Coast S&L; to Convert to Public Stock Ownership

Coast Savings & Loan Assn., the nation’s second-largest mutual savings and loan, announced plans Wednesday to convert to stock ownership.

The conversion, if approved, means that ownership of the Los Angeles-based S&L; will shift from Coast’s depositors to public shareholders. It also will make Coast the last major independent California S&L; to convert to public stock ownership as a means of increasing its capital.

Coast said a conversion plan has been approved by its board of directors and will be submitted to depositors for approval at an as-yet-unscheduled special meeting.

A sale of stock to the public is expected to be held before year-end, Coast Chief Executive Ray Martin said in an interview.

However, a company spokesman said terms of the sale won’t be revealed until the plan has been approved by the Federal Home Loan Bank Board, the nation’s principal S&L; regulatory agency.

Though Martin declined to say how much money the sale will raise, he said he hopes the offering will “do as well” as other recent offerings in California.

In some cases, large mutual savings and loans in California were able to double their retained earnings--a mutual S&L;’s rough equivalent of net worth--through stock sales. Coast has retained earnings of almost $172 million.

The additional capital will allow Coast to expand its operations, Martin noted. The S&L; has 97 branch offices and 12 lending offices throughout California.

Coast’s $6.8 billion in assets--more than double the level of 1981--make it the state’s 12th-largest S&L.;

Coast earned $4.5 million in 1984, $2.16 million in 1983 and $12 million in 1982, but it lost $27 million in 1981. It has a regulatory net worth of 6.2%, more than double the level required by state and federal banking regulators. It raised $150 million earlier this year in a public sale of long-term notes.

Coast is the last large depositor-owned S&L; in California. Other large California S&Ls; that converted from mutual to stock ownership in recent years are California Federal Savings and Glendale Federal Savings, both among the largest S&Ls; in the nation.

These kinds of public sales, which peaked in 1983, helped raise much-needed capital for financial institutions whose net worths had been eroded by heavy losses in 1981 and 1982, when high interest rates ravaged the entire savings and loan industry.