Federal regulators have quietly engineered a change in management at troubled Pacific Savings Bank of Costa Mesa, the bank’s new management confirmed Friday.
Chairman Joe G. Baker was removed from office and two of five directors have been replaced through a complicated regulatory action brought Thursday by the Federal Home Loan Bank Board.
A new chief operating officer from Glendale Federal Savings & Loan Assn. was brought in to take control of the savings bank and try to stem its losses.
Pacific has lost more than $74 million since 1984, including a $19-million loss in January of this year alone. As of Jan. 31, the savings bank had a negative net worth of $17 million.
Because of its worsening financial condition, regulators have been working with management of Pacific to find a buyer to take over the institution, which has about $1.7 billion in assets.
The only potential buyer to surface publicly is HF Holdings Inc., an investment concern headed by former Treasury Secretary William E. Simon and former Federal Reserve Board Vice Chairman Preston Martin.
Reached Friday, Martin would not comment on the change in management control at Pacific or how it would affect the takeover talks.
Federal Home Loan Bank officials could not be reached, and Baker was not available to comment on his departure from the company.
But Harvey A. Lynch, an executive vice president of Glendale Federal brought in by regulators to run Pacific, said: “In this case the operating trend was such that the Federal Home Loan Bank felt that a management change was in order. . . . But (the government) also felt that value still exists in the company. That value can be enhanced and with proper action, the (savings) bank can return to viability.”
He also said: “In my opinion and in the opinion of federal regulators, (there is) no element of dishonesty. I see no reason to change any more of the management team.”
The change in management does not affect depositors’ accounts nor the federal insurance of those accounts. The savings bank’s offices will be open for business as usual.