Lincoln S&L; Posts $109-Million 3rd-Quarter Loss in 1990 : Thrift: If the trend continues, a fourth-quarter loss would push the bailout figure beyond the already-anticipated $2 billion.

IRVINE —  Insolvent Lincoln Savings & Loan lost $109 million in the third quarter ended Sept. 30, sinking the thrift further into a vast pool of red ink that will make it one of the most costly taxpayer cleanups ever.

The Irvine-based thrift, which has been under regulatory control since April, 1989, lost more than $400 million in the first nine months of 1990 and more than $1.4 billion since the beginning of 1989, according to the Office of Thrift Supervision.

At the end of September, the thrift had $2.6 billion in assets and a negative net worth--a measure of how much its debts exceed assets--of more than $1.9 billion. Negative net worth provides the most current indication of what Lincoln’s bailout will cost taxpayers.

Regulators have estimated that the ultimate cost will be more than $2 billion. Lincoln’s negative net worth has likely plunged beyond that figure in last year’s fourth quarter. The final quarter’s results won’t be released for about three months.

The cost to taxpayers will depend, in part, on how successful regulators are at selling Lincoln’s assets and recovering awards in court judgments from Lincoln’s former operators, including Charles H. Keating Jr., the former chairman of American Continental Corp., which acquired the thrift in 1984. Keating is facing several major civil suits and has been indicted on state securities fraud charges.

Regulators seized the high-flying thrift in 1989, on the day American Continental filed for bankruptcy protection. The company is being liquidated. Regulators are selling the S&L;’s assets as they look for a buyer for its 29 branches in Southern California.

Lincoln invested heavily in risky real estate and junk-bond investments. Regulators are continuing to write down the value of those holdings.

The thrift at one time held more than $600 million in junk bonds. Some of those securities have been sold and others devalued. At the end of the third quarter, the junk-bond portfolio was valued at $381 million.

The S&L;’s real estate portfolio includes $1.5 billion in raw land loans, much of it to builders who bought Lincoln’s desert holdings. Those loans have been written down to $281.2 million, the quarterly results show.

“With securities, regulators have a good gauge on what they can be sold on the market for, so you can understand the writedowns,” said Gerry Findley, a financial institutions consultant in Brea.

“But writing down mortgage loans is simply judgment,” he said. “They have no real basis for knowing what can be sold on market and for how much.”

LINCOLN’S FINANCES

Irvine-based Lincoln Savings & Loan has lost more than $1.4 billion in the last two years as its assets base has been cut in half. Figures are in millions of dollars.

3/31/89 6/30/89 9/30/89 12/31/89 3/31/90 6/30/90 9/30/90 Assets $5,251.5 3,810.5 3,692.6 2,906.3 2,767.3 2,622.2 2,572.5 Earnings -$28.8 -788.0 -60.5 -127.5 -133.4 -163.9 -109.4

Source: Office of Thrift Supervision.