Regulators Step In to Close 2 Ailing Southland S
Federal regulators late Friday moved in on two troubled thrifts in Southern California, closing Signal Savings & Loan in Signal Hill and selling most of the deposits of Manhattan Beach Savings & Loan to another firm.
Separately, regulators disclosed that savers took out a record $8.1 billion from the nation’s thrift institutions in December, but pointed out that $3.4 billion came from a single, healthy institution that was intentionally shrinking its deposits.
The news comes amid growing public concern about the savings and loan industry, which has been hammered hard by heavy losses on real estate development loans. Hundreds of savings and loans nationwide have been rendered insolvent by loan losses.
Sell off Loans
Regulators in Southern California said Signal Savings would be liquidated, while the insured deposits of Manhattan Beach Savings have been taken over by Standard Pacific Savings in Newport Beach. All of the deposits, up to $100,000 per account, are insured by the Federal Savings and Loan Insurance Corp.
Regulators said FSLIC will take over and sell off the loans and other assets of both thrifts.
On another front, government regulators took control Friday of another six ailing savings and loan associations with combined assets of $12.8 billion.
The move brought to 10 the number of thrifts placed in conservatorship under a plan announced by President Bush on Monday to stem losses until a permanent solution of their problems can be worked out.
The regulatory actions in California involved two small thrifts that had only one branch each and combined assets of less than $75 million.
Regulators said they will begin paying off insured depositors of Signal Savings on Monday morning at the firm’s headquarters office in Signal Hill. It will cost $52.8 million to liquidate the insured accounts. Regulators were scheduled to work through the weekend, taking phone calls and sending out withdrawal instructions to depositors.
The former branch office of Manhattan Beach Savings will be open for business Monday morning under the Standard Pacific Savings name, regulators said. Manhattan Beach Savings had 2,229 accounts and deposits of $45.9 million at year end.
Deposits that exceed $100,000 are not insured, and regulatory officials said it had not yet been determined how much uninsured money was deposited in either thrift. It also was not clear how much of the uninsured deposits would be paid back.
The closure of Manhattan Beach Savings closes the curtain on a thrift that was opened in 1984 by Peter Sajovich, a banker born in Budapest who had a reputation for being experienced and bright. He had held jobs as assistant branch manager for American Savings & Loan and as underwriter for the Federal Home Loan Mortgage Corp. in Los Angeles.
But regulators took control of Manhattan Beach Savings more than two years ago and placed it in what is known as the management consignment program, a program used to take over a failing thrift without shutting its doors and paying off depositors. At the same time, regulators accused Sajovich of fraud, saying he had benefited financially through deceptive lending and business practices.
According to the most recent figures, Manhattan Beach Savings had $27.3 million in assets and $46.5 million in liabilities, giving it a negative net worth of $19.2 million. The takeover is expected to cost FSLIC nearly $25 million after it liquidates the assets.
Regulators said Signal Savings, opened in 1983, was insolvent because it sustained heavy losses on purchases of loans that were poorly underwritten and did not have adequate appraisals. The thrift had $46.1 million in assets at year end and a negative net worth of $8.4 million.
The record withdrawals from the nation’s S&Ls; last month topped the one-month record of $7 billion set in November, bringing the net outflow for two months to $15.1 billion, said the Federal Home Loan Bank Board, the primary regulator for the nation’s 3,000 federally insured thrifts.
