Union Federal Parent Reports Loss of $5.8 Million

The red ink continued at UnionFed Financial Corp. as the thrift holding company reported a loss of $5.8 million, or 78 cents a share, for its second fiscal quarter, which ended Dec. 31.

The loss was much less than the $9.3 million, or $1.25 a share, reported for the previous year’s second quarter.

But the loss continues to weigh down the financially strapped Brea parent company of Union Federal Savings Bank in Los Angeles. The thrift fails to meet two of three federally mandated standards for capital, the final cushion against losses.

It is operating under regulator-imposed restrictions as well as its own federally approved plan to raise its capital ratios. It stated that its quarterly results fell within the plan’s expectations, but the company has said previously that meeting its goals would be very difficult. Still, the company said it is committed to reducing bad loans and adding new business.

Part of that plan has been to reduce assets, which fell 29% to about $1.4 billion at the end of December, from $1.8 billion a year earlier. Since its woes began in 1990, when it had to revise annual earnings to show a significant loss, the company has reduced its asset size by $1.1 billion.

Altogether, the company has accumulated red ink totaling $116.7 million through its fiscal second quarter. Its problems stem from a drop in the value of its real estate holdings, which must be sold under a 1989 federal law, and losses in its commercial real estate loan portfolio.