American S&L; Deal Receives Mixed Reviews : Employees, Competitors Guardedly Optimistic; Some Customers Wary
The mood among customers at American Savings & Loan Assn. branches was a potpourri of worry, optimism and indifference Tuesday, a day after the announcement that the Robert M. Bass Group of Ft. Worth had agreed to take over the troubled thrift.
Charles Anthony of Costa Mesa said he will keep his checking account at American Savings and may even open up a retirement account at the Santa Ana branch near his job. “Deposits are federally insured, and that gives me great comfort,” he said.
Roland McGhie of Glendale, on the other hand, took most of his money out of the local branch of American S&L; about six months ago and put it in another S&L.; “I really don’t see any reason to put my money back” in American Savings, he said.
And several customers weren’t even aware that American Savings had been up for sale. Lisa Neily of Anaheim, for instance, had no idea that the S&L; had any problems. She said that the Huntington Beach branch was convenient because she attends nearby Golden West College.
But employees, industry consultants and even competitors were almost universally cheered by the news that the Bass Group would put $550 million into American Savings, the nation’s second-largest thrift. Under the deal, reached after marathon negotiations with Bass executives, federal regulators seized control of the S&L; Tuesday.
As part of the agreement, regulators are to provide $2 billion in assistance and assume 30% ownership of the revived S&L;, while the Bass group will put up $550 million in cash for the rest of the stock.
“People were saying before, ‘Hey, you’ve got problems.’ Well, now we can say that we have cash--lots of it,” said Donald Brown, an American Savings loan agent in San Diego.
At American’s parent company, Irvine-based Financial Corp. of America, harried workers answering unending telephone calls were “real upbeat and optimistic,” said Dianne S. Nelson, manager of corporate communications.
“As we see it today, everyone will have the same jobs and responsibilities,” she said. “The deal will result in a very strong financial institution.”
The roughly 5,400 American Savings employees at 187 branches throughout the state are expected to retain their jobs, Nelson said. The fate of the additional 100 employees who work for FCA at its Irvine headquarters is less certain. But Nelson said that FCA employees who also hold jobs with American Savings are likely to be retained.
Some competitors were also upbeat about the deal.
“We’re pleased that someone is investing a half a billion dollars into this industry,” said Norman M. Coulson, president and chief executive of Glenfed Inc., the holding company for Glendale Federal Savings. “It’s something very positive for this industry.”
Customers, though, were more cautious about the deal--if they knew anything about it to begin with.
‘Changes Upsetting’
An elderly woman from Fountain Valley wondered if her money really was safe, even though she realized that the Federal Savings and Loan Insurance Corp. insures all deposits up to $100,000 per account.
“All these changes going on are really upsetting,” she said. She pulled all her money out Tuesday and moved it to another S&L.;
For Gerry Williams of Huntington Beach, the sale is the third time in the past two years that his bank has been sold. He was a Crocker National Bank customer and left when Wells Fargo Bank took it over in 1986. Then he pulled his money out of Barclays Bank when Wells took that over, too, this year.
“I’ll stay here, at least for awhile,” he said.
Richard Belman of Whittier has been an American Savings customer for three years and has been tempted to transfer his funds elsewhere. But he said he will remain--as long as the S&L; continues to offer free checking with no requirement to maintain any minimum balance.
Others also were wary of changes in products and services.
Craig Donahue, a Glendale lawyer, said he hoped that new owners would not reduce interest rates on deposits. “What will end up eventually happening is that those very attractive terms will probably disappear,” he said.
Even so, some customers were optimistic. “It’s better for all of us,” said one smiling man as he hurried toward his car.
James S. Granelli reported from Orange County. Chris Kraul in San Diego, James Bates in the San Fernando Valley and Jesus Sanchez in Los Angeles also contributed to this story.
Main Story, Part I, Page 1.
FCA AND AMERICAN S&L;: VITAL STATS * Financial Corp. of America lost $223.6 billion in the first half of 1988, compared to $167.6 billion in the first half of 1987.
* As of June 30, American Savings & Loan had $15.4 billion in deposits and $25.2 billion in loans (including mortgage-backed securities). Assets stood at $30.2 billion, liabilities at $30.6 billion.
* FCA owns 99.9% of American Savings. About 12,000 shareholders own 35.9 million shares of FCA common stock outstanding. In NYSE composite trading Tuesday, the stock closed at 75 cents a share, unchanged from Friday.
* FCA and American Savings combined have about 5,500 employees, 400 fewer than at the end of 1987.
* American has 187 branches, of which 89 are in Southern California, 44 in the Bay Area and 54 in Northern California, primarily in the Stockton area and north.
* FCA occupies two floors of a five-story building in Irvine and employs about 100 people there. The biggest concentration of American Savings employees, about 1,700, is in the Stockton area, where the S&L; has its administrative headquarters and seven branches.
* American has 23 loan production offices around the state.
