Financial Corp. of America reported a modest profit in the third quarter, despite a large addition to loan-loss reserves and a drop in deposits at its main operating unit, American Savings & Loan Assn.
FCA said it earned $12.3 million in the three months ended Sept. 30, compared to earnings of $1.2 million for the period a year ago. It was the first time that the company has operated profitably in seven quarters since the 1984 third-quarter profit was from the sale of assets.
Irvine-based FCA, with assets of $27.6 billion, is the nation's largest S&L holding company.
The firm added $140 million in loans, mostly real estate credits, to its portfolio of troubled loans, which now stands at $1.7 billion. It added $25.6 million to its loan-loss reserves, which financial institutions set aside to take care of expected loan losses and which directly reduce earnings.
"We believe the addition to loan-loss reserves at this time is both prudent and necessary, largely because a sluggish real estate market has increased delinquencies and foreclosures in our portfolio of single-family mortgages," FCA Chairman William J. Popejoy said.