American Savings Lowers Interest Paid on Deposits
American Savings Bank, the successor firm to troubled American Savings & Loan, has cut the interest rates it pays on deposits to bring them more into line with its large California competitors, the head of the company said Thursday.
Mario J. Antoci, American Savings Bank’s new chief executive, said average interest rates on deposits have been lowered by two-tenths of a percentage point in the last three weeks--a move that he said led to only a small loss in savings even though rates in general were rising. American Savings has $13.2 billion in deposits.
Antoci’s moves at American Savings Bank are being followed closely by his competitors, especially in the intensely competitive area of deposits. Interest on deposits account for most of any thrift’s expenses.
‘We Applaud It’
Hobbled by deposit outflows sparked by large losses, American Savings & Loan often paid high rates for savings because it needed the money to maintain its liquidity. That, in turn, angered its rivals, which had to raise their rates to meet the competition.
“Any step to have a more rational pricing for deposits is a good move and we applaud it,” Keith Russell, president of Glendale Federal Savings, said.
Antoci’s remarks, made to reporters in Los Angeles, are part of his campaign to convince the public that American Savings is now a healthy and responsible financial institution, free of the financial turmoil that had buffeted the firm since 1984. Texas tycoon Robert M. Bass bought the company Dec. 28.
“This is a new company,” Antoci said. “It’s not the old American. . . . That’s the message I’ve got to get out.”
At the time of the sale to Bass, Stockton-based American Savings & Loan was divided into two financial institutions in a move that placed the healthy loans and stable deposits into a separate company known as American Savings Bank. The problem assets and unstable deposits were placed in another thrift known as New West Federal Savings, also being run by Antoci.
‘Modest’ Asset Growth
In other remarks, Antoci said:
- American Savings’ assets would not grow at all in 1989 and only “modestly” in 1990. Thereafter, he said, he expects the thrift to grow at a rate of about 8% a year. American Savings Bank has about $15.7 billion in assets.
- The company is looking for a location in Orange County or Los Angeles County to consolidate its far-flung Southern California operations. American Savings has major offices in Sherman Oaks, Irvine, Fullerton and Whittier. The headquarters will stay in Stockton.
- American Savings will keep its lending simple, making mostly single-family mortgage loans that have adjustable rates. The company will, however, make a small number of loans on multifamily dwellings and fixed-rate loans, he said.