California Federal Reports First-Quarter Loss of $326.3 Million

Citing continuing ills of Southern California’s real estate market, California Federal Bank on Monday reported a net loss of $326.3 million for the first quarter ended March 31.

The loss of $11.53 per share includes CalFed’s previously announced charge of $280 million from the bulk sale of about $1 billion in non-performing and performing loans. It contrasts with earnings of $10.5 million, or 40 cents per share, for the same period last year.

CalFed executives said that despite the results, their efforts to restore the thrift to health are proceeding well. Completion of the loan sales over the next three months will enable the S&L;’s management to “focus additional energy on the operating side of the business,” said Edward G. Harshfield, president and chief executive.

Analysts said the results were unsurprising, given the thrift’s announcement as early as February of the loan sales and expected charge.

“They’ve been communicating the loss for quite a long time,” said Campbell K. Chaney, an analyst for Dakin Securities in San Francisco.

Another analyst, however, said the institution’s loss continues to demonstrate that CalFed is “a hostage to Los Angeles real estate.”

“They have no diversification, no control over what their portfolio is worth,” said Kenneth Frankel, analyst at Drake Capital Securities in Santa Monica.

The sales are part of CalFed’s effort to cut its portfolio of non-performing assets to 1.98% of total. The ratio at the end of the first quarter was 4.87%, down from 5.26% at the end of December, it said.