The last analyst says goodbye to FirstFed

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Paul Miller, the last analyst covering FirstFed Financial Corp., gave up today, saying in a note that “it is unlikely that any value remains for shareholders” of the Los Angeles savings and loan company.

The FBR Research analyst had last published comments on the parent of First Federal Bank of California in February, when he advised investors to sell the stock. Back then, Miller valued FirstFed shares at 60 cents; the stock was unchanged at 32 cents today in the over-the-counter market.

For FirstFed, which stumbled with its pay-option adjustable mortgages, the issue is no longer existing investors as much as whether new shareholders can be found. As Miller pointed out, regulators have ordered the company to liquidate itself, merge with another financial institution or find new investors to provide a shot of fresh capital.

FirstFed is hoping to sell new shares to private investors in a deal that would all but wipe out existing shareholders.

Part of the money raised would pay off holders of $150 million in FirstFed bonds at 20 cents on the dollar, and part would be used to bolster the thrift’s capital cushion against losses.

The thrift got some good news today as President Obama was expected to sign legislation allowing companies to use losses from 2008 and 2009 to offset taxable profits going back five years, rather than just two years. FirstFed has reported $547 million in losses since the beginning of 2008 -- losses that could be used to apply for greater tax refunds.

FirstFed’s executives weren’t talking today, saying they were in a “quiet period” because of the coming attempt to sell new shares. The Securities and Exchange Commission has yet to clear the offering so FirstFed can issue a prospectus describing the proposed stock sale.

In an SEC filing this week, FirstFed provided fresh evidence of how its operating focus is shifting from modifying loans for troubled borrowers to dealing with foreclosures for those who can’t be helped.

Single-family home loans that were 60 to 89 days delinquent -- the most serious threats to go into default -- totaled $7.5 million, down from $12.6 million a month earlier and $97 million on Sept. 30, 2008.

So the pipeline of sludge is drying up at the entry point. But there was still plenty to deal with at the other end.

Even after selling 356 foreclosed properties in the third quarter, the bank owned 665 foreclosures valued at $176 million at the end of September, up from 413 worth an estimated $98 million at the end of June.

-- E. Scott Reckard