Federal Regulators Forced Action : Central S&L;’s Board Is Replaced
Apparently unable to find a willing buyer for financially troubled Central Savings & Loan Assn., federal regulators on Friday forced the resignation of Central’s board of directors, the election of a new board and the selection of a new management team.
With a negative net worth of $56.2 million and nearly $70 million in losses last year, Central, with $2.5 billion in assets, has been under “supervisory review” by the Federal Home Loan Bank Board for the past 18 months, during which time it has been unable to make any new loans or dispose of any holdings without federal approval.
In that period, Central officials have discussed selling the association with at least 15 financial institutions, outgoing Chairman Fred C. Stalder told about 100 Central managers and employees at a meeting to announce the FHLBB action late Friday.
Stalder, 64, resigned as chairman, chief executive and a director. Other resigning directors were Harvey H. Chapman, Peter L. Fritz, Rodney J. Hansen, Herbert J. Penfield and O. Morris Sievert, who also pledged their full support for the new board and its management team. Stalder, Central’s chief executive since 1948, said he learned of the FHLBB’s action on Thursday. “I don’t feel sorry about it; I’ve been pressing the FHLBB to take some action,” he said in an interview. “It may not be a permanent solution, but it . . . will help us get back in business.”
Regulators signed a 90-day contract with First Federal Savings & Loan Assn. of Phoenix to manage Central. First Federal President George Leonard will be Central’s new president and chief executive, according to FHLBB spokesman Don Alexander.
The new board of directors, selected by regulators, are Howard Edgerton, former chairman and chief executive of California Federal Savings & Loan Assn., who was elected chairman of Central; Carl Mather, former partner of Peat, Marwick, Mitchell & Co. and a former California commissioner of savings and loans; Oscar Grossman, former chairman and chief executive officer of Surety National Bank in Encino; Raymond Watt, chairman and chief executive officer of Watt Industries, a Santa Monica-based homebuilding firm, and Sherman Miller, chairman and chief executive officer of Nevada Savings & Loan Assn. in Las Vegas.
Regulators said the removal of the old board was taken to “find a solution” to Central’s “lingering problems.” They said that the search for a new capital infusion into Central would continue.
Central has 48 branches in Southern and Central California, including 19 in San Diego County, 12 in Los Angeles County and three in Orange County. Employees not attending the meeting in San Diego late Friday will be told of the management change by a letter from Stalder, mailed Friday afternoon.
