Valley Federal Going on Block As Capital Lags
VAN NUYS, Calif. -- Valley Federal Savings and Loan Association said the Office of Thrift Supervision has executed an agreement under which it will put the thrift in its accelerated resolution program.
This program is a joint effort of the OTS and the Resolution Trust Corp. to sell troubled institutions before having to seize them. Valley Federal is considered troubled because it does not meet capital requirements.
Conserving Franchise Value
While regulators are seeking a buyer, they leave current management in place. Depositors are not affected, and deposits remain insured.
The thrift said it was told by the OTS that institutions are selected for accelerated resolution on the basis of strong branch networks, desirable core retail business, and stable management. The theory behind such a sale is that the franchise retains more value and buyers will pay more than they would for an institution in conservatorship.
When a bid is accepted and the institution sold, Valley Federal Savings will be put in receivership, and shareholders will be unlikely to get any consideration for their shares, the thrift said.
Deposits and assets will be transferred overnight to the acquirer so that banking services are not interrupted.
Valley Federal has more than $2 billion in assets and 30 banking offices in California.