Magazine article American Banker

$100M-Plus Hit for Commercial Federal of Omaha

Magazine article American Banker

$100M-Plus Hit for Commercial Federal of Omaha

Article excerpt

Commercial Federal Corp. said Tuesday that it will take pretax charges of $105 million to $125 million in the third quarter because of a major restructuring.

The $13.8 billion-asset Omaha company said it will shed more than $2 billion of assets, including low-yield, high-risk investments and residential mortgage loans. It also said it would pay off high-cost borrowings.

During a conference call with analysts and investors, chairman and chief executive officer William A. Fitzgerald also hinted at an upcoming middle-management restructuring. He did not elaborate on how many jobs might be trimmed.

Commercial Federal is the fourth-largest thrift in the Midwest. Analysts said it has struggled with high expenses as it worked through six acquisitions over the last two years. Much of that dealmaking time was spent without a chief financial officer at the company. More recently, it has been without a chief operating officer.

And like many other banking and thrift companies, Commercial Federal has been feeling the pinch of rising interest rates on its profits from lending activities. Yesterday, it reported that profits from operations declined 14%, to $103.3 million in the first five months of the year.

A year ago the company was under intense pressure from Franklin Mutual Advisers Inc. -- its largest institutional investor -- to sell the company. Franklin, which holds about 7.6% of the company's stock, argued for a sale before the company lost more value.

During the conference call, Raymond Garea, an executive vice president with Franklin Mutual, questioned Mr. …

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