Reducing Customer Anxiety : San Diego’s Big 3 S&Ls; Tell Story of Strength

Times Staff Writer

San Diego’s three largest savings and loans have been largely untouched by their industry’s highly publicized woes, but the local institutions are nonetheless taking steps to reduce anxiety among their employees and customers.

“Our people need to feel comfortable” with Great American’s financial situation “so we’re providing them with necessary information and we’re urging them to share that information with customers,” said Great American First Savings Bank spokesman Kenn Ulrich. He says they are assuming that everybody has heard the bad news about the industry, and they are trying to separate themselves from it.

Advertising Campaign

Great American and other healthy S&Ls; are using advertising and employee communiques to explain that they are not among the 600 to 900 S&Ls; expected to close when tough new financial standards are phased in as part of the Bush Administration’s proposed S&L; rescue. The S&Ls; also are taking pains to explain that customer accounts of up to $100,000 are still insured, despite the Federal Savings & Loan Insurance Corp.'s liquidity problems.


Great American has in recent months issued several company-wide memos that attempt to keep tabs on rapidly changing developments in Washington. Great American also alerted branch employees to an upcoming USA Today newspaper story that listed the nation’s strongest and weakest S&Ls.;

“We found out in advance that USA Today was going to publish the list, and we let our employees know our net worth so they’d be able to answer any questions,” Ulrich said.

Home Federal Savings & Loan and Imperial Corp. of America also have been dwelling on the fact that most of the nation’s troubled institutions are in Texas, Colorado and Oklahoma.

“Of the 225 S&Ls; with regulatory net worth problems, 66% of the troubled assets are in the energy states, and, of that total, 75% are in Texas,” according to Home Federal President Robert Adelizzi, who spoke Friday to the San Diego City Club. “If it weren’t for the energy states, we wouldn’t be talking about a crisis.”

Healthy S&Ls; have been quick to point to their regulatory net worth, a common measurement of an institution’s financial health.

Home Federal’s regulatory net worth on Dec. 31, 1988, was 7.22% of assets, far above the 3% minimum, and Great American’s regulatory net worth at years’ end was 5.02%. ICA’s regulatory net worth on Dec. 31 was 3.74%.

Customers increasingly are asking questions “about our net worth and our earnings,” Ulrich said. “Before they’d be more concerned about our interest rates.”

Those questions are coming from “the small saver, the person who saved all their life is asking questions,” Ulrich said. “These are the people who essentially stand to lose everything if they’re not protected. The small, conservative saver is the one we need to communicate with better--not the more sophisticated investor.”


No Rush on Funds

“No question that the public’s awareness has been heightened by all the press about what it will take to ‘bail out’ the S&L; industry,” said ICA Executive Vice President Neil Pont. “Customers do come into the branches and they do ask us questions. And we’ve been giving our people the information they need to answer those questions.”

Home Federal recently distributed brochures explaining “how to read a balance sheet and income statement, as well as how to make basic assumptions about an institution’s financial security,” a Home Federal spokeswoman said. “And we’re getting increased requests for those brochures from our new-accounts people.”

San Diego’s three large S&Ls; said customers are not rushing to withdraw their funds because they fear a FSLIC collapse.


“But we’ve not seen any real amount of dollars walking out of our institution,” Pont said. “We’re retaining about 80% of our deposits, which is about normal.”

But S&Ls; are witnessing a slowdown in “new money that tends to travel between banks, S&Ls; and other institutions, depending on available rates,” Pont said.

Rising interest rates in recent weeks are probably responsible for some of the slowdown in new funds, because S&Ls; usually can’t increase their rates as quickly as other financial institutions.

And, the first part of the year is “not customarily a high-deposit inflow time,” according to one S&L; spokesman. “We’re not out actively seeking deposits because we don’t need a lot of funds.”


Adelizzi suggested Friday that California’s strongest S&Ls; will weather the storm “because we’ve built up a lot of good will with our customers over the years. Explaining (recent developments) is a many-faceted process, but I think we’re winning.”