Acknowledging its inability to raise enough capital to survive, San Francisco's Continental Savings of America consented Friday to being placed in the federal government's "accelerated resolution" program.
The company, which has six Bay-area branches and a number of loan production offices in California, lost $10.7 million in the first nine months of last year. It's tangible capital on Sept. 30 was 2.95% and its risk-based capital was 5.26%
The program allows the Office of Thrift Supervision and the Resolution Trust Corp. to market Continental on an assisted transaction basis. The deal is designed to resolve the $418 million-asset thrift before its critical capital position forces an all-out failure. The program is also designed to speed resolution of troubled thrifts without RTC conservatorship, which is costly and reduces franchise value.
If the regulators sell Continental through the accelerated resolution program, shareholders' investment will likely be wiped out. Officials at the thrift said, however, that they are still seeking an unassisted transaction with potential acquirers.
Continental chief executive Charles Chenes said Continental gave up on raising capital in some form of stock offering about six months ago and decided to market itself.
Continental isn't the only midsize bank or thrift suffering from California's economic woes. Just last Monday, Guardian Bank, a long-ailing community bank in Los Angeles, was closed by the state Banking Department because of a liquidity crisis.
Both Continental and Guardian raised capital within the last two years. The funds took care of capital deficiencies until 1994's losses did their mischief.
Mr. Chenes, who saved Continental from what had seemed like a probable regulatory takeover in 1992, listed a litany of woes behind the thrift's current predicament.
These included "earthquakes, riots, fires, floods, the closing of military bases, the loss of 600,000-plus jobs," he said. "Everyone here has dealt with that. But when you're a thinly capitalized company, as we are, it's all that much harder to overcome."
