Red Ink Slows UnionFed Recovery Despite Some Gains : Banking: Additional real estate and loan losses caused the parent company to post a loss of $5.95 million, or 80 cents a share, for the quarter.
In the face of more red ink, UnionFed Financial Corp. said Wednesday that it will be hard pressed to recover its financial health during its current fiscal year, even though it met interim targets for its first fiscal quarter.
Additional real estate investment and loan losses caused the Brea parent company of Union Federal Savings Bank to post a loss of $5.95 million, or 80 cents a share, for the quarter that ended Sept. 30. For the same period last year, the company lost $6.6 million, or 88 cents a share.
Quarterly revenue fell 28% to $26.8 million from $37.1 million last year.
UnionFed also saw its levels of capital erode since the end of June, but its current levels comply with a capital plan that it had submitted to federal regulators to show how it intends to boost its reserve against losses.
The bank is trying to raise the capital necessary to meet required ratios. Its plan calls for a capital infusion of about $27 million by the end of March and another $13 million by the end of June.
Achieving the required capital ratios in fiscal 1993 will be very difficult, David S. Engelman, the company’s chairman, president and chief executive, said in a statement.
That echoed Engelman’s warning last month when he announced that regulators had approved the amended capital plan filed by the savings and loan. The new plan was filed after the company reported a loss of $22.1 million for the fiscal year that ended June 30. It had lost $64.7 million in the previous fiscal year.
But Engelman vowed Wednesday that the company is “committed to the continued reduction” of bad assets and to “restoring our operations to profitability and strengthening our capital base.”
“We have limited our losses, reduced non-earning assets by more than $100 million and met our interim capital ratio targets for the past five quarters,” he said.
Partly to help its balance sheet, the company lowered its asset total to $1.5 billion at the end of September from $2 billion a year earlier.
UnionFed’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.
Union Federal, which is based in Los Angeles, lost $3.4 million on its real estate deals during the first quarter and socked away an identical amount as reserves for possible loan losses.
Union Federal sold four branches with a total of $79 million in deposits during the first quarter. It now has 22 branches.
UnionFed’s 1st Quarter
Citing loan losses and continuing weakness in the real estate market, UnionFed Financial Corp., parent of Union Federal Bank, reported first-quarter assets of $1.5 billion, down from $2 billion for the same period last year. That’s a $482.5 million decrease in assets. (Dollar amounts in thousands)
1st qtr. 1st qtr. Percent 1991 1992 change Assets $2,022,187 $1,539,684 -23.9 Net loss (6,582) (5,951) +9.6 Net loss per share (0.88) (0.80) +9.1
Source: UnionFed Financial Corp.
