FHLBB Takes Over Ailing First California Savings

An ailing San Fernando-based savings and loan founded 17 years ago to serve Latino businessmen was declared insolvent Thursday and turned over to federal regulators.

State regulators, who had been acting as conservator of First California Savings Bank since Aug. 14, called in the Federal Home Loan Bank Board to close the S&L; and transfer its $226.9 million in assets to a newly chartered federal institution called First California Savings.

The new institution was scheduled to reopen this morning with all accounts of up to $100,000 fully insured by the Federal Savings and Loan Insurance Corp.

Depositors will have access to all their money and can continue using their same checking and savings accounts and accruing interest at current rates, said Ronald Edmondson, a FHLBB spokesman.

The S&L; was founded in San Fernando as Camino Real S&L; and has catered to the Latino community. In the early 1980s, however, it fell victim to overly rapid growth, the expense of high salaries and bad loans, particularly for construction projects. In the 12 months ended March 31, First California lost $59.7 million.

Developer Mervyn A. Phelan bought the institution two years ago and moved its administrative office to Orange, where he is based. The S&L; never had a branch in Orange County, however, and only two of its former network of six branches remain, one in San Fernando and the other in Commerce.

The bank board Thursday named a management team from Great American First Savings Bank in San Diego to operate the newly chartered S&L.; The team is headed by John Faires, Great American’s first vice president.

Faires also heads the management team at Perpetual Savings Assn. in Santa Ana, having been named to that position after federal regulators seized the institution on March 18.

Unlike many previous takeovers, the bank board did not fire any of First California’s employees, though some officers, including Gilbert Fuentes, its president, will have different jobs.