Thrifts to Close Rather Than Get Deposit Insurance : Regulation: Savers T&L; in Laguna Hills is one of 10 statewide that will shut down. And some have temporarily frozen deposits, causing fear and anger.

Ten of the state’s 56 thrift and loans, including Savers Thrift & Loan here, are closing their doors at the end of the month because they are unwilling or unable to obtain federal deposit insurance.

And the liquidation process is causing some customers a great deal of concern. A few of the thrifts have frozen their clients’ deposits to give them time to sell some assets and pay off customers from the proceeds.

Tom Fober of Huntington Beach became angry Thursday when he tried to withdraw $3,800 from two accounts he had at Savers.

“They were rude and abusive, and I lost my temper,” Fober said about a yelling match with executives that led to his ejection from the office.

What led to this dispute involves a change in state law that requires thrift and loans to join the Federal Deposit Insurance Corp. by July. The change is designed to provide more adequate deposit insurance coverage following the failure of some thrift and loans several years ago.

Some thrift and loans--state-chartered institutions that are sort of a hybrid between banks and finance companies and are regulated under the state’s industrial banking laws--have failed to meet FDIC requirements or have chosen not to. Savers, with $2.6 million in assets, originally applied to the FDIC but then decided just to get out of the business instead.

On May 29, Savers mailed letters to its customers telling them that it was liquidating and asking them to withdraw their deposits, which total nearly $1.2 million. Many apparently panicked and rushed to withdraw their money early this month, said A. Daniel Schramm, Savers president and chief executive.

The deposit run took the thrift’s cash on hand. So Savers, invoking an obscure state rule, sent a second letter Tuesday telling customers that remaining deposits would be frozen for a month. Fober said that he didn’t get the second letter yet and that no one explained to him exactly what was going on.

An executive for the state industry’s private deposit insurance company tried to calm the fears of customers who must wait at least a month to collect the money from their accounts, known as certificates of thrift.

“Thrift customers are not going to lose their money,” said Thomas Cunningham, executive vice president of the Thrift Guaranty Corp. in Indio, the industry-funded carrier that insures thrift certificates for up to $50,000 per account holder. “We do have sufficient dollars and access to sufficient dollars to pay off all depositors.”

The liquidation of the thrift and loans present too many problems, Cunningham said, adding that they appear to have enough assets to pay off depositors, but it may take some time to sell those assets. The thrifts that imposed freezes on withdrawals, he said, should not have any problems liquidating some of their assets and refunding all deposits, including interest, within 30 days.

However, two of the institutions recently failed. American Thrift & Loan in San Diego filed for bankruptcy protection on June 30. Riverside Thrift & Loan was seized by the state and turned over to Thrift Guaranty as conservator.

The rush to liquidate comes as the deadline nears for thrifts to trade in their Thrift Guaranty coverage for FDIC policies. The switch will make thrift and loans more like banks but without expanded banking powers.

Some industry executives, like Schramm, are glad to avoid the FDIC regulators. “I can’t say that I’ll miss the regulators,” he said. “It seems that with all the problems in the banking and savings and loan industry, regulators appear now to be over-regulating.”

He said Savers will likely pay off all it depositors within a month, end up with a profit and continue making loans as a finance company from earnings and lines of credit that the firm gets from other lenders.

One institution, Chase Manhattan of California Thrift Corp. in Newport Beach, decided several years ago to leave the business. It stopped taking deposits, paid off all account holders and turned in its license earlier this year.

LIQUIDATING THRIFT & LOANS

Ten thrift and loans have not obtained Federal Deposit Insurance Corp. coverage and are liquidating assets to pay off depositors. One already has made full refunds to customers. As of June 8, the remaining nine held assets and thrift certificates, essentially deposits, as follows:

Thrift & Loan Location Assets Deposits American 1 San Diego $18,257,829 $14,634,761 Riverside 2 Riverside 14,869,629 11,444,421 Valley Van Nuys 9,269,772 4,102,296 Westwood Los Angeles 7,340,343 5,460,724 Countryside Citrus Heights 6,881,296 5,564,420 Ati Hollywood 3,961,231 2,086,905 Savers Laguna Hills 2,590,580 1,160,486 Mission San Diego 2,256,743 1,406,403 Santa Barbara Santa Barbara 1,765,916 669,584

Source: Thrift Guaranty Corp., Indio