Great American $155 Million Below Required Capital

SAN DIEGO — Great American Bank, stung by an unexpected increase in troubled assets, said Thursday that it had $155 million less capital Dec. 31 than was required in a reorganization plan approved by federal regulators in November.

The San Diego-based thrift also reported a $30-million net loss for the quarter ended Dec. 31, compared to a $198.9-million net loss for the same period in 1989. Great American lost $173 million in 1990, compared to a loss of $263.4 million the year before.

The announcements fueled speculation that federal regulators would soon take over the troubled institution.

Campbell Chaney, an industry analyst with Sutro & Co. in San Francisco, said the size of Great American’s capital shortage makes “almost imminent” the appointment of a conservator by the federal Office of Thrift Supervision.

The thrift estimated in February that its shortfall of capital--the final cushion against losses--would be about $100 million. So the size of the capital deficit revealed Thursday surprised some analysts. “The likelihood of them raising ($155 million) is very unlikely, and shrinking the company any more is unlikely because they’ve sold almost everything,” Chaney said.

Great American spokesman Brian Luscomb said thrift officials are in discussions with regulators about its capital situation. As part of its effort to remedy the capital shortfall, Great American this summer is to complete the sale of its California retail banking operation to Wells Fargo.

The thrift, once one of the nation’s largest savings and loans, attributed the increase in troubled assets to California’s continued economic slowdown, changes in federal reporting requirements and a flurry of recently completed appraisals that shed new light on the severity of previously identified problem assets.

The appraisals determined that cash flows, estimates of future rents, operating expenses and sales value of many problem assets were “often incomplete or not current,” according to a prepared statement released by Great American.

The savings bank ordered new appraisals early in the year, but the reports were stalled because “the appraisal industry was inundated by the high number of requests for appraisals, including those from other lenders and financial institutions,” Kemper said.

Great American’s financial problems have persisted despite the cash infusion generated by the sale of its 130 branches in California to Wells Fargo. Great American had hoped to meet regulatory capital requirements through the sale, which will generate about $136 million when completed.

Great American will keep its headquarters in San Diego and will retain retail branches in Washington and Arizona, along with its mortgage loan operation in California.