Home Fed to Run Bay Area S&Ls; as Separate Subsidiary

Home Federal Savings & Loan initially will operate the three insolvent San Francisco Bay Area thrifts acquired from federal regulators Dec. 31 as Columbus Savings, a wholly owned subsidiary with 16 branches and $750 million in assets, spokeswoman Kaye Rowan said Tuesday.

But Home Federal plans to eventually drop the Columbus Savings name and absorb the Bay Area subsidiary by closing some offices and turning other branches into Home Federal branches, Rowan said. Home Federal has not set a date for that consolidation, Rowan said.

Home Federal put up $25 million in capital to acquire Columbus Savings & Loan in San Rafael, Cal America Savings & Loan in Walnut Creak and First Security, a Pleasant Hill-based thrift. The FSLIC took control of First Security in July, 1988. Regulators took control of Cal America and Columbus in 1986.

Home Federal agreed to keep the Bay Area subsidiary separate in order to “provide better accountability of the transaction, preserve certain tax benefits and reduce the cost of the transaction for Home Federal and the Federal Savings & Loan Insurance Corp.,” Rowan said.

Operating Columbus Savings as a wholly owned subsidiary “is quite understandable,” according to Jonathan Gray, an industry analyst with Sanford C. Bernstein & Co., a New York-based investment firm. “They basically want to control and better manage what they’ve (acquired) and keep it separate and apart from what they already had.”

The acquisition “is part of Home Federal’s effort to escape the confinement” of Southern California, Gray said. Home Federal, with $15.8 billion in assets, has 176 offices, most of which are in Southern California.

Federal regulators agreed to pump $243 million into Columbus Savings to bolster its net worth and subsidize anticipated losses on troubled assets. Regulators said it would have cost $320 million to close the thrifts, pay off depositors and liquidate remaining assets.

Home Federal’s acquisition of Columbus Savings was one of seven forced sales and mergers that occurred Dec. 31 as regulators in Washington struggled to bail out troubled institutions throughout the country.

J. Waidron Hooper, who retired from Home Federal in 1987 after 28 years with the company, was named president and chief operating officer of Columbus Savings. Hooper will work in Columbus Savings’ Walnut Creek headquarters.