Thrift Regulators Close Perpetual Savings in Santa Ana

Federal banking regulators on Friday closed Perpetual Savings and Loan Assn. in Santa Ana, making it the first insolvent thrift in California to be scuttled since the $166-billion savings and loan bailout bill was signed by President Bush earlier this month.

Regulators said all but $100,000 of the thrift’s approximately $29 million in deposits are protected by federal deposit insurance. Perpetual’s total assets are about $30.4 million.

Protected accounts will be transferred to the Bank of Industry, which will take over Perpetual’s operations, regulators said. Perpetual’s Santa Ana office will reopen Monday as a Bank of Industry branch, but the thrift’s Westchester office will not reopen, they said.

Regulators declared Perpetual to be insolvent in 1987. Under President Bush’s industry-rescue proposal in February, banking regulators took over management of Perpetual Savings last April 6.

The thrift, one of a dozen Orange County savings and loans to be taken over since 1985, had been bogged down by ownership of 2.75 acres of West Hollywood commercial property that represented 40% of its assets and was at one point losing more than $100,000 a month in payments associated with the property.

Last fall, Perpetual was able to sell off the property at a minor profit, but the thrift’s losses continued.

Perpetual’s was the 10th closure since the bailout law was enacted, including two other closures Friday in Arkansas.

Federal Deposit Insurance Corp. Chairman L. William Seidman said previously that his agency would aim first at selling or closing smaller failed institutions like Perpetual. Under the bailout law, the FDIC has been given primary control over both insolvent banks and insolvent S&Ls.; The bill immediately provided the FDIC with $20 billion, which it must spend by Sept. 30, the end of the government’s fiscal year.

About one-third of the 2,900 S&Ls; in the nation are considered insolvent or nearly so, and regulators already have control of about 300.

Regulators also have a civil lawsuit pending against the former operators of Perpetual Savings, including its one-time chairman Paul Morady, claiming they established the S&L; solely to buy the West Hollywood property and sell it to Perpetual at a profit.

The $8.7-million suit is pending in U.S. District Court in Los Angeles.