Butterfield S&L; Makes Smooth Switch in Management
At first blush, it seemed like business as usual at Butterfield Savings and Loan Assn. Thursday.
A sprinkling of customers dotted the posh Santa Ana office, making polite exchanges of money and small talk with friendly tellers.
But just a floor above them, government regulators, Butterfield employees and the S&L;’s new management team worked behind board room doors, trying to pick up the pieces of an $800-million-dollar institution that was declared insolvent by government regulators Wednesday and reopened as a new association less than a day later.
The transition, said a Butterfield spokesman, was smooth, with no long lines of anxious depositors making a run on any of the S&L;’s three branch offices.
“I’m mainly holding a lot of hands today,” said Gerald H. McQuarrie, co-founder of Downey Savings and Loan Assn. of Costa Mesa and the man who was brought in to operate the “new” Butterfield under a three-month management contract.
“Everything is carrying on in a very stable manner. The people, in a little way, seemed to be relieved that we are here and that they now have capital.”
Seized Late Wednesday
After suffering major losses from poor real estate investments and its controversial restaurant operations, Butterfield Savings was seized by the Federal Home Loan Bank Board late Wednesday afternoon.
The bank board immediately chartered a new federal mutual association, appointed a new five-member board and hired Downey S&L; as its new management team.
Senior Butterfield management dismissed by the bank board included Butterfield’s founding president, Donald Endresen, as well as his father, David, and brother William. A spokesman for the S&L; said that other officers replaced by the bank board were Richard Falkow, Nelson Coleman and Chris Reinhardt. Those individuals, as well as the Endresens, however, continue to sit on the board of Butterfield’s holding company, Butterfield Equities Corp.
On Thursday, Butterfield S&L;, Donald and William Endresen and other officers of the company were sued in Orange County Superior Court by a Tustin couple for fraud, breach of contract and emotional distress. The lawsuit, seeking $10 million in punitive damages and $150 in actual damages, involves a promissory note investment made in Butterfield by Norman and Jeanne Bunker as individuals and as co-trustees for their dental practice’s pension fund. The Bunkers could not be reached.
McQuarrie and Downey Senior Vice President Anne Bacon said it was too soon to say what changes they will institute at Butterfield.
“We will continue with everything they have started until we have evaluated everything,” McQuarrie said, which includes the thrift’s controversial national telephone deposit-raising operation, real estate ventures and restaurant division. “We are not here to bully in and tell them what to do. I hope that we can help them and I think we can.”
McQuarrie said that although his contract with Butterfield is for three months, it could be extended. The new management team has been asked to evaluate the present status of the association and report back to regulators its findings and recommendations as to Butterfield’s ultimate fate.
Declined to Predict
McQuarrie declined to say whether Butterfield would eventually be merged with another institution or liquidated.
“I’m more optimistic, looking at the figures and the people here,” he said. “There are ways to get this thing running and going again.”
Still, there are some Butterfield depositors who are not as optimistic.
Jan Trayno, a 32-year-old Santa Ana woman, walked out of the S&L; Thursday afternoon with the cash from her closed account in her purse and the contents of her safety deposit box swung over her shoulder in a plastic grocery bag.
“It’s a funny feeling to have your money in a bank if they are having problems,” Trayno said. “I’d rather take it out.”
Randy Cobb, an office manager for a Santa Ana advertising company, added, “If I had $300,000, I’d be worried. But I read the article in the paper and I understand the insurance (fund) is taking care of everything, so we’re safe.”
A spokesman for the National Assn. of Securities Dealers said Thursday that Butterfield Equities’ stock is still being delayed from trading.
