Insolvent Seapointe S&L; Seized; Monterey Savings Gets Accounts
One-year-old Seapointe Savings & Loan Assn., declared insolvent in February after it lost $21 million in highly speculative financial options trades in only a two-week period, was seized Friday night by federal regulators.
Seapointe’s insured accounts were transferred to Monterey Savings Bank of Monterey Park, which will take over Seapointe’s only branch in Carlsbad on Monday.
The Federal Savings and Loan Insurance Corp. took control of Seapointe shortly before 5 p.m. Friday. The fledgling company’s phones were subsequently answered, “FSLIC, as receiver for Seapointe.”
Seapointe’s insured deposits will be honored at the original interest rates and with no loss of interest, regulators said Friday.
Seapointe’s $45-million asset base as of Jan. 31 had dwindled to $17.3 million “due to numerous violations of laws and regulations, and unsafe and unsound practices,” the Federal Home Loan Bank Board said.
Regulators in February asked Seapointe to let government officials either negotiate a sale or merger of the company’s assets after Seapointe’s loss of $21 million in the financial options market.
Seapointe reportedly was caught in a “hedge,” the practice of offsetting possible losses by buying corresponding and often contrary securities positions.
The investments were reportedly directed by Ontario-based Strategic Investment Services, and the losses were generated between Feb. 3 and Feb. 18.
About $33 million of Seapointe’s $37 million in deposits are in the form of Jumbo certificates of deposits.
Monterey Savings Bank, with $109 million in assets, paid regulators $42,000 to acquire Seapointe’s insured deposits.
But that will make but a small dent in the $23.1 million it is expected to cost the FSLIC to liquidate Seapointe’s assets.
Depositors with more than $100,000 will share the liquidation costs with FSLIC on a pro-rata basis, officials said.
Monterey Savings Bank is expected to retain most of Seapointe’s employees, regulators said Friday.