Newspaper article THE JOURNAL RECORD

Local Federal Shows $4.7 Million Net Loss

Newspaper article THE JOURNAL RECORD

Local Federal Shows $4.7 Million Net Loss

Article excerpt

A net loss of $4.7 million, or $2.70 per share, was reported Friday for the third fiscal quarter ended March 31 by Oklahoma City-based Local Federal Savings and Loan Association.

The thrift had reported a net loss of $1.6 million, or 92 cents per share, for the same quarter of the previous fiscal year.

Local Federal reported a net loss of $4.98 million, or $2.85 per share, for the nine months ended March 31, compared to a net loss of $3.4 million, or $1.95 per share, for the same period in 1988.

A decision to double Local Federal's reserves for possible losses in commercial real estate loans from $9.1 million to $18.5 million was responsible for the thrift's March 31 results, said Edward A. Townsend, president and chief executive officer.

On a consolidated basis, the thrift provided $9.4 million for possible losses on loans and properties acquired through foreclosure for the nine months ended March 31, Townsend said.

That provision was added to Local Federal's beginning reserves for loan losses of $9.1 million at June 30, 1988, creating total reserves of $18.5 million, he said.

The reserves were reduced by $2.7 million in net loan charge-offs made by the thrift during the nine months ended March 31, leaving reserves of $15.8 million, a 73.6 percent increase from the period ended June 30, 1988.

Specific reserves, earmarked for particular loans, totaled $2.7 million at March 31, while general reserves totaled $13.05 million, up from $6.4 million at June 30, 1988.

This reflects the continued difficulties confronting the Oklahoma commercial real estate market, Townsend said.

However, one bright spot in the thrift's report was its announcement of a 6.58 percent reduction in properties acquired through foreclosure to $21.1 million from $22.6 million, Townsend said.

Local Federal has reduced its exposure to the commercial lending sector, he said.

"We are increasing our reliance on the assets which formed the basis for the savings and loan business - single-family residential mortgage loans," Townsend said.

Townsend said the thrift increased residential loans to 82.15 percent of total net loans on a consolidated basis at March 31 from 74.71 percent at June 30, 1988. Single-family residential loans generally represent less risk of loss, he said.

The thrift had total loans of $772.5 million at March 31, up 20.9 percent from $638.7 million at June 30, 1988. Total assets at March 31 were $1.26 billion, up 56 percent from $811 million at June 30, 1988, while deposits totaled $1. …

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