Speaking at the annual shareholders meeting Wednesday, HomeFed Corp. executives said they could "give no assurances" that the worst of the embattled savings and loan's troubles are over.
The meeting held at HomeFed's operations center in Sorrento Mesa was often contentious and was punctuated by shouts from disgruntled shareholders. A few challenged the renomination of the two longtime board directors and of the thrift's outside auditing firm. Nevertheless, the directors, Terence P. Daly and Owen W. Strange, were reelected and the auditor approved.
Presiding over the meeting was chief executive Robert Adelizzi, who last week announced he was resigning at the "suggestion" of federal Office of Thrift Supervision regulators after the thrift reported on May 2 a $173.9-million first-quarter loss and mounting bad loans. HomeFed lost $248 million in all of 1990.
Struggling at times to control his emotions, Adelizzi, a 30-year employee at HomeFed, told the 200 shareholders in attendance that his resignation was "not voluntary" and that "to be forced to the sidelines is frustrating and disappointing."
In a half-hour talk detailing HomeFed's problems, Adelizzi painted a grim picture of the savings and loan's financial condition. He cited its $1.4 billion in non-earning loans, the tightening capital standards being applied by regulators and the depressed commercial real estate markets that make HomeFed's recovery a formidable task.
But Adelizzi, a major HomeFed stockholder, with 262,525 shares, closed with an upbeat football metaphor: "I fully expect to be here next year to review some very successful highlight films."
HomeFed Chairman Kim Fletcher said the thrift will soon hire an executive search firm to assist it in finding Adelizzi's replacement. The new chief executive will be in place by late June, he said. Until then, Adelizzi will stay on the job and may even continue at HomeFed in an advisory capacity if the new chief executive requests it, Fletcher said.
HomeFed will also soon be searching for some new members for its board of directors. The OTS has "requested" that HomeFed add at least four outside directors to its board by next year's meeting, Fletcher said. As of now, HomeFed's board is dominated by insiders.
Adelizzi's forced resignation followed disclosure of the first-quarter loss and the completion by the OTS of a months-long examination of HomeFed's loans. The S&L;'s loans have been battered by sinking real estate markets in California and other states.
The loss knocked HomeFed's capital--the buffer a bank or thrift maintains to protect it from losses--out of compliance with one of three minimum regulatory requirements. HomeFed expects to be short of a second requirement shortly.
Capital shortfalls require the submission of a capital plan detailing how the S&L; will regain compliance. HomeFed, which currently has $18 billion in assets, has said it plans to sell off or shrink its assets by $2.5 billion this year.
An apparent lack of confidence in Adelizzi's ability to lead HomeFed out of its morass of bad loans led OTS regional director Michael Patriarca to request his resignation at an April 29 board of directors meeting.
Fletcher told shareholders Wednesday that Adelizzi's forced resignation was the first in a new OTS policy of "early intervention" in the affairs of S&Ls; facing major problems.
"It's unfortunate that Mr. Adelizzi was the first CEO asked to resign. We did not agree with it, although we did see (regulators') reasoning," Fletcher said. "Bob is a victim of circumstances," said Fletcher, adding that it was not in HomeFed's best interests to make an issue of Adelizzi's resignation.
HomeFed shareholders have been battered by a year's worth of bad news. HomeFed stock closed down Wednesday at $2.75, down $.125 for the day in New York Stock Exchange trading, and down from as high as $47.50 per share in October, 1989. Several unhappy shareholders vented their dissatisfaction at Wednesday's meeting.
But neither Adelizzi nor Fletcher offered them much comfort, apart from noting that real estate markets in some parts of the country appear to be improving. In fact, HomeFed's capital problems could worsen as regulators tighten their standards in coming months.
In a press conference after the meeting, Adelizzi declined to discuss the circumstances surrounding his forced resignation, saying that to discuss regulatory matters was "to tread on sacred turf."
But Adelizzi did say his resignation is an example of how regulators "tend to overlook the human side of their decision-making. . . . It creates uncertainty among employees that hurts morale and hurts client expectations. These things are not considered by people who have not gone through the management process."