regulators, during a routine audit, ordered the thrift to record certain loans as a loss. The loss dropped Union Federal below a capital ratio that is based on the risk of its assets.
