Ahmanson, Great Western report higher profits.

Ahmanson, Great Western report higher profits

`Both are not only healthy but robust,' analyst states

The parent companies of the two biggest savings and loans in L.A. County and the nation -- H.F. Ahmanson & Co. and Great Western Financial Corp. -- both reported sharp increases in first-quarter profits last week, a sign that their economic health remains stable at a time when the S&L industry is ailing.

Irwindale-based H.F. Ahmanson, parent of Home Savings of America, reported a 57.5 percent jump in first-quarter profits. Ahmanson's first-quarter earnings were $61.8 million, or 62 cents a share, up from $39.2 million, or 40 cents a share, from the first quarter of 1989.

Great Western Financial Corp., owner of Beverly Hills-based Great Western Bank, reported a 30 percent increase in first-quarter profits. It reported earnings of $74.2 million or 58 cents a share, up from $57.2 million, or 45 cents a share, from the first quarter of 1989.

"Both Ahmanson and Great Western are not only healthy but robust," said Jonathon E. Gray, thrift analyst with New York-based Sanford C. Bernstein.

Ahmanson reported total first-quarter 1990 assets of $46 billion, a 9.1 percent jump from the $42.2 billion it reported in the same quarter last year. Ahmanson's new real estate loans rose to $3.4 billion in the first quarter of 1990, a 12.2 percent rise from the $3 billion it reported in the first quarter of 1989.

Great Western, conversely, reported first-quarter assets of $37.8 billion, an 8.5 percent increase from the $34.8 billion it had in first quarter of 1989. Total new loans for Great Western in the first quarter of 1990 were $2.9 billion, off $700 million from first quarter 1989's record level of $3.6 billion. And Great Western's total real estate loans, the majority of which are for single-family residences, were $2.5 billion in the first quarter of 1990, compared with $3.2 billion for the same quarter last year.

Great Western's earnings report marks a change from the fourth quarter of 1989, when it lost $77.3 million because of write-downs on troubled commercial and apartment loans. With its primary lending markets in California, Florida and Washington, Great Western -- like Ahmanson -- has long been considered one of the healthiest survivors in the nation's struggling thrift industry.

Ahmanson's net-interest income also rose dramatically last quarter, totaling $286.4 million, up $49.8 million from the first quarter of 1989. Ahmanson officials attributed that increase to a $3.6 billion gain on earned assets, adjustable-rate, single-family mortgages and the spread between interest earned and the cost of funds.

Great Western, by comparison, reported record net-interest income of $286 million in the first quarter 1990, a gain of 24 percent from the $230 million it earned in the first quarter of 1989.

Gray said Ahmanson also reported the highest operating earnings in its history last quarter, or 66 cents a share. That should put Ahmanson's 1990 annual operating earnings in the $270 million range -- $70 million ahead of its previous high mark, Gray said.

"And Ahmanson did that despite the fact that they set aside loss reserves three times as much as a year ago," Gray said, adding that the company's ability to make profits on California home loans is moving at a record pace.

Great Western's first quarter profits may also be related to fact that it set a large portion of its assets, $200 million, for bad loans last year, Gray said. "They had a bad experience making loans on commercial real estate in 1989, especially on hotels. They's playing it conservative now" Gray added.

Another key to the first quarter success of both companies, according to Gray, was the fact that both Ahmanson and Great Western consolidated their operations. "Like other S&Ls, both thrifts were a bit overweight. But now they are becoming lean and mean," Gray said.