Ahmanson Expects Record $290-Million Loss : S&Ls;: Red ink stems from sale of bad loans at Home Savings. Wall Street generally praises the move to shed problem assets.

The parent company of giant Home Savings of America said Monday that it will post a record loss of about $290 million in the second quarter, illustrating how Southern California’s severe real estate slump is still inflicting pain on even the most conservative of lenders.

H.F. Ahmanson & Co., whose Home Savings unit is the nation’s largest savings and loan, said the loss will be its first since the early 1980s. The red ink stems from the company’s sale of a $1.2-billion package of troubled home loans at a steep discount, and from setting aside $163 million to cover losses on real estate development projects.

Ahmanson emphasized that the actions rapidly accelerated its effort to shed its troubled assets and indicated that its worst days are probably over even though the lender now expects to report a loss for 1993.

“We’re going in the right direction,” said Richard H. Deihl, Ahmanson’s chairman and chief executive. “This just speeds up the process.”

The steps were mostly applauded on Wall Street, where Irwindale-based Ahmanson has previously gotten high marks for reducing its problem loans faster than some other major savings and loans.

After the announcement, Ahmanson’s stock climbed 50 cents to close at $19.875 a share in New York Stock Exchange composite trading. “I was pleasantly surprised that they stepped up and took aggressive action,” said analyst Bruce Harting of Salomon Bros. in New York.

The loss is nonetheless bitter medicine for Deihl, 64, who is planning to resign as chief executive this fall after spending the past quarter of a century running Home Savings with a caution rooted in his early memories of the banking failures of the Depression.

Ahmanson’s loss is the most graphic evidence yet of how California’s real estate downturn has caught up with even the most respected lenders. The setback is ironic because Home Savings has long preached the safety of single-family mortgages.

Deihl said Monday’s actions were not timed in any way to his decision to step down as CEO, noting that he plans to remain with the company as chairman.

“We’re doing something that makes sense now that we’ve gotten a decent price for it,” he said of the loan sale. The loans, whose borrowers had defaulted, were sold to a unit of Bear Stearns, the Wall Street investment firm.

Without giving an exact price, Deihl said Ahmanson sold the loans for a loss of between 24 and 29 cents on the dollar. “That’s what we would lose anyway” if Ahmanson kept the loans, Deihl said.

Ahmanson has remained profitable in recent years--it earned $204 million in 1992--even though the company, like most S&Ls;, has had to set aside hundreds of millions of dollars for loan losses as the recession escalated and real estate values tumbled.

With the second-quarter loss, however, Ahmanson said it expects to also post a loss for the entire year. The second-quarter deficit will be the largest since Ahmanson lost $42.4 million in the first quarter of 1982--when its assets totaled only $16 billion.

Despite its conservative history, Home Savings has gotten into trouble in part because it lowered its lending standards for certain home mortgages in the 1980s.

Home Savings’ bid to develop housing and commercial properties also ran afoul of the real estate recession. The S&L; is now planning to abandon that business and focus anew on single-family mortgages.

“I give them full credit for standing up and admitting at least part of” the loan problems, said Michael Murphy, an investor who bets that stocks will fall in price.

“But unfortunately, through 1993 and ’94 this (real estate slump) is going to continue, and we’re going to see some more pretty substantial write-offs and write-downs” by Ahmanson, predicted Murphy, who publishes the Overpriced Stock Service newsletter.

Deihl disagreed, saying the company does not expect any more major blows to its earnings “unless we have a real estate disaster that’s far worse than what we’ve had so far.”

With the sale to Bear Stearns, he said, Ahmanson’s problem assets now amount to only 2% of its total assets, down sharply from more than 5% last fall.

Home Savings Loss

H.F. Ahmanson & Co., parent of Home Savings of America, said it expects to lose nearly $300 million in the second quarter.

Second-quarter estimate: $290-million loss

Source: Bloomberg Business News; company reports. Researched by ADAM S. BAUMAN / Los Angeles Times