Coast S&L; Won’t Meet Capital Rule Next Year : Thrifts: Most experts believe that the company will ultimately meet the regulations, provided it successfully carries out a restructuring program.

Coast Federal Bank, which has suffered recent losses stemming from real estate loan problems and moves prompted by regulators, disclosed Wednesday that it will fail next year to meet some key federal requirements for capital.

The thrift, owned by Los Angeles-based Coast Savings Financial, also said that--as a result of recent regulatory examinations--it will be forced to restrict its growth, dividend payments and other activities, moves that in many cases it has already taken. Coast also must file a plan with savings and loan regulators showing how it will shore up its capital, the financial cushion it must maintain as a buffer against losses.

Most industry executives believe that Coast will ultimately meet the federal requirements, provided it successfully carries out a restructuring program and California’s economy avoids a steep fall.

Still, failure to meet some of the standards tarnishes its image with investors already wary of thrift and bank stocks. In October, Coast disclosed it was suspending its dividend. And Coast’s preoccupation with restructuring and meeting the standards puts it at a competitive disadvantage with healthy California banks and thrifts.

“This is one challenge after another,” Coast Chief Executive Ray Martin said.

Coast’s disclosure comes amid a disappointing effort to bolster its finances by selling 27 branches in the San Diego and Central Valley areas.

Coast said it received no bids for the eight Central Valley branches, which have $250 million in deposits, and is taking them off the market. It said it has received two bids for 19 San Diego branches with $950 million in deposits, but at amounts below expectations. Martin said Coast expects to sell the San Diego branches to one of the two bidders, whom he declined to identify.

Industry sources familiar with Coast said they believe that company executives were overly optimistic about the branch sales, especially at a time when the federal Resolution Trust Corp., the agency cleaning up the thrift mess, is having a virtual fire sale of thrift branches.

Specifically, Coast will fail to meet one higher capital standard that goes into effect Dec. 31 that is tied to the riskiness of an institution’s assets. That measurement requires thrifts to maintain more capital for riskier assets.

Separately, Coast said it does not believe that it will meet other higher capital standards scheduled to take effect at an unspecified date next year. Part of those standards for thrifts are being raised to match similar bank capital standards taking effect next year.

For any thrift, failure to meet all of the standards is bad news, especially with the economy weakening. But missing one of the three basic standards is not considered an insurmountable obstacle.

“If you don’t meet it it doesn’t necessarily mean you are going to the guillotine,” said Jonathan E. Gray, analyst with the Wall Street investment firm Sanford C. Bernstein & Co.

Coast is widely viewed as being among a second tier of California thrifts that have previously met federal capital standards, but not by much.

The top tier includes such large, well-capitalized thrifts as Oakland-based Golden West Financial and its World Savings unit, Beverly Hills-based Great Western Financial, and Los Angeles-based H. F. Ahmanson and its Home Savings of America unit. In the second tier with Coast are such thrift firms as CalFed, the Los Angeles-based parent of California Federal Bank, and GlenFed, parent of Glendale Federal Bank.

All thrifts are being hit hard by tougher examinations by two federal agencies--the Office of Thrift Supervision and the Federal Deposit Insurance Corp. Regulators frequently are pressuring thrifts to set aside money for general, unspecified losses that may occur in the future, rather than for specific loan problems as has typically been done. Coast is believed to be one of the few large S&Ls; in California where those examinations have been completed.

Low Tide Price per share, New York Stock Exchange trading, weekly close except latest Coast Savings Wednesday: $2.375, down 75 cents Source: Dow Jones