FirstFed Financial Corp on Friday reported a loss of more than $50 million for its third quarter as a result of charge-offs for bad loans.
The Santa Monica parent of First Federal Bank of California said it had a net loss of $51.6 million (-$3.77 per share), compared with net income of $23 million ($1.57) a year ago. The net loss is also deeper than the second quarter's loss of $35.5 million,
The loss resulted primarily from a $110 million provision for loan losses, the savings and loan's largest amount since the credit crisis hit. During the housing boom FirstFed specialized in pay-option adjustable rate loans, known as option ARMs. Those gave borrowers several payment choices, including paying less than the interest due. Many borrowers are now defaulting on these loans.
Net interest income fell 26 percent to $45.8 million in the quarter.
Shares of FirstFed closed up 74 cents, or 9 percent, to $8.95 on the New York Stock Exchange.
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