American S&L;, B of A Snap Up Ailing Thrifts : Banking: Valley Federal and Texas-based Sunbelt are acquired by aggressively expanding institutions. Minority-owned Family Savings, meanwhile, gets a $1-million cash infusion.
American Savings Bank acquired ailing Valley Federal Savings & Loan on Friday in a deal arranged by federal regulators, while BankAmerica Corp. took a major step into the Texas market by buying the failed Sunbelt Federal Savings in Dallas.
Separately, federal regulators disclosed that Texas billionaire Robert M. Bass, who owns American Savings, will pump $1 million into Family Savings Bank, a Los Angeles-based thrift that is one of the nation’s largest minority-owned institutions.
The Family Savings transaction, which gives Bass a 14.9% stake, is the first of its kind under a clause in the federal 1989 savings and loan bailout law allowing thrift holding companies to make small investments in other thrifts that are short of funds.
For Family Savings, the $1 million injection from Bass, which is being done through his Keystone Holdings Inc., provides much needed capital it might otherwise have had trouble raising.
For American, the investment isn’t being made so much for financial reasons as for its public relations value. It also scores points with regulators for the thrift, which is based in Stockton and Irvine. Regulators praised Bass on Friday for giving a minority-owned institution access to capital.
Family has been rebuilding its financial condition and public image for five years in the wake of a scandal involving former Chairman Oliver A. Trigg Jr. Trigg was indicted by a federal grand jury after a Los Angeles Times story in 1987 detailed a fraudulent plan Trigg used to take over the thrift. Trigg was convicted of fraud by a jury and is now serving a seven-year federal prison sentence.
Both the Valley Federal and Sunbelt acquisitions had been expected. American acquired all 22 Valley Federal branches, then immediately sold two Ventura County branches to Bank of A. Levy in Ventura and two San Joaquin Valley branches to Irwindale-based Home Savings of America.
American is paying a relatively cheap $16.9-million premium for the $1.37 billion in deposits it is acquiring along with $519 million in assets, mostly adjustable-rate mortgages and securities backed by mortgage payments.
The names of the 18 Valley Federal branches American is acquiring are expected to change over the weekend, and American officials said service will continue as usual for Valley Federal customers. The deal gives American a stronger presence in the San Fernando Valley. American, one of the nation’s 10 largest thrifts, was acquired by Bass in 1988 in a government-assisted deal.
Founded in 1925, Valley Federal was one of the San Fernando Valley’s oldest and largest thrifts. A conservative home lender for most of its history, the Van Nuys-based thrift ran into trouble after a fiasco involving a division that aggressively expanded into mobile home lending. Valley Federal’s problems will be expensive for taxpayers, who will pick up an estimated $189.9-million tab.
BankAmerica is paying the federal Resolution Trust Corp. $103 million for Sunbelt, whose failure cost taxpayers an estimated $297 million. The acquisition gives the San Francisco-based bank, which first entered the Texas market last year with a small acquisition in Houston, 111 additional branches and $3.7 billion in deposits in a state it considers critically important to its West and Southwest expansion strategy.
BankAmerica also is considered a leading candidate to buy First City Bancorp, a troubled bank in Houston that is expected to be sold in the next few weeks.
After its Texas plans are cemented, BankAmerica, parent of Bank of America, is expected to put on hold its aggressive expansion plans while it digests Security Pacific Corp. in the biggest banking merger ever. That deal is expected to close later this month.
