New UnionFed Money Plan ‘Difficult to Achieve’ : Finance: The Brea firm’s subsidiary needs $27 million by the end of next March and another $13 million by June 30.

UnionFed Financial Corp. said Monday that federal regulators have approved its latest plan to raise money for its struggling savings and loan subsidiary, but the company conceded that “it will be very difficult to achieve” the plan’s goals.

The Brea company said that its subsidiary, Union Federal Savings Bank in Los Angeles, will have to raise two ratios of capital to assets substantially.

The thrift needs $27 million by the end of next March and an additional $13 million by June 30, the end of its current fiscal year, said David S. Engelman, UnionFed’s chairman and chief executive.

“Although the bank intends to pursue all feasible alternatives to raise capital, we believe it will be very difficult to achieve the required capital ratios in fiscal 1993,” Engelman said. “If we do not, the operations and future prospects of the bank will depend principally on the political and regulatory climate at such time.”

Ever since the company revised its 1990 earnings two years ago to post a loss, the thrift has been operating under regulatory restrictions. As its capital dipped below required levels, it was forced to submit to the Office of Thrift Supervision a plan for raising capital.

Its worst fiscal year was 1991, when it lost $64.7 million. It lost $22.1 million for the fiscal year ended June 30, prompting regulators to ask for a new capital plan to meet stiffer requirements.

Under the new plan, the thrift’s so-called core capital must reach 5% of assets, while its ratio of capital to risky assets must hit 10% by the end of June. Previously, the thrift had until the end of 1994 to raise its core and risk-based capital ratios to 4% and 8%, respectively. Now, those previous bench marks must be attained by the end of March.

At the end of its latest fiscal year, the thrift had core capital of 2.9% and risk-based capital of 5.2%.

Union Federal’s problems stem from a portfolio of bad commercial loans and a series of real estate and joint-venture projects that have gone sour. Under federal law, it must reduce its real estate holdings to 2% of assets by the end of 1994.

“In the last two quarters, we have been able to achieve marked reductions in the bank’s non-performing assets,” Engelman said. “However, the persistent weakness in the Southern California economy and additional regulatory demands have required us to further intensify our efforts to resolve problem assets on the schedule projected in the amended plan.”