Valley Federal Reported Close to Being Sold : Thrifts: Sources say American Savings Bank could take over the ailing S&L;'s deposits and 22 branch offices as early as this week.
American Savings Bank is expected to acquire ailing Valley Federal Savings & Loan as early as this week, sources close to the deal said Tuesday.
Details of the transaction are still being worked out, but sources said American will assume both Valley Federal’s insured and uninsured deposits and take over the thrift’s 22 branch offices.
Van Nuys-based Valley Federal was put up for sale last year by federal regulators under a new program designed to entice financially strong investors to buy troubled thrifts that are still solvent but far short of the capital they need as a financial cushion against losses.
Valley Federal, with assets of $2.2 billion as of Dec. 31, is one of the largest thrifts in the nation in the program, which allows an institution to operate outside of direct government control while buyers are sought.
Fred Bailard, executive vice president of Valley Federal, said that thrift officials have not been told who the buyer will be, or even if one has been selected. A spokesman for American declined comment.
Founded in 1925, Valley Federal is one of the San Fernando Valley’s oldest and largest financial institutions. Through most of its history, it has been a conservative institution specializing in making single-family home loans. But the thrift was pummeled by an aggressive, ill-fated move into mobile-home lending in the mid-1980s.
Despite huge losses from that business, Valley Federal’s basic operation remains strong. It posted a $9.3-million profit in 1991, down 64% from $25.7 million a year earlier. Despite being profitable, Valley Federal was $132 million short of federal capital requirements on Dec. 31.
Last week, Valley Federal’s chief executive, Scott A. Braly, resigned after a two-year effort to rebuild the ailing thrift. No successor has been named.
American, which is technically based in Stockton but run largely out of offices in Irvine, was bought in a government-assisted deal in late 1988 by a group led by Texas billionaire Robert M. Bass.
Since then, American has become one of the nation’s most profitable thrifts. The S&L;, which had $17 billion in assets as of Dec. 31, has been aggressively buying from the government pieces of failed thrifts in Southern California, including the branches and deposits of Beverly Hills-based Columbia Savings & Loan and Far West Savings & Loan in Newport Beach.