Thrift & Loan Held Insolvent and Shut Down : Orange Coast May Go to One of Two Bidders
Orange Coast Thrift & Loan Assn. in Los Alamitos was declared insolvent and taken over by regulators Friday after loan losses exhausted the tiny thrift’s capital.
Because Orange Coast Thrift is insured by the Federal Deposit Insurance Corp., customers’ accounts are protected to $100,000. One regulator said he did not believe any of Orange Coast’s accounts were in excess of the insured amount. There were $11 million in thrift certificates--the industry’s version of deposits--held by about 1,100 customers.
Two unidentified institutions have submitted bids to purchase the association’s assets, said Dale Lucas, special administrator for the state Department of Corporations. A decision on the bids is expected today.
If a sale is approved by regulators and an Orange County Superior Court judge, Lucas said, the thrift--which has only one office--would be reopened Monday under the name of the purchaser.
The thrift and loan’s “inadequate lending policies” spawned its problems, said Lucas, whose agency regulates thrifts and loans in California. He said that Orange Coast had a number of small real estate loans that had gone bad.
After closing the thrift, the department appointed the FDIC to act as receiver.
Orange Coast, with four employees, is the first California thrift and loan to be closed by regulators since 1984.
“The FDIC does what it has to do,” said Alan Rothery, chairman of the thrift and its holding company, Western Pacific Bancorp. “There’s no bitterness, though. We had a very good relationship with the (regulatory) auditors.”
The closure came after state and federal examiners completed an audit earlier this week that showed, among other things, that the company had $12.5 million in assets, $11 million in total loans and a negative net worth of $1.5 million.
The holding company was not taken over, but it has no other assets, Rothery said. Western and the thrift were formed four years ago by a dozen investors, he added.
