American Interstate of Costa Mesa Seized by U.S., Along With a Second S&L; in L.A.
Two small Southern California savings and loans, including one with its administrative office in Orange County, were taken over Thursday by federal authorities, officials announced.
The two insolvent institutions are American Interstate Savings, which has its corporate headquarters in Costa Mesa and operates a single office on South Figueroa Street in Los Angeles, and Sierra Federal Savings, a one-office savings and loan on North Roxbury Drive in Beverly Hills.
American Interstate, which had few retail customers and appeared to concentrate on mortgage lending for multiple-family dwellings, has $27 million in assets. Sierra Federal has $49 million in assets.
The thrifts are among seven institutions in California, Florida, Illinois, Louisiana, New Mexico and Tennessee placed in conservatorship Thursday as part of a joint regulatory program by the Federal Savings and Loan Insurance Corp., the federal agency that insures deposits at member thrifts, and the Federal Deposit Insurance Corp., which backs funds on deposits in member commercial banks.
The moves were taken in preparation for expected congressional passage of an expensive bailout of savings and loans. By putting the institutions into conservatorship, the government is seeking to minimize losses and limit risk until Congress provides money to close them or subsidize their sale.
American Interstate--which moved its administrative office to Costa Mesa from Los Angeles last year--was the third S&L; with headquarters in Orange County to be taken over by regulators this year and the 14th county-based thrift to be seized since 1986.
The institutions seized Thursday were transformed into new mutual associations, effectively wiping out any subordinated debt and stockholder positions. American Interstate was privately owned, with just seven shareholders.
For unexplained reasons, Sierra Federal’s name will be changed to Clover Federal Savings & Loan. American Interstate Savings will retain its name.
Terry Williams, a spokesman for the Federal Home Loan Bank Board, said depositors are not affected by the takeovers. He said neither of the two California institutions has a very active retail business but instead cater to money brokers, who place large amounts of money in institutions that offer high “jumbo” rates.
According to its March 31 financial statement, filed with the Federal Home Loan Bank in San Francisco, American Interstate lost $529,000 for the first three months of the year, following a $1.1-million loss for 1988. The S&L;'s single branch in Los Angeles had only $26 million in deposits in 364 accounts.
Williams said a federal regulator has been named managing agent for American Interstate. In addition, Val Mellgrin, who was named president and chief executive of American Interstate in March, will remain in that position, and none of the S&L;'s 18 other employees will be fired, Williams said.
Just three of the employees work in the branch office in Los Angeles, he said.
Staff writer John O’Dell contibuted to this story.