BANKING/FINANCE
The best deal federal savings and loan regulators can offer S&L; purchasers may be the troubled Pacific Savings Bank in Costa Mesa.
“It’s a good S&L; for someone to buy,” said Preston Martin, former head of the Federal Home Loan Bank Board. An investor group headed by Martin and former Treasury Secretary William E. Simon initially tried to acquire the S&L; early last year, but talks were shelved as the group went after other savings institutions.
Martin said his group is “still interested” in Pacific Savings, but he wouldn’t say if talks have resumed. A Simon-Martin group reached agreement last week to acquire the insolvent Bell Savings in San Mateo and the healthy Western Federal Savings in Marina del Rey.
One industry source said regulators have targeted Pacific Savings as the next major California savings institution to be sold. S&L; executives said they aren’t aware of such a designation, and regulators would not discuss the matter.
At least half a dozen potential buyers are looking over the S&L;’s books as part of the process to bid on it, said Harvey A. Lynch, a Glendale Federal Savings executive vice president hired to run Pacific Savings.
“This is an easy one for (regulators) to cure and get off their list of trouble institutions,” Lynch said. “We’ve got it as far as we think we can get it, and we can ride it for a while.”
But the deficit at Pacific Savings “certainly is not going to get any better,” he noted.
Pacific Savings had about $1.3 billion in assets and nearly $1.5 billion in liabilities at the end of June, leaving it with a deficit of $191 million, Lynch said. He said he doesn’t expect the deficit to grow beyond $206 million by the end of the year.
The Lynch team, hired by regulators 14 months ago to halt the S&L;’s mounting losses, has been “on target” with its year-old business plan, he said.
The S&L;, which lost $178 million in the last five years, dropped an additional $17.7 million for the first six months, about $500,000 more than what executives expected, Lynch said.
