UnionFed Blames Losses on Real Estate Weakness

Blaming continuing weakness in the real estate market that swelled its losses for the fourth quarter, the parent company of Union Federal Savings Bank reported Friday that it lost $64.7 million for its fiscal year ended June 30.

UnionFed Financial Corp.’s losses, which amounted to $8.68 per share, were more than triple last fiscal year’s loss of $18.1 million, or $2.39 per share.

UnionFed said it lost $41.1 million in the fourth quarter alone, up 33% from a $30.9-million loss in the corresponding quarter last year.

Chairman David S. Engelman said in a statement that the losses came after a detailed review of the Brea-based company’s real estate holdings during the fourth quarter.

“Both the bank’s and the (Office of Thrift Supervision’s) reviews reveal continuing weakness in real estate markets,” Engelman said. As a result, the company had to set aside more funds to cover the projected losses. He also warned that, depending on market conditions, the losses may continue in the new fiscal year.

UnionFed said that its combined loan and real estate loss provision totaled $53.2 million for the quarter, compared to $53 million for the year-ago period. For the year, those loss provisions were $90.7 million, up from $60.7 million a year earlier.

UnionFed said its biggest losses for the year were: $15.2 million on single-family housing developments in Southern California; $13.5 million for real estate in Key West, Fla.; $7.6 million for six hotels, and $3.2 million for commercial properties in Maine.

Engelman said the company’s plan for the current year is to focus on its retail banking network and on developing a mortgage banking business.