American Buys Most of FarWest Assets, Branches

American Savings Bank and three other Southland thrifts Friday acquired most of the assets and branch offices of failed FarWest Savings & Loan from the federal Resolution Trust Corp.

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 about $800 million in insured deposits and $263 million in various assets.

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.

All the acquired FarWest offices will open Monday under new names. Deposits up to $100,000 will continue to be insured by the federal government.

Three other offices--in the San Diego communities of Hillcrest, San Marcos and Santee--failed to attract any interest and were dissolved Friday. Those branches were poured into the RTC’s growing collection of real estate and office furnishings.

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.

FarWest’s failure is expected to cost taxpayers $831 million. FarWest Savings, controlled by the wealthy Belzberg brothers of Canada, was seized by regulators in January, 1991, after enormous losses because of soured real estate loans and junk bond investments.

The thrift, formerly a unit of Los Angeles-based FarWest Financial Corp., was an active buyer in the risky junk bond market pioneered by Michael 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. The new American has performed well for its new owners, posting profits of $214 million in 1989 and $247 million in 1990.

Times staff writer James M. Gomez contributed to this report.