PHM Unit to Acquire 5 Insolvent Texas S&Ls; Under Federal Bailout
Seeking outside capital for the ailing savings and loan industry, federal regulators announced Friday that a unit of PHM Corp., a major home builder and insurance firm, will invest $45 million to acquire five insolvent Texas S&Ls.;
In return for the new money, the Federal Savings and Loan Insurance Corp. will provide a $556.9-million aid package to clean up the balance sheets of the insolvent thrifts and protect the new owner from losses on the existing loans and investments.
The aid package includes a note for $311 million. The FSLIC has now poured out more than $10 billion in notes, which are IOUs on the federal insurance fund, in its thrift rescue deals. This policy is drawing considerable skepticism from members of Congress who fear that it is simply delaying the inevitable shutdown of ailing S&Ls.;
Focus on Texas, Oklahoma
However, regulators say the notes are helpful in revitalizing S&Ls; until outside buyers can be found.
The S&Ls; sold Friday were included in the list of 259 insolvent thrifts being handled under the board’s Southwest Plan, an effort to merge, sell or close the most seriously depressed institutions. The plan focuses on Texas and Oklahoma, where falling oil prices and a collapse in real estate values devastated the loan portfolios of many S&Ls.;
The buyer in Friday’s transaction is Pulte Diversified Cos., a subsidiary of the PHM Corp. of Bloomfield Hills, Mich. PHM is also the parent company of Pulte Home Corp., a leading builder; various units of PHM are active in mortgage banking and home insurance.
Sees Opportunities
“One of our goals in the Southwest Plan has been to bring in new capital whenever we could, and Pulte is certainly an important example of that,” said M. Danny Wall, chairman of the Federal Home Loan Bank Board.
“Pulte’s management obviously believes, as we do, (that) there are excellent opportunities for investors in Texas thrifts,” Wall said. “Other investors, like Pulte, who are waiting in the wings, will help us fulfill the strategy of consolidation we adopted to restore the Texas thrift industry to health.”
Pulte will acquire Allenpark Federal S&L; of Houston; Bay City Federal of Bay City; Gulf Coast of Richmond; and Heights Savings of Houston. The name of the fifth institution to be acquired by Pulte will be announced next week.
