Union Federal Bank Parent Blames 2nd-Quarter Loss on Bad Loans
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BREA — The parent company of Union Federal Bank on Tuesday reported a loss of $7.2 million for its second fiscal quarter.
That compared to a loss of $5.8 million for the same period a year earlier.
For the six months ended Dec. 31, UnionFed Financial Corp. reported losing $11.3 million, compared to a loss of $11.7 million a year earlier--which included an income tax benefit of $6 million.
The bank blamed much of the losses on bad real estate loans. It said it set aside $4.8 million during the latest quarter to cover bad loans, especially loans on apartments. The bank said it lost $3 million on a single transaction: the sale of its largest foreclosed property.
At the end of the half, the bank said, bad loans totaled $48 million, down from $84 million a year earlier.
The company’s chairman, David S. Engelman, said the bank expects to clean up more bad loans this year. Now, however, the Northridge earthquake may bring more losses or hurt the region’s economic recovery, Engelman said.
At the half, the bank had assets of $942 million, down from $1.2 billion in June, at the beginning of the fiscal year.
The bank, based in Brea, has 14 branches in Southern California.
Since a recapitalization in September, the bank has enough capital to comply with federal regulations.
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