Bass’ Next Task: Keeping Popejoy at American S
Robert M. Bass, the Texas investor who is acquiring American Savings & Loan, will probably make a concerted effort to keep William J. Popejoy as chief executive, but it’s questionable whether he will succeed.
Weary after four demanding years in the job, Popejoy has said he wants out as soon as a successor is firmly in place. “I want to get this chapter of my life behind me as soon as possible,” he said in a recent interview.
Brought in to restore order at American Savings in 1984, Popejoy had his moments in the sun but eventually evolved into a caretaker chief executive as his attempt to revive the company fell far short.
His task was indeed daunting. Public confidence in American Savings, a once-proud California institution and the nation’s largest thrift at the time, had evaporated. Many of its loans were in trouble, and huge amounts of deposits were flowing out the door each day.
Popejoy halted the deposit run by borrowing heavily against company assets, prompting one industry consultant to liken him to Red Adair, the legendary oil well firefighter. And the company started making money again.
Although Bass and his fellow investors won’t talk publicly, it’s known that they have been impressed by Popejoy’s ability to maintain his composure and hold the company together under trying circumstances.
After learning of the regulatory takeover Tuesday, Popejoy phoned his public relations deputy, Layna Browdy, at 6 a.m., and instructed her to prepare an upbeat letter to employees emphasizing that the takeover should be viewed as positive and stabilizing.
Popejoy, 50, was in Washington Tuesday and unavailable for comment. He went there in an unsuccessful 11th-hour effort to negotiate some compensation for the shareholders of Financial Corp. of America, American Savings’ parent.
In a statement Tuesday, Popejoy indicated that--for now--he will stay as chief executive of American Savings, but will resign as his executive positions at FCA, which is now a shell company. American Savings was FCA’s only major asset.
In recent months, American Savings has been under renewed assault by mounting losses and deposit outflows. Red ink in the second quarter surpassed $160 million, while the company lost $337 million in deposits in July.
The erosion of American Savings’ deposit base concerns the Bass group because the company’s deposit base and retail branch office network are its primary asset. American Savings has about $15 billion in deposits and 187 retail offices scattered throughout California.
The outflows have vexed company officials and regulators because they have come amid assurances by the Federal Home Loan Bank Board that all deposits are insured, even those above the traditional $100,000 limit. American Savings officials say small savers, the heart and soul of the deposit system, have become increasingly weary of the turmoil and bad news that has dogged the company for years.
Although the Bass investors have not talked to Popejoy directly during the negotiations, it’s expected that they will now. They intend to dangle the carrots of improved compensation and a better working environment as enticements to stay. Popejoy’s compensation totaled nearly $540,000 last year, far less than his peers at other large California thrifts.
Popejoy’s stay at FCA and American Savings has grown increasingly painful in recent months as the financial institution has twisted slowly in the wind while regulators searched for a buyer.
His demeanor, normally upbeat, turned subdued as it became increasingly clear that American Savings could not survive on its own. “This job has been anything but exciting in the past six months,” he said recently.
It was almost exactly four years ago that Popejoy, independently wealthy and bored by an early retirement, chucked a life of tennis and travel to take on the job of FCA chairman and chief executive, succeeding Charles W. Knapp, whom regulators had forced to resign.
He landed the job because he had excellent ties to the thrift regulatory establishment as well as experience in running three different savings and loans in Southern California. Although his selection was initially popular in lending circles, some industry insiders warned privately that Popejoy did not have the competence and experience for such a difficult job.
The photogenic Popejoy became a centerpiece in company advertisements as American Savings sought to convince the public that the financial institution was in safe hands again.
As time wore on, Wall Street began to share the optimism, driving up FCA’s stock from less than $5 in the summer of 1984 to a high of $17.25 in 1986, when the company earned more than $95 million, primarily because interest rates continued to drop and allowed the firm to sell assets profitably.
But the naysayers said privately that American Savings could not be saved, and in the end they proved correct. FCA’s once-healthy foundation of capital cracked and eventually crumbled under the weight of higher interest rates and real estate development loans that did not pay off.
Stockholder frustration erupted collectively last spring at FCA’s annual meeting in Irvine as Popejoy came under harsh attack after heavy losses in the previous nine months wiped out shareholders’ equity.
“How could that happen?” asked one incredulous stockholder.
Popejoy was sympathetic--to a point. “I don’t apologize for one thing we have done in the past four years, but I am sorry we didn’t turn the company around,” he said. “To that extent, we failed.”
WILLIAM J. POPEJOY
Chairman, chief executive of Financial Corp. of America and its principal subsidiary American Savings & Loan Assn., the nation’s second largest S&L.;
1981-1983: Chief executive of Financial Federation Inc., holding company for United Savings & Loan Assn., which was merged with Great Western Financial Corp. in July, 1983.
1982-1983: Chairman of California League of Savings Institutions.
1980-1981: President and chief executive of Far West Savings & Loan Assn.
1974-1978: Joined American S&L; as president and chief operating officer and became president and chief operating officer of First Charter Financial Corp., its holding company. Promoted to chief executive if American.
1971-1974: With Federal Home Loan Mortgage Corp. in Washington, becoming president and chief operating officer in 1973.
1961. Bachelor’s degree, California State University, Sacramento.
1962. Master’s degree, same institution.
Completed mortgage banker’s and income property programs of the Mortgage Bankers Assn. in 1968 and 1970, respectively.
Born 1938. Married with three sons. Source: Financial Corp. of America, Who’s Who in America