BANKING/FINANCE : Failed S&L; Deposits Selling Cheaply May Come With Some Hidden Costs

The federal agency charged with cleaning up debris from the savings and loan debacle has been selling failed thrifts’ deposits cheaply and may sell more at even lower prices.

The Newport Beach office of the Resolution Trust Corp. sold a total of more than $15 billion in failed California thrifts’ deposits last year.

And except for a few cases in which the buyers also picked up some solid assets--such as branch offices--the premiums paid typically amounted to less than 0.5% of the value of the deposits acquired, according to a study done by Anaheim banking consultant Gerry Findley.

The price for deposits at healthy S&Ls; would be 2% to 3% of the value, Findley said, and deposits at healthy banks would go for an even higher premium.

But the RTC, which has become one of the nation’s biggest banking and real estate operations, must sell its holdings as quickly as possible. And its price isn’t likely to go up.

“There’s a real pressure downward on deposit premiums,” Findley said. “Nobody’s got any money. And there are very few people who go through this process with the RTC and want to come back for a second dose.”

Healthy financial institutions that want to increase market share or beef up a few of their branches might want to check the RTC’s California holdings, Findley said, but they should know that the cheap price does not cover some hidden costs.

Costs mount, he said, as buyers add manpower to meet demands of more customers, provide accommodations to the RTC agents who remain behind to monitor the transition and service the high-priced jumbo certificates of deposit until their terms end.

“So you may be paying less than a 1% premium, but it may be more like 1.5% to 2% by the time you price it out,” Findley said.