U.S. Regulators Take Control of Bell Savings : Insolvent San Mateo S&L; Gets New Management

U.S. saving and loan regulators said Thursday that they have taken over Bell Savings & Loan Assn. because the San Mateo-based financial institution was insolvent.

It was the fifth time in recent months that regulators from the Federal Home Loan Bank Board have taken control of a California savings and loan with more than $1 billion in assets.

In what has become a familiar pattern, Bell Savings will reopen for business today with a new board of directors and management team.

Other S&Ls; taken over since mid-April include Beverly Hills Savings and Southern California Savings.

Bell Savings, the state’s 28th-largest thrift, has 18 branch offices, including one in Los Angeles and one in San Diego. The rest are located in Northern California.

Regulators blamed Bell’s problems on bad loans and poor-quality deposits.

Unsold Condo Complex

“The association’s insolvency was caused by losses resulting from poor underwriting practices--high-risk direct investments and acquisition, development and construction loans,” a bank board statement said.

One of Bell Savings’ problem properties is an unsold, $36-million luxury condominium complex known as the Park Towers, located just off the Ventura Freeway in Glendale.

Regulators also were critical of Bell Savings’ reliance on brokered deposits, which are funds raised through professional money men for a fee. They said brokered deposits helped fuel a rapid lending policy that inflated Bell Savings’ assets to $1.9 billion at the end of 1984 from $422 million at the end of 1982.

Meanwhile, a bank board study released Thursday in Washington revealed that almost 14% of the nation’s 3,167 federally insured S&Ls; are technically insolvent. That means that the S&Ls; are open for business but that their liabilities exceed assets.

These associations have about $15.8 billion in assets--nearly triple the size of the deposit insurance fund operated by the Federal Savings and Loan Insurance Corp.

The report, disclosed during a Senate Banking Committee hearing, dramatically underscored the problems facing the nation’s savings and loan industry.