Four Submit Offers for Family Savings
Family Savings Bank, a long- standing black-owned financial institution in South Los Angeles, has received at least four acquisition offers--including one from FBOP Corp., an Illinois-based holding company that has aggressively expanded into Southern California by snapping up community banks, bank officials confirmed.
But the possible sale to a nonminority-controlled company such as FBOP has become an issue among local African American leaders, who fear the loss of a central pillar in the black business community.
“We want to keep the ownership,” said Rep. Maxine Waters (D-Los Angeles), who plans to send a letter today to Gov. Gray Davis expressing the concerns of many leaders of the black community. “That way we’ll know that the bank won’t be closed or merged into a bigger institution.”
Bank officials declined to reveal any details of the offers, but an official with Family Savings described them as “competitive.”
Family Savings, which has about $190 million in assets, was pushed onto the auction block by financial problems that befell WattsHealth Systems, a network of businesses and community services with controlling interest in Family Savings.
The bidders include Los Angeles-based Founders Bank of Commerce, which last year merged with Boston Bank of Commerce to form the nation’s first bicoastal African American bank. Controlling interest in Founders Bank is held by an investor group that includes Earvin “Magic” Johnson, pop star Janet Jackson and record industry executive Jheryl Busby.
Also bidding is FBOP, which, as of Sept. 30, 2001, had banks and thrifts with combined assets of $8.148 billion, according to the Federal Deposit Insurance Corp.
FBOP Chairman Michael E. Kelly confirmed that the Oak Park, Ill.-based holding company has made a bid for Family Savings but declined to discuss the terms. Over the last decade the company has acquired a number of local banks, including Beverly Hills-based California National Bank, Fidelity Federal Bank parent Bank Plus of Los Angeles and San Diego National Bank, among others. It also owns banks in Illinois and Texas.
Kelly instead referred comments to Greg Mitchell, president and chief executive of FBOP subsidiary California National Bank, who until last year was an investment banker at Founders Bank.
“Now, ironically, we’re competing against him,” said Founders CEO Kevin Cohee, adding that as its investment banker, Mitchell is familiar with Founder’s finances and strategic plan, which included attempting to buy Family.
Mitchell said he signed a confidentiality pact with Founders. He said that if FBOP acquires Family Savings, the bank would continue as a minority-run institution under proposed FDIC guidelines, with the existing board and management team remaining in place.
“We very much like, trust and respect the management and the board of directors and believe that teaming up with them we can do great things for the customers,” Mitchell said.
Johnson, the former Los Angeles Lakers champion, said Founders is prepared to “match any offer” for Family Savings. “It’s our hope and desire that the people who are going to make this decision are equally as committed to maintaining the integrity of minority ownership as we are,” he said.
Sources close to the talks said a third bid came from another African American-run financial institution.
Since 1948, Family Savings Bank--which began as the Watts Savings & Loan Assn.--has been a central part of Los Angeles’ African American community, providing mortgage loans to low- and moderate-income consumers.
“They were providing mortgages when this community was redlined by many of the big banks,” Waters said.
A combined Founders-Family Savings bank would have about $450 million in assets, which would put it in the running for the nation’s largest black-owned financial institution. Founders and Family Savings are two of about three-dozen African American-owned financial institutions in the U.S. today, down from about 50 in 1980.
Wayne-Kent Bradshaw, president of Family Savings, said that keeping the bank in minority hands will be just one factor the seven-member board considers as it comes to its decision. He wouldn’t say when a decision would be made.
Family Savings is majority-controlled by WattsHealth Systems. In 1995, WattsHealth borrowed $3 million from one of its businesses, a health maintenance organization called UHP Healthcare, to buy a controlling stake in the bank.
But last year, state regulators seized control of the nonprofit foundation that operates UHP Healthcare after the HMO fell more than $20 million into debt .
The state wants the loan repaid and is urging WattsHealth to separate the bank from its healthcare business.
