Glendale Federal Loses $39.8 Million; Coast Savings Also Hit

Hurt by declining loan revenue, Glendale Federal Bank reported a $39.8-million loss for its second quarter ended Dec. 31, compared to a loss of $79.4 million for the same period in 1992.

Also hit was Coast Savings Financial, the parent of Coast Federal Bank, which reported that fourth-quarter earnings declined to $3.7 million from $24 million in the fourth quarter of 1992. For the full year, Coast’s profit was $17.2 million, down 67% from $48 million in 1992. The 1992 results included a onetime tax benefit of $19.8 million.

At Glendale Federal, continued losses have drained its core capital, which is now only $29 million above the minimum required by federal regulators, raising doubts about its ability to survive if the current level of losses continues.

Though Glendale Federal says it expects income to improve shortly and that it will sell assets if necessary to raise more capital, some analysts expressed concern.

“When you are only $29 million over capital requirements and losing $40 million a quarter, that doesn’t leave a lot of leeway,” Gareth Plank of Mabon Securities said. “The earthquake will bring in continued collateral questions that make me a little nervous.”

Glendale Fed, which recently raised $451 million in capital in the securities markets to avert a federal seizure, said net interest income--revenue from loans and other assets minus interest paid to depositors--declined 22% from the year-ago period.

For the six months ended Dec. 31, Glendale Federal’s loss totaled $59.7 million, compared to a loss of $96.2 million over the same two quarters in 1992. Glendale Federal has assets of $18 billion and 216 branches in California, Washington and Florida.

Coast, which has $8.1 billion in assets and 88 branches in California, continued to boost its loan quality. Non-performing assets declined for the 11th consecutive quarter to $220 million, or 2.7% of assets. That was down from $319 million, or 3.8% of assets at Dec. 31, 1992.