$1.2 Million Profit for Newport Balboa S

Developing a larger loan portfolio and withdrawing from the mortgage banking field helped to increase the profits of Newport Balboa Savings & Loan Assn. for the third quarter and the first nine months ended Sept. 30.

The S&L;, a wholly owned subsidiary of ITT Financial Corp., earned $1.2 million in the third quarter, nearly twice the $666,000 it earned in last year’s third quarter. For the first nine months, Newport Balboa’s profits topped $3.3 million, a 16% increase over nearly $2.9 million in profits for the same period last year.

Total revenues also rose for the quarter to $7.6 million, a 22.5% increase over $6.2 million in revenues for the same quarter last year. For the first nine months, revenues were $22.1 million, an 11.6% increase over $19.8 million in revenues for the same period last year.

“We made a management decision in November, 1984, to change over from a largely mortgage banking operation to having a loan portfolio, and we are reaping the profits of that decision in 1985,” Fredric J. Forster, president of the thrift, said.

He said the S&L; began its mortgage banking operations, in which it sold the loans it originated and usually retained service fee contracts, as a response to the need to dispose of low, fixed-rate loans during the high interest rate period in the late 1970s and early 1980s.

But by keeping the loans it now originates, Newport Balboa has seen its assets jump and its net worth drop. As of Sept. 30, its assets were $223.2 million, a 34% increase over assets of $166.1 million a year earlier. Its net worth declined to nearly 5.2% from 7.1% a year ago, but the lower net worth is still above the 3% minimum required by federal regulators.

Forster said the S&L; does not need a stronger net worth and even transferred $1.4 million to its parent company in the form of dividends last year. “The tremendous advantage we have is that if we need more capital (for net worth purposes), we can get it from ITT,” he said.