A turnaround team imported from Florida has managed to fix the troubled Southern California Savings and Loan.
Southern California, one of the largest problem thrifts in the Golden State, raised $60 million by issuing new stock to current shareholders as an early June regulatory deadline loomed. The new capital puts the $1.7 billion-asset thrift in the "adequately capitalized" category and will give it time to resolve its soured multifamily portfolio and hopefully begin making money again.
"We've had net operating losses for several years," said Mike Holmes, chief financial officer. "The short answer is that we've had eroding net interest margins, high operating expenses, and high provisions for losses on loans and foreclosed real estate."
According to call reports, Southern California's leverage capital ratio stood at 0.5% on March 31, less than the 2% regulatory minimum.
Mr. Holmes would not disclose the names of the thrift's shareholders. Southern California S&L was bought in 1986 by San Francisco holding company Socal Holdings Inc. Socal at the time was controlled by former Treasury Secretary William Simon.
Southern California S&L was declared insolvent in 1985, and Mr. Simon bought the thrift out of receivership from the old Federal Savings and Loan Insurance Corp.
But by 1992, the thrift was losing money again. It lost more than $80 million in the three years ended Dec. 31, 1994.
In March, Socal brought in a team headed by Rudy Guenzel, the former chief executive of BancFlorida in Naples. Mr. Guenzel, along with Mr. Holmes and retail banking guru William Flader, returned $1.6 billion-asset BancFlorida to profitability before selling it to First Union Corp. last year.
"The institution in the past was a large multifamily lender," Mr. Holmes said. "Our strategy going forward is to be a direct residential lender through our branches. We want to be a retail bank."
Still, Mr. Holmes said, Southern California S&L still has $400 million in multifamily loans on its books. Multifamily credits have been the worst- hit loan type at thrifts in the region since the recession there began four years ago.
More than 28% of Southern California's assets are in multifamily loans.
"We're looking at all options" for resolving the multifamily portfolio, Mr. Holmes said, including a bulk sale.