Directors Ousted : U.S. Bank Board Takes Control of N. America S
The Federal Home Loan Bank Board took control of North America Savings & Loan Assn. on Friday--a week after the S&L; was seized by the state--by putting the Santa Ana institution into receivership and ousting its directors and 20 top officers.
The bank board, which has broader enforcement powers than the state, turned over the S&L;’s deposits, assets and liabilities to a newly created, federally chartered S&L;, to be called North America Federal S&L.;
The leaner institution will reopen for business Monday with the remaining 76 employees and a new management team, according to spokesmen for the bank board, which named its insurance arm, the Federal Savings and Loan Insurance Corp., as receiver for the old North America Savings.
On Jan. 16, the state Department of Savings and Loan, which concurred in Friday’s action, had placed the S&L; into conservatorship. That action was taken just hours after North America Savings’ owner, Duayne D. Christensen, was killed in a single-car crash, but officials said the conservatorship had been ordered before the accident and was not in response to Christensen’s death.
Friday’s move by the federal agency was taken because “the state is not in a position to do some of the things we can do,” said Don Alexander, a bank board spokesman. “This receivership gives the bank board and FSLIC the authority to remove officers and directors,” which the state could not do. The S&L;’s president, Brooks A. Miller, was one of the officers dismissed Friday.
State Moved First
Alexander said the bank board was not involved in the initial takeover of North America because it was not able to act as quickly as the state.
While not accusing the S&L;’s old management or officers of any improprieties, Alexander said FSLIC is “always concerned when an insolvency occurs that the old board members did not carry out their fiduciary duties to the fullest extent.”
The bank board hired Charles Bottomley, a 30-year veteran of the S&L; industry, to manage the new S&L.; Bottomley is a former assistant managing officer at Mercury Savings & Loan Assn. in Huntington Beach. The bank board also installed a five-member board of directors, chaired by Eugene Zak, chairman of the W. Ross Campbell Co. in Los Angeles.
North America Savings had become insolvent at the end of November. It had a negative net worth of $1.5 million and $8.9 million in losses in the first 11 months last year.
Rapid Growth Strategy
Its financial problems resulted from a rapid growth strategy and the aggressive solicitation of high-cost jumbo certificates of deposit, which were used to engage in high-risk real estate investments, the bank board said.
The board also claimed that the association violated numerous regulations, including those prohibiting conflicts of interest and limiting the total amount that can be loaned to a borrower. The bank board also said the S&L; violated loan underwriting and documentation procedures.
In a lawsuit filed Wednesday, Christensen and his close friend and business manager, Janet F. McKinzie, were accused of defrauding $2 million from Imperial Bank by providing false documents and other misrepresentations stating that Christensen had a $2.7-million certificate of deposit at North America Savings. Actually, there was only $200 in Christensen’s account, the suit said.
