Loan Losses Sting FirstFed Earnings

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FirstFed Financial Corp. posted a first-quarter net loss because of steep losses from home mortgages.


FirstFed posted a loss of $69.8 million (-$5.11 per share), compared to a profit of $32.4 million ($1.92) in the same period a year earlier. Wall Street was anticipating a profit of 26 cents per share.


Net interest income for the Santa Monica-based parent of First Federal Bank of California also fell 34 percent to $49.3 million, also below analysts’ expectations of $54 million.


The bank company said that a $150 million provision to pay for souring loans stung earnings. A year ago, loan-loss provisions totaled $3.8 million.


The bank company said its decision to substantially increase its estimate of losses on single family loans was based on the continuing decline in California real-estate prices during the first quarter.


FirstFed warned Wall Street last week of the impending loss, saying it was bracing for “substantially” higher losses.


Shares in FirstFed gained more than 10 percent to near $17 after the announcement Friday but have retreated since. Shares were down 4.3 percent to $16 in early trading Wednesday.

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