American Buys Most of FarWest
American Savings Bank and three other Southland thrifts Friday acquired most of the assets and branch offices of failed FarWest Savings and Loan from the federal Resolution Trust Corp.
Five FarWest Savings branches in San Diego County were included in the sale, and three local offices that failed to attract any buyer interest were shuttered Friday.
American, headquartered in Stockton and with its chief operations in Irvine, said it will take over 15 of Newport Beach-based FarWest’s 28 branches, with approximately $800 million in insured deposits and $263 million in various assets. American will take over all of Far West’s Orange County offices plus selected locations in four other Southland counties.
FarWest’s operations were too geographically diverse to interest a single buyer. The RTC entertained several bids, awarding five other L.A.-area branches to First Federal Bank of California in Santa Monica, four in San Diego County to Connecticut-based Northeast Savings and one, in Chula Vista, to International Savings Bank in San Diego.
The four San Diego County branches acquired by Northeast Savings are located in Carlsbad, Escondido, La Jolla and Mira Mesa and had an aggregate $186.9 million in deposits.
The Chula Vista branch acquired by International Savings carried $41.7 million in deposits. By virtue of its $320 million in assets and four branches, International is now the county’s largest locally headquartered savings and loan, chief executive Vince Siciliano said Friday.
The three San Diego County offices of FarWest that were shut down were in Hillcrest, San Marcos and Santee. Their physical assets were poured into the RTC’s growing collection of real estate and office furnishings.
All the acquired FarWest offices will open Monday under new names. Deposit up to $100,000 will continue to be insured by the federal government.
In addition the RTC will retain $1.48 billion of FarWest’s assets--principally bad loans and investments that the acquiring thrifts didn’t want--and will advance an estimated $983.4 million to the buyers to help cover their costs. The agency hopes to recoup about 68% of the $2.46 billion.
The failure of FarWest is expected to cost taxpayers $831 million. FarWest Savings, controlled by the wealthy Belzberg brothers of Canada, was seized by federal regulators in January, 1991, when it became saddled with enormous losses because of soured real estate loans and huge investments in junk bonds.
The thrift, formerly a unit of Los Angeles-based FarWest Financial Corp., was an active buyers in the risky junk-bond market pioneered by Milken. Profits from those investments were pumped into FarWest Financial and often used by Milken clients to finance corporate takeovers.
American is itself the Phoenix-like successor of one of the nation’s largest S&L; collapses. The then-ailing thrift was sold to Texas billionaire Robert M. Bass in a federally assisted deal in 1988 that, at the time, was estimated to have cost taxpayers nearly $2 billion in government incentives to Bass’s holding company.
The new American has performed well for its new owners, posting profits of $214 million in 1989 and $247 million in 1990 and is expected to show a profit of $181 million for 1991.
During the past year, American has acquired branches and deposits from six other California thrifts including 20 offices and nearly $1 billion in deposits from failed Columbia Savings on Beverly Hills.
Times staff writers Chris Kraul in San Diego and James M. Gomez in Orange County contributed to this report.
