3rd-Quarter Loss Renders Great American Insolvent
Troubled Great American Bank on Wednesday reported a $34-million loss in the third quarter, rendering the thrift insolvent based on one regulatory capital measure.
The San Diego-based S&L; attributed the loss, which wiped out its scant $32.2 million in so-called tangible capital as of the end of June, to continued provisions for loan losses and an $11.5-million provision in anticipation of a loss from the proposed sale of its commercial real estate portfolio.
Great American said the Office of Thrift Supervision was warned of the third-quarter loss in estimates included in the thrift’s revised capital plan submitted last month. An OTS spokeswoman Wednesday declined to comment on Great American’s negative tangible capital balance and whether it could precipitate a regulatory takeover of the institution.
With assets of $15 billion, Great American was once one of the nation’s most powerful and innovative S&Ls.; But the 211-branch thrift has been rocked during the past two years by deteriorating loans in California and Arizona, causing it to take massive loan writedowns. The thrift has been severely capital-deficient since late last year.
Great American lost $65.6 million in the third quarter of 1989. It lost $143.1 million in the first nine months of this year, compared to a loss of $64.5 million for the first nine months of 1989.
Its weakened capital position forced it to arrange the sale of its 130 California branches to Wells Fargo Bank for $491 million. Pending regulatory approval, Great American expects to complete the first phase of the sale, including all branches in San Diego, Riverside and Orange counties, by Nov. 30. The rest of the branches will transfer by mid-1991.
