Nervous Savers Line Up at Offices of Troubled Thrift

Worried depositors lined up Monday at beleaguered Columbia Savings, some intent on taking out their money while others were simply looking for a little reassurance.

Both camps apparently got what they were looking for.

Several of Columbia’s 22 savings branches were extra busy Monday and one particularly long line numbering about 30 people spanned the tastefully decorated lobby of the savings and loan’s main Beverly Hills branch at mid-morning. But panic was noticeably absent, and some offices were downright quiet.

Many customers said they were concerned and surprised by the announcement that the maverick thrift, which until recently was advertising the acumen of its management, had lost about $575 million in a recent five-month period, wiping out its capital and rendering it insolvent. Most of the losses were blamed on the institution’s portfolio of junk bonds, those high-risk securities that have lost much of their value in recent months. Analysts say a government takeover is highly likely.

“Some people have closed accounts. That would be expected,” said spokeswoman Lenore Hatch. She declined to specify the size of the outflow or whether withdrawals were heavier than deposits made on Monday.

It may not be known for at least several days if the stunning news of Columbia’s insolvency triggered a run on deposits. Columbia had attracted deposits by offering higher rates than most of its competitors.

“Obviously there are people who have come in and have been very concerned,” Hatch said. “There’s been a great misconception about what the insurance is.”

Deposits are insured up to $100,000 by the federal government, and some combinations of different types of accounts can take an individual’s total coverage even higher. But that didn’t comfort all of Columbia’s depositors.

“I just came from working out and there’s no way I wasn’t going to close out my account today,” said Elaine Stein, who waited in line at the main Beverly Hills branch for an hour to close her three accounts, which totaled less than $100,000.

“I know it’s insured and all that, but I don’t care,” Stein said. “I’m angry.”

She added: “I blame this on Mike Milken and his crappy junk bonds.”

Columbia sent extra officials into its branches to try to soothe customers, and many were talked into leaving their money alone.

Matt Gold went to Columbia’s Tarzana office to withdraw his $10,000 certificate of deposit, but was persuaded that his money is safe.

“They’re not thinking of closing,” the Encino resident said. “I think it (the CD) will be covered.”

Ed Bangert also decided to leave his checking account intact after a visit to Columbia’s Costa Mesa branch.

“It doesn’t affect me any because everything is insured,” the retired carpenter said. “If you can’t trust the (banking) system and the government, then everything will go down the tubes.”

Doris Ostrow planned to withdraw just enough money Monday to bring her account under the insurance limit.

“I think I will leave in the $100,000 because where do I go from here?” she asked. “You can’t hold it in the house.”

Sy Brill is an old hand with troubled financial institutions. The Sherman Oaks resident said he has been a customer at Columbia’s Encino office for only a few months--since paying a penalty to withdraw his CD from ailing Lincoln Savings of Irvine, which was taken over by federal regulators.

Times staff writers John Medearis in the San Fernando Valley, Cristina Lee in Orange County and Nancy Yoshihara in Los Angeles contributed to this article.