State S&Ls; Record Gains at Year’s End : Thrifts: The improvement at several institutions indicates that California’s industry may be on the way back.
Five major California savings and loans posted improved fourth-quarter results Wednesday, making 1991 a strong comeback year for an industry plagued by financial turmoil since the mid-1980s.
Separately, First Interstate Bancorp reported a $59.9-million loss, or $1.14 a share, in the fourth quarter, stemming from the weak state economy and soft real estate market. It joined other major California banks that have reported disappointing year-end earnings this week.
Among thrifts, the parent firms for Home Savings of America, World Savings, Great Western Bank and Glendale Federal Bank all showed improvement, thanks largely to the huge “spread” between the interest they take in on home loans and the interest they pay out to depositors. Coast Savings Financial, although technically posting a drop in quarterly profit, showed a strong improvement in its basic operations. Coast’s results a year earlier were inflated by a large one-time gain.
Here are how each of the savings and loans fared:
* H. F. Ahmanson, Los Angeles-based parent of Home Savings of America, posted a $64-million fourth-quarter profit, or 51 cents a share, compared to $475,000, or less than 1 cent a share, a year ago. Profits for 1991 rose 29% to $245.8 million, or $2.06 a share.
* Great Western Financial’s profits were $71.5 million, 53 cents a share, in the fourth quarter, contrasted with a $62.3-million loss a year earlier. For the year, earnings at the Beverly Hills thrift more than doubled to $298 million, or $2.24 a share.
* Oakland-based Golden West Financial, parent of World Savings, saw its earnings rise by 51% in the fourth quarter to $64 million, or $1 per share, and by 31% to $239 million, or $3.76 a share, for all of 1991.
* Glendale-based Glenfed, which has been undergoing a revamping, posted a profit of $20.5 million, or 60 cents a share, in its fiscal second quarter, contrasted with a loss of $113.7 million, or $3.33 a share, a year earlier.
* Coast’s earnings in the final 1991 quarter amounted to $10.2 million, or 63 cents a share, compared to $50.1 million, or $3.18 a share, a year earlier. All of its 1990 fourth-quarter profit came from a huge one-time gain. For 1991, the Los Angeles thrift’s earnings soared to $41.7 million, or $2.60 a share, from just $2.9 million a year earlier.
California’s thrifts have benefited by the plunge in interest rates instituted by the Federal Reserve Board in an effort to get the economy moving. Profits typically rise when rates drop because the interest payments homeowners make on their adjustable-rate mortgages lag the declines in the rates that thrifts offer their depositors. In addition, many thrifts have already built up a cushion of money to deal with problem loans.
“What we are left with is a strong, healthy core of profitable and well-managed companies” said Jay Janis, president of the California League of Savings Institutions trade group.
Most thrift stocks rose on the earnings announcements: Golden West soared $3.375 to $41.375; Great Western rose 50 cents to $17.75; Ahmanson climbed 25 cents to $17; Coast rose 62.5 cents to $9.125, but Glenfed fell 62.5 cents to $5.875.
Meanwhile, California banks continue to display distress.
First Interstate’s $59.9-million fourth-quarter loss contrasts with a $91-million profit, or $1.32 a share, a year earlier. The loss was in line with what bank analysts had predicted for the Los Angeles-based bank.
For 1991, First Interstate lost $288 million, or $5.24 a share, contrasted with a profit of $469 million, or $7.30 a share, in 1990.
Despite the loss, investors were encouraged by a sharp decline in First Interstate’s level of problem loans.
The bank’s stock jumped $2 a share to close at $32.50.
