Federal, State Regulators Close Ramona S&L; Assn.; FSLIC Is Named Receiver

Ending two years of disputes, state and federal regulators on Friday evening closed down Ramona Savings & Loan Assn. in Orange and immediately transferred $108.1 million in assets and liabilities from the 59-year-old state-chartered institution to a newly chartered federal association.

Ramona Federal S&L; will reopen Monday for business as usual with its $96 million of deposits still covered by up to $100,000 per account by the Federal Savings and Loan Insurance Corp., which was named receiver for the S&L;, a spokesman for the regulators said.

Ramona is the third S&L; based in Orange County to fail this year.

FSLIC’s parent agency, the Federal Home Loan Bank Board, laid the blame for Ramona’s failure on new management that took over the S&L; in 1984 and changed the operation rapidly “from that of a traditional thrift to that of a real estate development company.”

The bank board has been critical in recent years of S&Ls; that stray beyond traditional home-lending practices even though some states, such as California, give them broader investing and lending authority.

Ramona’s lending practices “caused severe regulatory criticisms and led directly to the institution’s insolvency,” said Douglas Green, a bank board spokesman.

Bank Board Critical

The bank board also has been critical of costly and volatile “jumbo” $100,000 certificates of deposit. Ramona had $15.8 million of the CDs among its deposits, Green said.

During a summer-long examination of Ramona by agents from the bank board and the state Savings and Loan Department, the S&L; took two actions that embroiled it in a confrontation and a lawsuit with the state agency.

In May, John L. Molinaro, Ramona’s sole owner, chairman and chief executive, took a $2-million dividend out of retained earnings and the state agency ordered him to put it back in the association’s deteriorating capital base. He refused and was sued by the state Aug. 26.

In its suit, the state agency asserted that Molinaro endangered the S&L;’s operations by engaging in “unsafe and unsound” accounting and record-keeping practices and unlawful loan practices and by refusing to pay back the $2-million dividend.

The agency alleged that among the illegal activities were loans of nearly $3.4 million on two properties that the association itself appraised at less than $3.1 million. The agency said Ramona overstated its gross income by $6.98 million from one real estate transaction. In a second confrontation, Molinaro tried to sell out to former banker Donald Stump, going so far as to install him as president on July 1 after the state agency had rejected the deal. Stump quickly stepped down. The agency, in court documents, claimed that Stump did not have the “requisite competence, experience and integrity” and referred to a 1980 State Banking Department order heavily criticizing Stump’s conduct at American State Bank, now called American Interstate Bank.

Molinaro could not be reached to comment on the government’s seizure of the S&L.;

Green said that while the bank board considers Ramona, which opened in Fillmore in 1927 and still has a branch there, to be insolvent, it can continue to meet its short-term obligations to creditors and depositors through its cash flow and liquidity.

Ramona reported a net income of $4.5 million for 1985 and of $457,000 for the first quarter this year. A bank board spokesman in San Francisco, though, said those figures are in dispute.

The new Ramona Federal Savings will be headed by Richard Huston, whose Deuel-Briggs Partners consulting firm was issued a contract by the FSLIC to operate the S&L; under the agency’s controversial management consignment program. Huston is a former president of Brentwood Savings & Loan Assn.

New Board Named

FSLIC also named a new board of directors, headed by Ernest S. Rady, chairman of American Assets Inc., an investment and real estate development firm in San Diego County.

Other board members are Dale B. Welton, former senior vice president of finance and administration at Security Pacific Automation Co., a division of Security Pacific National Bank; Everett Miller, vice president of G&D; Centers Inc., a shopping center development company in Southern California, and a former Glendale Federal S&L; executive; John E. Overton Jr., president and chief executive of National Mortgage Investors Inc. in Glendale and former regional manager of the Federal National Mortgage Assn., and Dallis E. Widick Jr., executive vice president of Shearson Lehman Mortgage Corp. and former vice president and district manager of Great American Savings Bank in San Diego.

The government has taken over 14 California thrifts so far this year. Nationwide, 45 S&Ls; have been seized by regulators.