Ramona Savings in Orange Closed by U.S. Regulators : Guardian S&L; Gets the Assets of a 2nd Thrift Shut in Exeter

Times Staff Writer

Federal regulators Friday closed beleaguered Ramona Federal Savings & Loan in Orange--a victim of mounting losses for more than two years--and transferred most of its assets and deposits to a Minnesota savings institution.

At the same time, regulators closed Mt. Whitney Savings & Loan in Exeter and transferred its assets and deposits to Guardian S&L; in Huntington Beach.

Both troubled institutions were insolvent when they were seized in 1986 and put in a management consignment program created by federal regulators. The program relies on managers hired by regulators to keep failed institutions afloat while solutions other than liquidation are sought.

But regulators could find no other solutions for Ramona and Mt. Whitney.


Depositors at both S&Ls; will have access to their funds Monday and can continue to write checks on their accounts, said Andrea Plater, a spokeswoman for the Federal Savings and Loan Insurance Corp.

Depositors Will Need to File

Any amount over the insured limit of $100,000 per account will not be covered, however, so depositors will need to file forms with FSLIC to try to recoup more than that, Plater said. The agency has not determined yet how much money is held in accounts exceeding the insured limit.

The liquidation of the two S&Ls; is expected to cost FSLIC $122.7 million, she said. The amount includes deficits of $65.7 million at Ramona and $41.8 million at Mt. Whitney, as well as projected costs and other losses associated with liquidation, she said.

The institutions are the fourth and fifth S&Ls; closed by FSLIC this year, and the first in California.

Regulators seized Ramona in September, 1986. Subsequent criminal convictions have landed its owner, John L. Molinaro, in federal prison.

Molinaro is asking a federal judge in Los Angeles to let him withdraw his guilty plea to criminal fraud and stand trial on the charges. He was also convicted in federal court in San Francisco of using a false name to acquire a passport.

A jury trial on a civil lawsuit filed by FSLIC against Molinaro and other former officers and directors of Ramona is scheduled to begin May 10 in U.S. District Court in Los Angeles.


Mt. Whitney was seized in February, 1986. A FSLIC lawsuit against Mt. Whitney’s directors and officers is pending.

Jumbo Certificates of Deposit

Regulators decided to close the two S&Ls;, Plater said, because they were paying higher-than-average interest rates for jumbo $100,000 certificates of deposits--a common problem among failed institutions in the consignment program. Often those jumbo CDs were acquired before regulators seized control.

The higher rates have been used by institutions in the consignment program to attract deposits and pay for continued operations. Industry leaders have sharply criticized that practice in the last year as a form of unfair competition.


The performing assets and insured deposits of Ramona, which maintained its headquarters in Orange even though it closed its branch there last year, were sold to Midwest Federal S&L; in Minneapolis, which agreed to put up $5.6 million of its own funds to assume Ramona’s $102 million in deposits. FSLIC provided Midwest with $96.4 million to cover the remaining deposits.

Midwest Gets Access

The acquisition is expected to give Midwest, which has $3.5 billion in assets, access to the lucrative California deposit market.

Guardian S&L; in Huntington Beach acquired the performing assets and insured deposits of Mt. Whitney. Guardian agreed to put up $1.3 million of its own funds to assume $75 million in Mt. Whitney deposits, and FSLIC provided Guardian with $73.7 million to cover the remaining deposits.


Although its headquarters is in Huntington Beach, Guardian has no branches open to the public in Orange County.