Advertisement
YOU ARE HERE: LAT HomeCollections

Markets

FirstFed's Earnings Surge 68% in Quarter

April 27, 2006|E. Scott Reckard | Times Staff Writer

FirstFed Financial Corp. reported a 68% increase in first-quarter net income Wednesday, reflecting higher lending profit and loan prepayment charges at its savings and loan subsidiary, First Federal Bank of California.

The Santa Monica-based thrift's shares have been targeted by short sellers, investors who make money if a company's stock declines, because the company specializes in relatively risky adjustable-rate mortgages known as pay-option ARMs, which have artificially low initial payments.

But FirstFed easily beat Wall Street's expectations for earnings, and its shares rose 89 cents to $60.40.

The thrift earned $31 million, or $1.83 a share, compared with $18.5 million, or $1.10, a year earlier. Revenue increased 42% to $77.3 million.

Net interest income, the thrift's interest earnings minus its costs for deposits and borrowings, increased to $67.1 million from $50.1 million.

Loan prepayment fees were $7.4 million, up from $2.6 million a year earlier. FirstFed said an increasing number of its loans included prepayment fees to cover origination costs.

The volume of loans issued shrank to $726 million for the quarter, down from $1.3 billion a year earlier, reflecting the leveling off of real estate in California, FirstFed said.

Critics looking for early indications of problems have closely watched unpaid interest on option ARMs, which is added to borrowers' loan balances when they make the artificially low payments.

This deferred interest at FirstFed totaled $98.5 million on March 31, up from $62.6 million on Dec. 31 and $10.3 million at the end of March 2005.

Advertisement
Los Angeles Times Articles
|
|
|