Sale of Lincoln’s Branches Imminent : S&L;: Two years after its seizure by regulators, the Irvine-based institution could be officially finished as soon as Friday. Great Western Bank is seen as the most likely buyer.
Nearly two years after seizing high-flying Lincoln Savings & Loan, the federal government is on the verge of selling the thrift’s branch network and closing down the institution as an operating entity.
The Resolution Trust Corp., the federal agency charged with managing and liquidating failed S&Ls;, is expected to announce the sale of most or all of Irvine-based Lincoln’s 29 branches in Southern California, perhaps as early as Friday.
Government and industry sources said the most likely buyer would be Great Western Bank in Beverly Hills, the nation’s second-largest savings and loan. Great Western officials declined comment Wednesday.
The sources said that Michigan National Bank in Farmington Hills, Mich., which owns Beverly Hills Federal Savings Bank in Laguna Hills, also put a bid in for Lincoln’s branches. Michigan National’s corporate chairman Robert J. Mylod would not comment.
Lincoln was declared insolvent and seized by federal regulators in April, 1989, after a lengthy battle with its controversial owner, Charles H. Keating Jr. The failure of the thrift, which invested in real estate projects and other risky investments, is expected to cost taxpayers more than $2 billion.
The resolution of the thrift has been a high priority for federal regulators, who put the institution on the block in November. The thrift’s troubled assets have kept many potential buyers at bay, although its branch system is seen as highly attractive.
The purchase price of the branches could not be determined. But industry sources said branches of failed thrifts generally are being sold for no more than 1% of their deposit base, and large, high-rate deposits are often given to buyers for no premium.
Lincoln had $2.2 billion in deposits and $2.6 billion in assets at the end of September. Year-end figures are not available yet. The thrift has lost $1.4 billion since federal regulators took over its operations, largely due to the write-down of assets.
“The only thing salable (to a financial institution) is the deposit base,” Vernon L. Peckham, the RTC agent managing Lincoln, said in a recent interview. “There have been several financial institutions showing an interest in purchasing the branches, and we would like to sell the branch system.”
Peckham, however, would not comment Wednesday on any sale prospects.
The leading contender to purchase Lincoln’s deposits and branches is Great Western, sources said. When asked about the thrift’s interest, Great Western spokesman Ian Campbell said: “I don’t have an announcement to make.”
Great Western, which has nearly $40 billion in assets, has been expanding in the last year primarily through acquisitions of collapsed thrifts in Florida. It lost out to Security Pacific National Bank in buying the failed Gibraltar Savings in Simi Valley, but it picked up Gibraltar’s Florida operations along with CenTrust Savings Bank in Miami, Pioneer Savings Bank in Clearwater and the Florida branches of two New Jersey-based thrifts, Carteret Savings Bank and City Federal Savings Bank.
The attraction of Lincoln is its substantial deposit base and loyal customers. Of its total deposits, more than $1 billion comes from Southern Californians who have been longtime depositors.
The rest of Lincoln’s deposits are either jumbo certificates of deposit or brokers deposits--money brought in by brokers who look for high deposit rates for the clients’ money. Those kinds of deposits, sometimes called hot money, are quickly moved to other institutions when a higher interest rate is offered.
With the sale of Lincoln’s deposits and branches, regulators will be left with a hodgepodge of assets and operations. This includes undeveloped master-planned real estate developments in the Arizona desert and some junk bonds.
Regulators in charge of running Lincoln have never held out much hope that they could clean it up enough to attract a solid bid for the whole institution from a bank or an S&L.; With 35 subsidiaries, Lincoln also sold insurance and securities, engaged in currency trading and managed hotels and other properties.
Times staff writer James Bates contributed to this report.
LINCOLN AT A GLANCE LOCATION: Irvine
BUSINESS: Savings, real estate development, investments
TOP EXECUTIVE: Vernon L. Peckham, managing agent, Resolution Trust Corp.
ASSETS: $2.6 billion *
DEPOSITS: $2.2 billion *
BRANCHES: 29
LARGEST DEBT: $1.7 billion in loans from the RTC
RECENT DEVELOPMENTS:
* Put up for sale in November, Lincoln Savings has attracted some interest, primarily for its deposits.
* Great Western Bank is the leading contender. Michigan National Corp., owner of Beverly Hills Federal Savings Bank in Laguna Hills, also is in the running, government and industry sources said.
* The Resolution Trust Corp., which manages and liquidates failed thrifts such as Lincoln, may announce a deal as early as Friday.
* As of Sept. 30, 1990
