McGill-McMillin Group Enters Quest for Flagship Federal S
A local investor group that includes former Federal Reserve Bank official Robert McGill and developer Corky McMillin has entered the bidding for Flagship Federal Savings & Loan, the thrift that federal regulators created in the wake of the July, 1986, failure of Sun Savings & Loan.
The investor group had its beginnings in 1985 when several members made an unsuccessful bid for Central Savings & Loan, McGill said Wednesday, adding that the group “got into the Central bidding process too late and (federal regulators) already had two qualified buyers.”
In addition to McGill and McMillin, the investor group, named FSL Investment, includes a handful of San Diegans, and several with “residential and commercial development experience,” according to McGill.
If FSL acquires Flagship, it would run the institution as “more of a traditional thrift than anything else,” McGill added.
Federal regulators expect to sell Flagship, which includes the remains of Sun, during the second quarter of 1988. Regulators have spent the past 1 1/2 years ridding the S&L; of problem assets and replacing them with performing assets. Los Angeles-based Great Western Savings & Loan has operated the S&L; since 1986 through a federal management-consignment program.
Flagship, which has lost about $7 million since its creation, began 1988 with a healthy asset base, according to Robert McNitt, a Great Western executive who also serves as Flagship’s chief executive.
“All of Flagship’s major loan and asset problems have been solved and Flagship is now a clean association that’s ready for sale,” McNitt said Wednesday. That cleanup included reducing Flagship’s reliance upon the high-yield certificates of deposits that at one time accounted for 40% of deposits, McNitt said.
However, the thrift continues to report monthly losses because its $153-million deposit base exceeds its $100 million in outstanding loans. Federal regulators will release Flagship’s 1987 financial figures during April, McNitt said.
A spokeswoman for the Federal Home Loan Bank Board of San Francisco, which is handling the bidding process, declined to comment on the upcoming sale.
However, one San Diego S&L; executive described Flagship as an “extremely attractive” institution that probably would draw interest from financial institutions in the West and on the East Coast.
“Southern California is a particularly attractive part of the country right now, particularly for the strong regional” institutions, the executive said.
McGill acknowledged that his group lacked the “deep pockets and breadth of depth and experience” enjoyed by those larger institutions. However, he said FSL’s investors have “sufficient capital” to bolster Flagship’s financial health.
McGill, 42, is a San Diego State University graduate who began working for a local stock brokerage in the early 1970s. He subsequently spent 10 years with California First Bank in San Diego before joining the Federal Reserve Bank of San Francisco.
During his last three years with the Federal Reserve Bank, McGill helped to establish the agency’s new Los Angeles office. He left the federal agency a year ago “in order get back to a normal personal and business life.”
