At beach party atop the convention center in San Diego last week, about 1,000 savings and loan executives dared to be goofy.

The delegates to the Savings and Community Bankers of America annual meeting lined up to have their pictures taken as they surfed on a plastic wave, kicked beach balls through the night air, sported glow-in-the-dark necklaces, and danced to rock music against a campy backdrop of plastic palm trees.

A Time to Dare

A year or two ago, with public anger about the deposit-fund bailout at its peak, they wouldn't have dared to have such a conspicuously good time.

But these days, savings and loan executives are being swept along on a wave of optimism. Earnings are up, and the nascent Clinton administration sounds as though it will look kindly upon their once outcast industry.

"Everybody has got a hopefulness about them," Gerry J. Pittinger, chairman of the savings and community bankers group, told a press conference.

The industry is hopeful that President-elect Bill Clinton will stimulate the economy, realize the value of thrifts as home lenders, and lighten up on the crush of regulation bankers say is strangling the business, Mr. Pittinger said.

President Bush, on the other hand, became a whipping boy for everything that has gone wrong for S&Ls and other thrifts the past few years.

At a breakfast meeting the group arranged for reporters, James F. McKenna, president and chief executive of North Shore Bank, Brookfield, Wis., scoffed at the Bush administration's attempt to reduce regulation.

"George Bush and the administration's talk about regulatory relief was garbage," said Mr. McKenna. "It existed perhaps in the mind of the President. Period."

At another press conference, David A.E. Carson, president of $6 billion-asset People's Bank, Bridgeport, Conn., also took shots at Mr. Bush.

"There is nothing the Bush administration did to help this country get out of the recession. Not one thing," grumbled Mr. Carson. "When [Treasury Secretary Nicholas] Brady came up to New England to talk about the credit crunch, his eyes glazed over."

Mr. Carson was one of four S&L executives trotted out before reporters to tell how they saved their institutions from extinction. The point of the testimonials was to show that the S&L industry is rebounding and will survive. Many commentators continue to predict its demise.

David Shepherd, president of First Family Bank, Eustis, Fla., was among the miraculous survivors. He told how his institution wrote off $12 million in sour loans, and raised $3.5 million in capital in a modified conversion. The thrift now has 5.5% core capital and 9% risk-based capital.

His tale was of a fall followed by redemption.

"We went through the hell and the fire," he said. "We see a good future."

Tad Lowrey, president and chief executive of CenFed Bank, Pasadena, Calif., said his $1.1 billion-asset institution made about every bad move in the book.

Loaded with Losers

CenFed, which was mutually owned at the time, had too many commercial real estate loans; it invested in real estate joint ventures; and it bought junk bonds, as well. The bank dumped the bad investments and converted to a stock institution in 1990, raising $27 million in capital. Depositors bought 65% of the company.

"Today, our primary focus is on single-family loans," Mr. Lowrey said. "We feel like the problems are behind us."

"You are not the |survivors'; you are victors," Paul Schosberg, the trade group's president, told the membership in his convention speech. "But you are victors only in the sense that you have won battles. Clearly, you haven't won the war."

Despite the occasional fun, delegates appeared to sense that their optimism might be as artificial as the plastic wave employed by the photographer.

Tempered Expectations

A survey of 500 executives found that 47% expected moderate improvement in the economy during the next six months, while 43% expected no change at all. Seven percent predicted a moderate decline; 2%, substantial decline; and only 1%, substantial improvement.

Mr. Schosberg summed up the situation this way: "The fact of the matter is . . . our banking system as we know it is very much at risk."

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