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More of the same.

More Of The Same

One of the few investment analysts following First Federal of Arkansas, Robert Stern of Prudential-Bache Securities, was on target for his first quarter (Dec. 31, 1987) loss estimate, but missed the second quarter loss of $58.7 million.

That's caused him to update his analysis on the faltering S&L. Some points:

* In March, First Federal officials held its regular auction of capital market preferred stock. No buyers came forward, so First Fed had to redeem $73.4 million of the stock.

What they lost was the difference between rates at about 5.5 percent and the 8.5 percent rate from Federal Home Loan Bank advances used to buy back the stock. Stern says that will increase interest expense by at least $2 million annually.

* Stern also projects that interest expense will outstrip interest income from the First Federal portfolio -- all that before the S&L sets aside provisions for loan losses (an estimated $47.9 million in 1988).

His estimate for losses in 1988 total $97.5 million, or $26.50 per share. That estimate decreases somewhat for 1989, when Stern sees losses of just under $60 million ($16.30/share).
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Title Annotation:forecasts of Robert Stern of Prudential-Bache Securities on financial performance of First Federal of Arkansas
Publication:Arkansas Business
Date:Aug 1, 1988
Previous Article:And a warm welcome.
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