FCA Assuming $425 Million in Southland Deposits : Pacific Savings to Sell 13 Branches
Pacific Savings Bank has agreed to sell 13 of its branch offices in Southern California to American Savings & Loan Assn., the two financial institutions said Wednesday. Complete terms of the sale weren’t disclosed, but American Savings said it will assume $425 million in new deposits.
The sale will boost American’s branches to 135 statewide and lower Pacific Savings’ network to 12. American, the principal subsidiary of Financial Corp. of America, is based in Stockton, while Pacific Savings is headquartered in Costa Mesa.
Officials at both S&Ls; said the deal makes sense because Pacific Savings has been selling branch offices for several years, while American Savings wants additional branch-office deposits in the wake of its well-publicized deposit run a year ago.
Branch-office deposits are usually lower than $100,000 and are therefore insured by the Federal Savings and Loan Insurance Corp. During a confidence crisis last summer, American Savings lost $6 billion in large uninsured deposits, one of the worst deposit outflows in U.S. banking history.
American Savings wants to “further strengthen the company’s retail deposit base and de-emphasize high-cost institutional jumbo accounts,” Chairman William J. Popejoy said.
Uninsured accounts now constitute about a third of American Savings’ deposits, down from 50% a year ago, he said.
For Pacific Savings, the sale is part of a continuing branch-office shrinkage that has been going on since 1981, when the savings institution had 60 offices. Pacific Savings lost $7.6 million in 1984 but made more than $1 million in the first six months of 1985, President Verne Potter said.
Under terms of the sale, American Savings will assume $425 million in deposits at offices in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties. Pacific Savings will also give American Savings a “discounted” amount of cash as a partial offset to the deposits. (In S&L; parlance, cash is an asset and deposits are liabilities.)
The fact that Pacific Savings doesn’t have to come up with a full $425 million in assets to offset the liabilities is, in effect, what American Savings is paying for the branch offices. But neither side would reveal what that de facto price is.
“There is a discount,” Potter said. “We just not saying how much.”
