Dark Horse Runs in FHLBB District : Tony Angotti Wants a Larger Voice for Small Thrifts
The Goliaths of the savings and loan business traditionally dominate industry affairs, but an executive with a small Orange County thrift is taking aim at a prestigious post held almost exclusively by the heads of the largest and most powerful S&Ls; in the state.
Ottavio A. (Tony) Angotti, a relative newcomer to the S&L; business, is mounting an unusual campaign for election to the board of directors of the Federal Home Loan Bank of San Francisco.
The bank is one of the 12 district banks under the Federal Home Loan Bank Board in Washington, which regulates most of the savings and loan industry. The San Francisco bank serves S&Ls; in California, Nevada and Arizona, acting primarily as a credit facility for its members.
Angotti’s effort underscores the deepening schism that has developed over the last few years between the large, old-line thrifts in the state and the new breed of small, entrepreneurial S&Ls; that have flourished as the industry undergoes deregulation.
He and a growing contingent in the industry point out that the 36 largest thrifts, which control enough votes--60.5%--to sway the election of directors to the powerful San Francisco bank, do not properly represent the interests of the remaining 177 smaller thrifts served by the bank.
Angotti, 49, president of Consolidated Savings Bank in Irvine, admits that his chances of winning one of the four seats up for election this year are “slim or none.”
Other executives expect him to finish near the bottom of the 14-man field headed by the chairmen of the nation’s two biggest S&Ls;, William J. Popejoy of American Savings & Loan Assn. and Richard H. Deihl of Home Savings of America. Current board members Anthony M. Frank, chairman of First Nationwide Savings; Ray Martin, president of Coast Savings & Loan Assn., and Herbert M. Sandler, chairman of World Savings & Loan Assn., are expected to win reelection easily.
The district bank board is made up of six appointed, non-industry directors and eight elected, industry members. The industry seats, one of which is reserved for a representative of Arizona institutions and another for Nevada S&Ls;, carry two-year terms and limit reelections to only two more consecutive terms. Votes, based on a complex formula involving the number of shares that the member institutions are required to have in the district bank, are to be turned in to the FHLBB in Washington by Oct. 25, and results are to be announced Nov. 15.
The probability that Angotti will lose does not dissuade him from campaigning.
“I sent one letter out, and I’m going to send another one out. I’m going to bombard them,” he said in a recent interview. “And I’m not going to fail because it’s my intent to send a little message.”
That message is directed at members of what Angotti and others refer to as “the club”--the executives of the billion-dollar institutions. It is that they should let in one of the smaller S&Ls; and give more consideration to the smaller institutions.
The “club’s” support, for instance, for such federal regulations as last January’s rule to limit annual growth of S&Ls; with only $100 million in assets to 25% of net worth has angered many small institutions’ executives, who see it as a way to allow the big firms to grow quickly and limit them to a snail’s pace.
“See, the club is going to determine what you’re going to do and how you’re going to do it,” said Angotti, whose institution reported $67.4 million in assets on June 30 and expects to hit $100 million by the end of the year.
“I think the people that they’ve had up there (on the district bank board) are repeating, playing musical chairs,” he said. “I’m not complaining. I think they’re great people. . . . But they need to have a voice from what’s happening out there in the trenches.”
Prestige, Influence
Through appointment or election, for instance, Frank, of the $10.5-billion, San Francisco-based First Nationwide Savings, has been a board member for 10 of the last 15 years and is seeking reelection to his second consecutive term.
A seat on the board of the district bank is both prestigious and influential in shaping policy, especially when the main office in Washington seeks input on regulatory matters, according to Popejoy. California S&Ls; represent about 25% of the market nationwide, and the state is home to eight of the largest S&Ls.;
The board takes no part in supervision. Its power and authority is limited to the banking side of the business, such as approving loans to member institutions or providing training seminars. But often policy can be set and carried out through banking business.
Last year, for instance, regulators in Washington wanted to oust former Financial Corp. of America Chairman Charles W. Knapp because of what they considered his dangerous policies at the company’s chief subsidiary, American Savings. They lacked formal authority to remove him from office, but when American Savings suffered a $7-billion run on deposits, the San Francisco bank board refused to lend the institution any money until Knapp resigned. He did, and Popejoy, handpicked by FHLBB Chairman Edwin J. Gray, was installed as chairman that same day.
Popejoy, who served on the district bank board from 1978 through 1983, said he would not be in any conflict of interest if he won one of the terms, even though American Savings and FCA have an agreement with the FHLBB that allows the federal supervisors to hire and fire American’s executives and to require monthly reports on management activities.
Besides prestige and influence, said Beverly Hills lawyer Ernest Leff, whose firm represents about three dozen thrifts of all sizes, “there’s also a lot of self-interest in being on the board.”
“First of all, you get information on business and what’s going to happen before competitors do,” he said. “Second, the district bank in San Francisco is a large lender to the S&Ls;, and being on the board of your lender is not a bad thing.”
Board members have also benefited recently through appointments to manage failed thrifts. So far this year, the government has taken over 10 California S&Ls; with combined assets of about $10 billion because they were insolvent or operating unsafely. Management teams have been brought in to operate them, and contracts went to five of the eight S&Ls; represented on the San Francisco bank’s board.
With so much at stake, campaign emotions have never run higher.
Angotti, who spent 29 years in the banking industry before starting Consolidated in February, 1984, said the district bank board could be doing more to educate the public on the need to save money, to educate mid-level executives to be more than “just order takers” and to remind top executives that they are “bankers, not developers.”
One candidate who has little quarrel with the status quo is Frederic J. Forster, president of Newport-Balboa S&L; in Newport Beach, which had $218.9 million in assets as of June 30. He and others see restrictive regulations as a way to protect the weak Federal Savings and Loan Insurance Corp., which has to pay off depositors when thrifts go under.
“The big S&Ls; are the ones who end up paying the bill in many ways,” he said, referring to their higher FSLIC premiums. “I’m not so sure that the guys paying the biggest bill shouldn’t be running the bank.”
Federal Home Loan Bank of San Francisco Elected industry directors: Douglas A. Clarke, vice chairman of the FHLB. His third consecutive term expires at end of 1985; he cannot seek reelection. He is vice chairman of Glendale Federal, Glendale, with assets of $12.7 billion.
Kim Fletcher, director. Term expires at the end of 1986. Chairman and chief executive of Home Federal S&L;, San Diego, with assets of $9.5 billion.
Anthony M. Frank, director. Term expires at the end of 1985; he is seeking reelection to a second consecutive term. Chairman of First Nationwide Savings, San Francisco, with assets of $10.5 billion.
Ray Martin, director. Term expires at the end of 1985; he is seeking reelection to a third consecutive term. President of Coast S&L;, Los Angeles, with assets of $6.3 billion.
James F. Montgomery, director. Term expires at the end of 1986. Chairman of Great Western Financial Corp., Beverly Hills, with assets of $21.8 billion.
Herbert M. Sandler, director. Term expires at the end of 1985; he is seeking reelection to a second term. Chairman, World S&L;, Oakland, with assets of $11.5 billion.
Gene E. Rice, Arizona director. Term expires at the end of 1986. Chairman of First Federal S&L; of Arizona, Phoenix, with assets of $4.3 billion.
Raymond J. Gregor, Nevada director. Term expires at the end of 1986. President of First Western Savings, Las Vegas, with assets of $1 billion.
Appointed non-industry directors:
William F. McKenna, FHLB chairman. Term expires end of 1985. Name partner in law firm of McKenna, Conner & Cuneo, Los Angeles.
Jay Janis, director. Term expires at the end of 1986. Consultant, Los Angeles.
Patrick Kruer, director. Term expires at the end of 1988. Managing partner of Patrick Development, San Diego.
Norman C. Roberts, director. Term expires end of 1986. Investment consultant, San Diego.
Peter D. Herder, director. Term expires at the end of 1987. Chairman of Herder Cos., Tucson.
Jack P. Libby, director. Term expires at the end of 1986. President of Nevada Young American Homes Inc., Las Vegas.
