Butterfield Will Reopen as Traditional Mortgage Firm
Shorn of most of its wide-ranging and money-losing ventures, Butterfield Savings & Loan Assn. will start operating Jan. 1 as a traditional home mortgage lender without help from another savings institution.
The troubled Santa Ana association won federal approval Monday to run itself without the management team from Downey Savings & Loan Assn. in Costa Mesa, which was hired to operate the S&L; 16 months ago when regulators seized Butterfield and declared it insolvent.
The action makes Butterfield one of only a few S&Ls; in the controversial “management consignment program” to operate on their own directly under the control of the Federal Savings and Loan Insurance Corp.
A big reason for the action was that Butterfield got rid of its last major problem Dec. 17 when it sold its 22-store Love’s Wood-Pit Barbecue Restaurant chain for about $1.2 million to B. S. B. Foods Inc. The chairman of B. S. B. is Harry Shuster, president of Lion Country Safari Inc. in Irvine.
“While all of Butterfield’s problems have not been totally resolved, Butterfield today is in a stable position,” said Gerald H. McQuarrie, Downey’s chief executive and head of the management team at Butterfield.
“I feel Butterfield on the long range is in a position, with continued prudent management, to satisfy the FSLIC’s initial infusion of ($159.3 million in) capital and to firm up its potential as a traditional savings and loan,” he said.
One person not returning to Downey will be Anne Bacon, who has been running the day-to-day operations of Butterfield as its executive vice president and chief operating officer. Bacon was hired by the FSLIC-appointed board of directors at Butterfield to stay on as the new president and chief executive.
“I’ve thoroughly enjoyed it here,” said Bacon, who leaves behind a 15-year career at Downey that started as McQuarrie’s secretary and ends as a senior vice president and executive committee member.
“It would be nice to try to see the job finished,” she said, “though it could mean I’ll be out of work.”
Regulators have been trying to sell Butterfield recently, but no financial institutions have been interested.
The once-burgeoning S&L; had assets of about $830 million, more than $40 million in losses and more than 1,000 employees--about 300 in Orange County--when regulators took it over Aug. 7, 1985.
It had participated in dozens of real estate syndications and bought the Love’s chain and a franchise operation of Wendy’s Old Fashioned Hamburger fast-food eateries.
The investments, engineered by Donald W. Endresen, then the S&L;’s president, came under criticism from Edwin J. Gray Jr., chairman of the Federal Home Loan Bank Board, the agency that regulates S&Ls; and oversees the FSLIC. Gray repeatedly chastised Butterfield and similarly run S&Ls; for using deregulation to get into non-traditional businesses that they said threatened the stability of the industry.
Under Downey, McQuarrie said in his prepared remarks, every facet of Butterfield’s operations--including its loan procedures, auditing, appraisals, interest rates and investments--was analyzed and numerous changes were made.
Since the takeover, Butterfield has trimmed its assets to $701.6 million as of June 30, mostly through the sales of non-earning assets and its Santa Ana headquarters building. It suffered $20.3 million in losses in the first six months and had a negative net worth of $36.5 million at the end of the period.
Butterfield’s staff has been cut to 154, all in Santa Ana and its Bakersfield branch. Most of the former employees were hired by the companies that bought the various S&L; divisions and subsidiaries that were sold.
