Dallas Thrift Will Take Over 4 Insolvent S
A Dallas thrift will acquire four insolvent Texas savings and loans in what may be the largest merger in the federal plan to rescue Texas’ ailing thrift industry, officials said Wednesday.
The Federal Savings and Loan Insurance Corp. will provide $2.6 billion in assistance, said George M. Barclay, president of the Federal Home Loan Bank of Dallas.
The four thrifts to be merged within the next year into Southwest Savings Assn. are Stockton Savings Assn. of Addison, Lamar Savings Assn. of Austin, City Savings & Loan Assn. of San Angelo and Briercroft Savings Assn. of Austin, Barclay said.
Barclay said the merger would likely be the largest of any reached under the federal plan, known as the “Southwest Plan.”
In the latest deal, the thrifts have combined assets of more than $4 billion, 75% of which are in commercial and “non-conventional” real estate, and combined deposits of more than $4.4 billion, Barclay said.
Southwest is contributing $25 million of subordinated debt to the consolidated company as equity, but no outside capital will be used. The consolidation will initially raise the number of Southwest’s branch offices to 116 from 33.
Other Mergers Sought
Todd Miller, chairman and chief executive of Southwest Savings, said the company planned to substantially reduce the number of branches, especially where there is duplication.
The Federal Home Loan Bank Board has now resolved the problems of eight Texas thrifts under the Southwest Plan, which was announced by the board in February and initiated last week.
The goal is to blend 104 insolvent thrifts and 39 ailing ones with some of solvent, well-run operations and reduce the overall number of S&Ls; in Texas from 281 to 180 or less, the board has said.
As part of its assistance in the deal, FSLIC will provide Southwest Savings with a 10-year note worth about $483 million.
In exchange, FSLIC will receive warrants to purchase 50% of Southwest’s common stock. FSLIC will receive 90% of Southwest Savings’ first $60 million in profit.