Failed Huntington Federal S&L; Purchased by American Savings
American Savings Bank, created 18 months ago out of the ashes of the collapsing Financial Corp. of America in Irvine, purchased the failed Huntington Federal Savings & Loan on Friday for $1.5 million.
Huntington Savings’ two branches, with $114.2 million in deposits, will reopen Monday as American branches, Dianne Nelson, an American spokeswoman, said.
“This acquisition is consistent with our retail banking strategy to fortify our statewide branch network in our key market areas, such as Orange County,” said W. Brent Robinson, executive vice president and director of American’s retail banking. “We expect this to be a very smooth transition for these customers.”
American has two branches in Huntington Beach among its 178 branches statewide. Nelson said there are no plans to merge Huntington Savings’ two branches into the existing branches. Huntington’s 27 employees will be retained, she said.
American also is picking up $6.4 million of the institution’s assets, primarily cash and consumer loans, and will have the right over the next 60 days to buy $104.1 million in remaining assets, mainly home loans, from the Resolution Trust Corp.
The RTC is the government agency that has been operating Huntington Savings since regulators declared the thrift insolvent and seized it on Feb. 9.
The agency predicts that Huntington’s collapse will cost the RTC about $4.5 million.
Most of Huntington’s remaining assets are good-quality home loans, said Patrick Pittman, the RTC’s supervisor for the closing. American, one of five bidders for Huntington, has the right to “cherry-pick” the remaining assets over the next 60 days, he said.
Owen Blicksilver, an American Savings spokesman, said the giant thrift, with $16 billion in assets, picked up the tiny S&L; because it had “significant franchise value . . . and consumer loyalty.”
Of the deposits American bought, about $76.2 million are considered core deposits, which are smaller accounts from local residents who are less likely than big account holders to move their deposits to other thrifts.
American’s $1.5-million payment is essentially 2% of core deposits. To gather that much in core deposits through advertising would take a long time and cost 8% to 9% of the deposits garnered, Pittman said, adding:
“They got a good price.”
American Savings was itself created from the remains of the bankrupt FCA and its American Savings & Loan unit, once the nation’s largest thrift with more than $32 billion in assets.
Regulators provided $1.7 billion in federal assistance when it sold half the institution to the Robert M. Bass Group in Ft. Worth, Tex. Bass put $350 million into the deal. A second institution, New West Savings, was created to hold all the bad assets of the old American Savings and is a self-liquidating thrift managed by Bass personnel.
American posted $214.2 million in net income in 1989.
