Spring Mountain Group of Newport Buys Pioneer S

Abandoned twice by suitors in recent years, Orange County’s smallest thrift, Pioneer Savings & Loan, finally has tied the knot with the Spring Mountain Group in Newport Beach, the new owner disclosed Monday.

Spring Mountain, whose primary subsidiary is Spring Mountain Escrow Corp., won state and federal regulatory approvals late last week to purchase Pioneer, said Christine Sanderson, the group’s president. The new owner will take control next Monday, she said.

Anne Bacon, a former Downey Savings & Loan executive who ran Butterfield Savings & Loan for regulators while it was in receivership, will be Pioneer’s new president, Sanderson said.

Sanderson did not reveal the price, but she said Pioneer’s book value at the end of February was about $350,000. As part of the deal, federal regulators required Spring Mountain to put $3 million into the S&L;’s capital base, its final reserve against losses, to revive the troubled institution.

Pioneer has not had a profitable year since it opened in 1985. The S&L;’s assets dropped to $14.6 million at the end of September from a high of $22.2 million in December, 1986. It lost $325,000 for the first nine months last year.

Sanderson said Pioneer will now look for a branch to buy in the Newport Beach or Laguna Beach area and move out of its second-floor offices in Newport Center, a location that isn’t conducive to gathering deposits from walk-in customers. The new owner plans to change the S&L;’s name, possibly to Southern Cities Bank, she said.

Pioneer’s lending initially will focus on residential loans for those who buy the homes built by Spring Mountain Escrow’s builder clients, Sanderson said.

As part of the deal, Spring Mountain and Pioneer will be indemnified for any damages in pending litigation between Pioneer’s lone shareholder, Palm Springs builder James Deane, and seven others over the financing for the S&L;’s start-up five years ago. That litigation has thwarted two other attempts to sell the institution.