Converts to Federal Stock Company : Newport Balboa Leaves California S & L System

Saying it no longer wants to shoulder the added costs and regulations of being a state-chartered organization, Newport Balboa Savings & Loan Assn. has left the state S&L; system and converted to a federal stock company, Newport Balboa Savings, F.A.

The change does not affect depositors, borrowers or any other customers serviced by the Newport Beach-based institution, which is wholly owned by ITT Financial Corp., a subsidiary of ITT Corp.

Newport Balboa does not intend to use the expanded lending and investing powers of California’s liberal S&L; laws, so directors decided that paying more than $30,000 a year in state S&L; assessments--more than twice what it paid a year ago--was “wasted money,” said Fredric J. Forster, president and chief executive of the institution.

“Also, for simplicity of management, we’d rather deal with one set of regulations rather than two,” he said.

While state-chartered savings institutions have broader authority in their operations under state law, they also must adhere to federal regulations imposed by the Federal Savings and Loan Insurance Corp. to get coverage of up to $100,000 for each account.

Forster said Newport Balboa also may find it easier in the future to expand across state lines as a federally chartered association, but he said the S&L; has no current plans to go into another state.

The institution, with $265.4 million in assets at the end of March, had opposed a planned increase last fall in the assessments charged by the state Savings and Loan Department to fund the department’s operations.

Slight Formula Change

The final assessment formula was amended slightly, but S&Ls; with less than $100 million in assets still pay four times more than they did a year ago--$20,000 rather than $5,000. Newport Balboa’s assessment more than doubled.

Forster complained at the time that the difference could constitute a small association’s profits for the year.

Newport Balboa is the only institution in the state this year to convert to a federal charter.

The state S&L; department was financially battered after 20 state-chartered savings institutions--most of them with $1 billion or more in assets--converted to federal charters in 1981 and 1982.

After California adopted its liberal S&L; laws in 1983, four of those institutions returned to state charter and five other federal associations joined them during the next two years.