Valley Federal Posts 80% Drop in Quarterly Profit

Valley Federal Savings & Loan Assn., the troubled Van Nuys-based thrift that was recently put up for auction by federal banking regulators, said its third-quarter earnings plunged 80% to $1.1 million from $5.5 million a year earlier.

For the nine months that ended Sept. 30, Valley Federal’s earnings dropped 61% to $8.3 million from $21.5 million during the same period last year. The thrift’s assets as of Sept. 30 stood at $2.3 million, a decline of 15% from $2.7 million a year earlier.

Valley Federal also said it boosted its reserves against loan losses by $14.1 million in the latest quarter contrasted with $800,000 last year. For the first nine months of 1991, the thrift’s loan-loss provisions totaled $19.2 million contrasted with $2.4 million last year.

For two years, Valley Federal has been selling assets, closing branches and laying off employees in an effort to meet minimum federal capital requirements, but the thrift still is about $125 million short of that goal, chief executive Scott A. Braly said.

As a result, federal regulators refused to extend a Dec. 31 deadline for the thrift to come up with the additional capital and, on Nov. 6, the government placed Valley Federal in a so-called accelerated resolution program under which parts or all of it are expected to be sold by March.