Citadel Holding Warns It May Run Out of Cash
Citadel Holding Corp., the Glendale parent of savings and loan Fidelity Federal Bank, reported a first-quarter loss of $14.8 million, and warned it could soon run out of cash and fall below federal minimum capital requirements.
Citadel’s loss for the three months ended March 31 contrasted to a profit of $100,000 a year earlier. The loss was due to higher provisions for loan losses, largely because of the earthquake, plus increased operating expenses, decreased net interest income and losses in the sale of certain loans.
The earthquake more than doubled Citadel’s volume of delinquent loans to $373 million as of March 31 from $155 million on Dec. 31, 1993. The quake also damaged Fidelity Federal’s building in Sherman Oaks, but that structure is expected to open in a few months and Fidelity has been operating the Sherman Oaks branch out of a trailer.
The quarterly loss further eroded Fidelity Federal’s capital. As of March 31, Fidelity Federal’s core capital ratio was 4.04%, just above the federal minimum of 4%. If Fidelity falls below the minimum, it could face restrictions from regulators. Citadel said Fidelity Federal also currently has cash to operate only through mid-1994. Citadel has proposed a restructuring plan to raise cash, but that plan has been challenged by one of its creditors, Chase Manhattan Bank.
As of March 31, Citadel’s assets totaled $4.1 billion, down 15% from $4.8 billion a year earlier.
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