Valley Federal’s Profit for 1st Quarter Down 78%

Valley Federal Savings & Loan Assn. said that its profit in the first quarter ended March 31 fell 78% to $2.12 million from $9.74 million a year ago, when the Van Nuys thrift’s results included a one-time gain of $4.5 million from the sale of deposits and branches.

The S&L;’s assets shrank 10% to $2.67 billion as of March 31 from $2.96 billion a year earlier.

Last week, the Office of Thrift Supervision approved an amended capital boosting plan under which Valley Federal has until the end of this year to meet strict federal capital requirements. The thrift has operated under close scrutiny from regulators since losing $137.7 million in 1989, mainly due to problems in its mobile-home lending unit. That loss wiped out Valley Federal’s capital, but the S&L; has been profitable since then.

Valley Federal said that as of March 31, it complied with the amended capital boosting plan, which generally calls for the thrift to reduce its capital shortfall by retaining profits and shrinking its assets. But the Van Nuys thrift will probably have to apply for another amendment to the plan, allowing it even more time to comply with capital regulations.

Valley Federal also reported that its provision for possible loan losses for the first quarter increased to $2.3 million from $214,000 a year ago. The thrift’s non-performing real estate loans and foreclosed properties as of March 31 were $67 million, compared to $47 million a year earlier.