Winning Suitor for Flagship S&L; Was 1 of Many
The investor group that on Friday acquired Flagship Federal Savings Bank for $2.5 million was one of five or six groups to bid on the thrift that federal regulators created after Sun Savings & Loan Assn.’s July, 1986, failure, Flagship President Scott Taylor said Monday.
Federal regulators declined Friday to describe the other bids made for Flagship. But Taylor acknowledged during a Monday press conference in San Diego that the price his group paid was kept down because regulators are facing an unprecedented number of troubled S&L;’s.
The investor group, led by Chicago businessmen Bruce J. Frey, learned Flagship was available when the Federal Savings & Loan Insurance Corp. included the San Diego-based thrift on a list that is circulated to qualified bidders.
“My eyes lit up when I heard about Flagship,” Taylor said. “This is an excellent opportunity in an excellent market.”
Flagship will “emphasize making mortgage loans on single-family homes, with fast loan decisions, fast closings and a minimum of hassle,” Taylor said. About 80% of Flagship’s loans will be made to purchasers of single-family homes, and the S&L; will not invest in major real estate projects, he said.
Taylor moved quickly to distance Flagship from its predecessor, Sun, which lost $120 million before failing in 1986.
While Sun was saddled with bad loans, little capital and, at times, questionable management, Flagship “has a great deal more cash, and an infinite amount of operating flexibility,” Taylor said. “There are things one can do prudently if you have the staff and systems to do them.”
On Monday, Taylor replaced Robert McNitt, a Great Western Savings & Loan executive who, for nearly two years, had run the federally chartered savings bank under a Federal Home Loan Bank Board management-consignment program.
Taylor will move quickly to create a marketing campaign for Flagship. The S&L;’s name recognition has suffered because federal regulations prohibited the Great Western management team from properly marketing Flagship, Taylor said.
Flagship’s new owners expect to turn a profit on Flagship but they do not expect the S&L; to grow dramatically. Rather, growth will concentrate on “quality” assets and earnings opportunities, Taylor said. Flagship will “not be deposit-driven,” Taylor added.
Flagship reported $96.9 million in assets and $104.2 million in liabilities Aug. 31. The institution also reported negative regulatory capital of $7.3 million. According to terms of the sales agreement signed Friday, federal regulators will add sufficient capital to give Flagship a positive regulatory net worth.
Flagship operates five branches in San Diego County and one branch in Mission Viejo. Taylor told Flagship’s 65 employees Monday that the S&L; is interested in adding new branches.
Taylor is a former thrift industry regulator who also spent two years as a vice president with California Federal Savings & Loan.
