Fidelity Bank’s Losses Narrow in 3rd Quarter

Fidelity Federal Bank reported a narrowed loss and improved asset quality in the third quarter that ended Sept. 30, but the Glendale-based savings and loan’s losses through the first three quarters are nearly quadruple those of a year ago.

Fidelity posted a loss of $8.23 million in the third quarter, compared to a year-earlier loss of $14.4 million. For the January through September period, Fidelity reported losses of $114 million, compared to $28.9 million a year earlier.

Fidelity has been hobbled by bad loans as a result of the recession and the Jan. 17 Northridge earthquake, but asset quality improved in the third quarter. Non-performing assets totaled $75 million on Sept. 30, down from $274 million three months earlier. In turn, the amount the S & L set aside for expected loan losses was $3 million in the third quarter, compared to $19.5 million in the same quarter of 1993.

But unloading problem loans has shrunk Fidelity’s asset portfolio to $3.7 billion at the end of the third quarter, down 17% from a year earlier. And the S & L said that despite improved asset quality, future write-downs and loan loss provisions may still be necessary.

“Continuing increases in interest rates could erode consumer confidence and put pressure on the ability of our multifamily borrowers to make their loan payments,” said Richard M. Greenwood, chief executive of Fidelity.