County’s 22 S&Ls; Earn $45 Million For 3rd Quarter : Thrifts: Enjoying a rush of home refinancings, they are rebounding from a $3.8-million loss in the 1991 third quarter.

Orange County’s 22 savings and loans, helped by favorable interest rates and a high volume of home mortgage refinancings, boosted their total earnings to more than $45 million for the third quarter of 1992.

The thrifts rebounded from $3.8 million in losses for the same period a year earlier, when 23 S&Ls; were based in the county. Most of the losses then came from FarWest Savings in Newport Beach, which was operated by federal regulators and has since been closed.

The improved financial picture in the three months ended Sept. 30 is another sign that the thrifts could end the year in the black for first time in nearly a decade. For the first nine months of 1992, the county’s S&Ls; posted a profit of $190.7 million, compared to $78.6 million a year earlier. In 1991, fourth-quarter losses put the county’s thrifts into the red for the year.

For a change, the county does not have several multibillion-dollar thrifts pulling down the industry’s average. Guardian Savings in Huntington Beach, seized by the federal Office of Thrift Supervision in June, 1991, posted the greatest loss during the third quarter: $25.8 million.

In years past, huge failures like those of Lincoln Savings & Loan in Irvine and FarWest put the industry in the red because of the massive quarterly losses that resulted.

“If you look at them now, the vast majority are profitable,” said Edward H. Sondker, president and chief executive of Independence One Bank of California in Mission Viejo, which recently changed its name from Beverly Hills Business Bank. “The reason is many of the troubled institutions have gone out of business.”

Downey Savings posted the biggest rebound. Its $10.5-million quarterly profit contrasted with a $9.6 million loss for the same period of 1991. For the first nine months of 1992, Downey’s loan originations for single families more than tripled to $744.8 million, compared to $234.6 million for the same period a year earlier. The S&L;, which is focusing on development of its home lending operations, said that refinancings were accounting for 80% of its loan originations by the fourth quarter.

Independence One Bank in Mission Viejo, which lends money to mortgage bankers, also reported an uptick in home refinancing and loan volume during the quarter, Sondker said.

“The mortgage business was booming, even though the economy in Southern California isn’t,” Sondker said.

The rush to refinance also was a boon to Plaza Savings in Santa Ana. The S&L;, subsidiary of a holding company that completed an initial public offering of stock in October, boosted its profit to $4.3 million from $951,000 for the same period a year earlier. Chairman Jack French said that, while refinancings might ebb, he foresees a healthy first half of 1993.

“There’s no reason to believe that the refinancings will dry up completely,” French said.

Some S&Ls; also had larger profit margins because interest rates were lower on deposits than on loans. But the gap is shrinking.

“It’s starting to catch up a bit,” Sondker said. “It’s not as great as it once was.”

Some thrift executives said that Democrat Bill Clinton’s victory in November’s presidential election raised concerns about rising interest rates. But those fears have subsided as banks and thrifts await the details of the President-elect’s economic program.

“People are calming down and are not thinking that he will spend his way out of the recession,” French said.

The fortunes of half a dozen thrifts were tepid.

Federal regulators have seized three savings and loans in Orange County since September, 1991: First Newport Bank, San Clemente Savings and Delta Federal Savings Bank in Westminster. All are being operated by federally appointed conservators. Guardian is still in the hands of the Resolution Trust Corp., the federal agency that manages troubled thrifts.

Union Federal Savings Bank in Brea, which posted a loss of $6 million for the third quarter, is trying to raise the capital necessary to meet federal standards. Company officials say that a plan, approved by regulators, for a capital infusion of about $27 million by the end of March and another $13 million by the end of June will be difficult to meet. Another S&L;, Cornerstone Bank in Mission Viejo, also is attempting to restore its capital base after falling below minimum requirements.

In addition, Sterling Savings & Loan in Irvine turned in its charter in November, choosing to close up shop and saying that new government regulations are too restrictive.

*Orange County S&L; Scoreboard

Results for Third Quarter, 1992

Ranked by assets ASSETS (millions) Savings and Loan 1991 1992 American $17,073.0 $17,171.8 Household Bank 8,655.4 8,672.8 Downey 3,874.6 3,430.4 Western Financial 2,667.1 2,538.1 Union Federal 2,010.6 1,539.8 ITT Federal 1,315.4 1,457.9 Beverly Hills++ 1,210.1 1,115.7 Long Beach 801.4 817.8 United California 609.3 521.3 Plaza 196.6 374.3 Standard Pacific 292.8 370.2 Fullerton 335.6 342.9 Guardian * 638.6 264.4 Universal 261.7 230.9 San Clemente * 238.4 215.0 Irvine City 101.8 93.9 Golden State 53.0 74.4 Cornerstone 58.3 58.1 Sterling** 73.9 57.4 Pioneer 51.2 53.5 Delta* 63.1 44.5 First Newport* 55.9 24.8 Orange County Totals $40,637.8 $39,469.9

*

Ranked by assets TOTAL CAPITAL + as % of assets Savings and Loan Tangible Core Risk-based American 4.5% 4.5% 12.5% Household Bank 4.0 4.8 11.9 Downey 8.1 8.1 14.3 Western Financial 5.8 5.8 11.6 Union Federal 2.4 2.7 5.0 ITT Federal 5.8 5.8 9.3 Beverly Hills++ 10.7 10.7 28.0 Long Beach 5.4 5.4 8.8 United California 3.6 3.6 7.6 Plaza 7.8 7.8 13.0 Standard Pacific 6.4 6.4 11.0 Fullerton 6.9 6.9 11.0 Guardian * -18.8 -18.8 -15.6 Universal 5.9 5.9 11.6 San Clemente * 0.22 0.71 1.8 Irvine City 5.1 5.1 11.9 Golden State 2.7 3.7 8.6 Cornerstone 4.2 4.2 6.0 Sterling** 30.7 30.7 25.1 Pioneer 6.2 6.2 13.2 Delta* -1.9 -1.9 -13.0 First Newport* -2.8 -2.8 -2.6

*

Ranked by assets NET INCOME (thousands) Savings and Loan 1991 1992 American $48,324 $31,813 Household Bank 15,379 20,520 Downey -9,587 10,490 Western Financial 5,040 -133 Union Federal -6,536 -5,954 ITT Federal 4,530 2,606 Beverly Hills++ 2,043 2,700 Long Beach 3,740 4,172 United California -4,909 -1,359 Plaza 951 4,264 Standard Pacific 1,036 924 Fullerton 609 -105 Guardian * -26,602 -25,780 Universal -47 449 San Clemente * -3,284 -170 Irvine City 84 349 Golden State 84 249 Cornerstone 2 29 Sterling** -54 -276 Pioneer 113 132 Delta* -195 472 First Newport* -51 -384 Orange County Totals $30,670 $45,008

+Federal law requires thrifts to have 1.5% tangible, 3% core and 7.2% risk-based capital relative to assets.

++Beverly Hills Savings changed its name to Independence One Bank of California in December.

* Seized and now being operated by regulators.

**Even though it was not in financial trouble and was one of California’s top-rated thrifts, Sterling turned in its charter in November and self-liquidated, saying that new government regulations were too restrictive.

Source: Office of Thrift Supervision; compiled by TED JOHNSON / Los Angeles Times

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