Pacific Savings May Join Firm Run by Simon, Preston Martin
Pacific Savings Bank, under regulatory pressure to shore up its finances, is negotiating a possible merger with an aggressive new company headed by former Treasury Secretary William E. Simon and former Federal Reserve Board Vice Chairman Preston Martin.
Officers at HF Holdings Inc. in San Francisco have been talking extensively with Pacific Savings managers and with federal regulators since last September, according to Gerald Parsky, an HF partner and spokesman.
For the record:
12:00 a.m. Feb. 28, 1987 FOR THE RECORD
Los Angeles Times Saturday February 28, 1987 Orange County Edition Business Part 4 Page 2 Column 5 Financial Desk 1 inches; 35 words Type of Material: Correction
The real estate that Pacific Savings Bank took in through foreclosure by the end of September--a figure incorrectly reported in The Times Friday in a story about the negotiations--was $11.9 million, or about 1.2% of the S&L;’s total mortgage loans.
“We’re not yet at the stage of a definitive agreement,” Parsky said, “but their management has been receptive to our group” and HF employees are already examining the Costa Mesa S&L;’s real estate and mortgage portfolios.
Simon is known for buying troubled companies in ailing industries at depressed prices, and then making millions of dollars by turning them around and selling out.
He turned to the S&L; business last summer to build what he called a “mosaic of financial institutions” to capitalize on the burgeoning growth of financial services and Far East trade.
Last fall, the company bought controlling interest in World Trade Bancorp, a 3-year-old Beverly Hills bank holding company. It also purchased the ailing Honolulu Federal S&L--Hawaii;’s largest savings and loan.
And last month the group revealed that it was negotiating with federal regulators to buy two insolvent savings associations--San Mateo-based Bell S&L; with $1.4 billion in assets and Beverly Hills-based Southern California S&L; with $1.1 billion in assets.
Pacific Savings, with $1.7 billion in assets, is the 29th largest S&L; in the state and the seventh largest in Orange County.
Simon was in Australia on Thursday and referred calls to Parsky. Martin was en route from Hawaii and was unavailable for comment. The chairman and the president of Pacific Savings could not be reached either.
Pacific Savings, which traces its history back to 1890, has been having problems for at least three years. Its net worth dwindled to $37.3 million at the end of September from $57.4 million at the end of 1984 and $51.4 million at the end of 1985, according to Federal Home Loan Bank Board figures.
The S&L; lost $6.8 million in 1984, posted $4.6 million in net income the following year but lost $12.3 million in the first nine months last year, according to bank board figures.
Parsky said the problems at Pacific Savings are typical of the troubles that have plagued other S&Ls; in recent years--bad loans and problem real estate deals. Real estate taken in through foreclosure at the end of September, for instance, totaled $27.6 million, about 3% of the S&L;’s total mortgage loans.
“Some of the problems are significant,” Parsky said. “We have to assess how much new capital and how much new growth is necessary to make it healthy again.”
Only last February, Pacific Savings provided a management team to run American Diversified Savings Bank, which federal regulators had declared insolvent, seized and put into the controversial management consignment program. Pacific Savings stepped down last August after submitting another management plan for American Diversified.
