Glendale Federal to Shed Mortgage Securities : Finance: Sale is part of move toward community banking. Institution expects a loss of about $30 million.

Glendale Federal Bank, one of the nation’s largest savings institutions, said Monday that it will sell its entire holdings of collateralized mortgage obligations and record an after-tax loss of about $30 million.

CMOs are complex securities that are tailor-made for investors using simpler mortgage pass-through securities, such as Ginnie Maes issued by the Government National Mortgage Assn.

The sale is part of a plan Glendale adopted in July to shift its focus from the mortgage business to serving community banking needs, a spokesman said.

Glendale, which has 148 bank offices and 22 loan offices in California, said it has sold about half its CMO holdings and will record the entire loss in its second quarter ending Dec. 31. The sale, which began in November, is expected to be completed in early 1996, it said.

The bank said it reclassified about $2.8 billion of its mortgage-backed securities portfolio from “held to maturity” to “available for sale” under new accounting standards.

It said the reclassification includes the bank’s $1.8-billion portfolio of fixed-rate CMOs and $1.0 billion of its adjustable-rate pass-through securities portfolio.

Glenfed said it has no immediate plans to sell the pass-through portfolio.

The reclassification of the pass-throughs was done to take advantage of new accounting standards and to provide the bank with greater flexibility in managing this portfolio in the future, Glenfed said.

It also said it expects to take an after-tax charge of about $47 million in the current or next quarter to pay for a one-time assessment to recapitalize the Savings Assn. Insurance Fund. The assessment is contained in the federal budget legislation that is pending.

The bank said it has not yet determined if that charge will be recorded in its second or third quarter.

Glenfed shares fell 12.5 cents to $16.75 in New York Stock Exchange trading.