CalFed to Post Loss After $300-Million Loan Sale
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California Federal Bank announced Thursday that it will sell up to $300 million in troubled loans, a sale that will cause the Los Angeles-based financial institution to report a third-quarter loss.
Although the sale by the nation’s fifth-largest savings and loan is not scheduled until December, CalFed will take the loss in the quarter ended Sept. 30. Those results will be reported later this month.
The thrift declined to say how much of a loss it will take on the loans, saying disclosure would “taint the bidding process.” More than 80% of the problem loans are in California, the company said.
More than half of CalFed’s total problem loans and assets--about $1.2 billion--are apartment buildings, while the rest are residential mortgages and commercial real estate. CalFed’s assets total $15.8 billion.
Analysts estimated that CalFed will have to write off between 10% and 45% of the loan values to complete the sale. Home Savings of America and Great Western Bank both sold off huge portfolios of bad loans this summer and wrote off about 25% of their value.
CalFed Chairman Michael Arthur said the expected loss from the sale will not threaten the thrift’s capital, which has been comfortably above minimum levels since a $150-million recapitalization was completed in late 1992.
Investors responded positively, bidding up CalFed shares by 50 cents to close at $15.125 in New York Stock Exchange trading.
The auction will be handled by Cantor Fitzgerald Brokerage in New York.
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