Most O.C. S&Ls; Now Operating in Good Shape
Most of Orange County’s 24 savings and loans bolstered their capital last year, an indication that the thrifts that survived the widespread industry problems of recent years are in a strong financial position as a group.
The solid capital base of the county’s thrifts was revealed in financial documents filed with the Office of Thrift Supervision. And it comes despite the fact that as a group, the county’s S&Ls; lost $472.5 million.
Lincoln Savings & Loan in Irvine and FarWest Savings & Loan in Newport Beach lost more than that together.
Without the failed Lincoln Savings, which regulators sold earlier this month, the overall results from the rest of the local S&Ls; showed net income of more than $50 million and enough capital to exceed the three tough standards imposed by federal law.
Except for Lincoln and three insolvent thrifts, every S&L; in the county exceeded the so-called tangible capital ratio, a basic test of reserves that must be 1.5% of assets. Only two of the solvent thrifts failed the so-called core capital test of 3%, and five fell short of the 7.2% ratio that is based on the riskiness of an S&L;’s loans and other assets.
John Flemming, a thrift consultant with the Santa Ana firm of Carpenter & Co, predicted that the local industry will post “outstanding” results in the future if regulators soon sell or close three other insolvent institutions that they seized in January--Far-West, Malibu Savings Bank in Costa Mesa and Beach Savings Bank in Huntington Beach.
While he won’t project an end to S&L; failures in the county, Flemming said the few problems that might cause regulators to take action are small. So far, 22 county-based thrifts have been seized, more than in any other county in the state.
Flemming said the disaster in the county’s industry has obscured the fact that many S&Ls; had been managed well.
“Regulators have gone way beyond weeding out the bad ones,” he said. “They have removed everybody who was marginal. The remaining group is an impressive, solid collection of well-run businesses.”
The results for 1990 do not include statistics from New West Federal Savings & Loan in Irvine, a self-liquidating thrift that was formed from the bad assets of the failed American Savings & Loan in late 1988. The results also do not include information from eight other failed thrifts, including Mercury Savings & Loan in Huntington Beach, that regulators sold or closed during the year.
ORANGE COUNTY S&L; SCOREBOARD
Ranked by assets ASSETS TOTAL CAPITAL1 (millions) % % % S&L; 1990 1989 Tangible Core Risk American 2 $16,569.1 $16,290.5 4.1% 4.1% 13.8% Household 7,887.0 7,074.9 31.8% 3.9% 9.1% Bank Downey 4,155.6 3,774.3 5.1% 5.1% 11.2% FarWest 3 3,715.0 4,354.7 -7.1% -7.1% -8.4% Western 2,977.2 2,871.5 3.9% 3.9% 8.9% Financial Lincoln 3 2,524.8 2,906.3 -119.6% -119.6% -90.6% Union 2,387.1 2,391.1 2.9% 3.2% 5.0% Federal Beverly 1,408.2 1,525.7 7.4% 7.4% 345.4% Hills ITT 1,240.3 951.8 5.3% 5.3% 8.1% Federal Guardian 681.9 607.3 3.0% 3.2% 5.4% United 653.3 662.9 3.7% 3.8% 7.3% California Fullerton 338.5 351.0 5.0% 5.0% 8.1% Universal 265.0 268.3 3.8% 3.8% 7.5% Standard 263.4 241.0 6.6% 6.6% 11.3% Pacific San 254.2 323.1 1.9% 2.4% 3.3% Clemente Malibu 3 139.1 197.9 -3.2% -2.0% -2.7% Plaza 118.6 69.2 4.6% 4.6% 8.3% Irvine City 97.1 82.5 4.0% 4.0% 9.0% Sterling 92.1 168.5 15.8% 15.8% 20.8% Beach 3 81.8 112.8 -1.2% -1.2% -2.2% Delta 73.1 57.9 4.3% 4.8% 6.9% University 72.9 79.8 4.3% 4.3% 8.4% Cornerstone 56.4 56.5 5.2% 5.2% 6.5% Pioneer 33.4 11.3 9.3% 9.3% 18.6% Orange 46,085.1 45,430.8 0.6% -4.0% -5.9% County Totals
Ranked by assets NET INCOME thousands) S&L; 1990 1989 American 2 $247,408 $215,704 Household 41,807 11,391 Bank Downey 40,375 13,645 FarWest 3 -263,882 -38,692 Western 10,192 12,013 Financial Lincoln 3 -525,837 -1,004,786 Union -37,171 19,186 Federal Beverly 16,156 4,312 Hills ITT 8,865 6,451 Federal Guardian 2,230-4 -1,677 United -5,924 -3,775 California Fullerton 2,139 7,188 Universal 307 2,542 Standard 1,319 -396 Pacific San -93 1,057 Clemente Malibu 3 -456 -1,085 Plaza 2,132 1,913 Irvine City -34 -127 Sterling -5,682 6,268 Beach 3 -6,962 2,140 Delta 520 -626 University 93 216 Cornerstone -78 54 Pioneer 67 -407 Orange -472,509 -747,491 County Totals
1 Federal law requires thrifts to have 1.5% tangible, 3% core and 7.2% risk-based capital.
2 Includes statistics from 1990 acquisition of failed Huntington Savings & Loan in Huntington Beach.
3 FarWest, Malibu and Beach were seized by regulators in 1991. Lincoln was seized in 1989 and sold in 1991.
4 Guardian has announced that it will restate annual earnings soon to report a loss of up to $3 million.
Source: Office of Thrift Supervision
