End of an Era in S.D. Banking : S&Ls;: Great American’s branch signs were replaced by those of Wells Fargo over the weekend, closing the final chapter in its 105-year history.
The signs at the 64 Great American Bank branches in San Diego County were pulled down over the weekend and replaced with those of Wells Fargo Bank, a switch that officially closed the final chapter in the bank’s 105-year history as a retail presence in the area.
In a deal announced in July, Great American agreed to sell the local branches and 66 others in California to Wells Fargo for $491 million, part of Great American’s last-ditch effort to bolster its fading capital and keep from being taken over by federal regulators.
Great American will continue to operate branches in Washington and Arizona, as well as maintain its mortgage loan operation in California, but it is prohibited by terms of the sale from gathering deposits in California.
Along with the savings and loan’s branches, Wells Fargo is acquiring some $6.3 billion in San Diego County deposits from Great American, giving it the largest local market share.
The sign switch comes two months after Wells Fargo paid for the branches and at a time when the bank and HomeFed Bank--San Diego’s sole remaining major, locally headquartered savings and loan and Wells Fargo’s chief competitor--are locked in a marketing battle for local deposits.
HomeFed’s radio and TV advertisements portray Wells Fargo somewhat comically as an interloper in local banking. Wells Fargo, meanwhile, is promoting its longstanding local ties with scenes of its stagecoaches calling at San Diego’s Old Town during the past century.
All 1,800 employees at the 130 branches and at Great American’s loan service center in National City have or will become Wells Fargo Bank employees.
Once-proud Great American absorbed huge loan losses over the past three years, mainly because of the deterioration of its troubled Arizona and California real estate loan portfolios. The losses drained the savings and loan of its capital and forced it to sell its 130 California branches, one of the strongest retail banking networks in the state.
Terms of the branch sale called for 92 Southern California branches to be sold in the first phase. Later in 1991, Great American will turn over 38 more branch offices, mostly in Northern California.
Great American’s $34-million loss for its third quarter ended Sept. 30 effectively wiped out its scant remaining capital, leaving it insolvent by one capital adequacy standard. The S&L; regained a positive net worth in late November, when it booked a $105-million gain from the sale of the first phase of branches to Wells Fargo. The S&L; expects to book another $25 million gain when the rest of the branches change hands this year.
Whether and for how long Great American can hang on to its positive net worth is still at issue, given the poor quality of its remaining assets, which, as of Dec. 1, totaled about $10.7 billion.
As of Sept. 30, about $835 million, or 5.55%, of Great American’s assets were not generating any income at all. The thrift’s classified assets, a broader measure of problem loans that include those likely to become non-performing in the near future, totaled $2 billion.
