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Great American Reports Loss of $59.3 Million for 4th Quarter

February 19, 1990|GREG JOHNSON | TIMES STAFF WRITER

Great American Bank, which has been hurt by Arizona's real estate slump, on Friday reported a $59.3-million net loss for the fourth quarter ended Dec. 31.

The San Diego-based S&L also reported a $123.9-million net loss for 1989, its first annual loss since becoming a publicly traded company in 1983.

Great American--the nation's seventh-largest publicly traded S&L, with $16.1 billion in assets--also said its scheduled fourth-quarter dividend will not be paid.

The losses contrasted with net profits of $19.8 million and $49.3 million for the previous fourth quarter and year, respectively.

Great American reported an $87-million provision for loan and foreclosure reserves during the fourth quarter, bringing its total reserves for the year to $221 million. The S&L has created $368.5 million in loan and foreclosure reserves during the past three years.

In suspending payment of its fourth-quarter dividend, Great American said earnings will be used to help bring the S&L's capital base in line with tough new federal regulations.

Great American also reported that it had reduced its payroll by the "equivalent" of 247 positions.

Most of the reserves taken during 1989 were established in connection with the S&L's troubled Arizona loan portfolio. Great American vastly expanded its Arizona commercial real estate, apartment and land loans with the 1986 acquisition of Home Federal Savings of Tucson. Great American is one of several California financial institutions that have been hit hard by the real estate slump in Arizona.

The bank's total loan and real estate reserves stood at $162.6 million at year-end. Of that total, $64.3 million was for loans that were exposed to possible losses. The rest was to provide reserves for general exposures.

The reserves taken during the past year "will help speed the process of restructuring loans, and foreclosure and sale of properties," according to a statement issued Friday night by Great American Chairman Gordon C. Luce.

Analysts in the past have wondered if Great American's Arizona woes were close to being solved. After the S&L reported a $93-million loan-loss reserve during the third quarter, one analyst wondered, "How much worse can Arizona get?"

Great American's shareholder equity stood at $513.1 million on Dec. 31, down from $646.8 million on Dec. 31, 1988.

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