Charter’s Owner Seeking to Buy Insolvent L.A. Thrift

The owner of Charter Savings Bank in Newport Beach is seeking state regulatory approval to purchase an insolvent Los Angeles savings institution, according to a notice released by the state Department of Savings & Loan.

According to the state, Mola Development Corp. plans to merge Westwood Savings & Loan into Charter. After the merger, Charter would have more than $775 million in assets.

The application was disclosed in a weekly bulletin listing applications and other matters that need regulatory approval.

Details of the proposed transaction and its current status were not included in the notice and were not available Wednesday. Typically, an application is not filed with the state until a definitive agreement is reached.

Westwood was declared insolvent and seized by federal regulators in March, 1986. It has continued to operate under managers hired by the Federal Home Loan Bank Board and its deposit insurance arm, which acts as receiver for Westwood.

Federal regulators, who would negotiate the sale, declined to comment Wednesday.

Regulators have been working feverishly to sell off as many insolvent S&Ls; as possible by the end of the year to buyers who want to take advantage of tax benefits that expire Jan. 1.

Executives at Mola and Charter were unavailable for comment Wednesday.

William J. Crawford, commissioner of the state S&L; agency, said he is not familiar with the status of the negotiations for Westwood.

Earlier this year, Charter embarked on an aggressive acquisition campaign by buying troubled Merit Savings Bank in Los Angeles. It then attempted to buy two other ailing institutions, but negotiations fell through.

During the summer, Jon Maddox, the S&L;’s president, said Charter was looking to buy S&Ls; saddled with foreclosed properties and other real estate development problems. The plan, he said, was to use Mola’s real estate expertise to help resolve those problems.

Westwood, which has problems with real estate loans and real estate investments, fits Charter’s profile for prospective acquisitions.

With five branches in Los Angeles, Westwood Savings posted a net loss of $7 million for the third quarter. At the end of September, it had assets of $341.5 million and its liabilities exceeded its assets by $222.7 million, giving it one of the larger deficits in the nation.