Transpacific Industries said Monday that it has agreed to buy the remaining stock of Arrowhead Pacific Savings Bank, a small savings and loan association in the posh mountain resort town of Blue Jay near San Bernardino that has sustained heavy real estate development losses.
The agreement was arranged under supervision of federal savings and loan regulators, who last month negotiated a consent agreement giving them broad powers over Arrowhead Pacific's operations.
Transpacific, which already owns nearly 25% of the publicly traded company, will buy the remaining shares for about $2.2 million in cash and notes, then contribute $1.6 million in real estate to shore up Arrowhead Pacific's net worth.
Arrowhead Pacific lost $1.13 million in the third quarter, including $615,000 that was added to its reserves for loan losses. Its nine-month losses total $1.75 million.
The losses helped to wipe out the institution's net worth, meaning that its liabilities now exceed its assets. As of Sept. 30, the financial institution said it had a negative net worth of $220,000.
The S&L's problems stem partly from a severely depressed market for vacation homes as well as ill-advised residential development deals. "They got into some joint ventures that they shouldn't have," noted Rich Kaufman, Transpacific's president.
Transpacific is a diversified, privately held company based in Los Angeles whose properties range from fast-food chicken outlets (known as Pioneer Take-Out) to real estate holdings in Lake Arrowhead to a hotel in the resort town of Lake Havasu City, Ariz. Its annual sales will probably fall between $60 million and $65 million this year, Kaufman said.
Arrowhead Savings, with assets of $67 million, is a 5-year-old financial institution whose stock is traded over the counter. It has two offices near Lake Arrowhead, two in San Bernardino and one each in Palm Desert, Mammoth Lakes and on Santa Catalina Island.
The S&L has a new management headed by Chief Executive Steven Tartaglini, former director of corporate planning for Home Savings of America, the nation's second-largest S&L.
To save money and improve efficiency, Tartaglini said, he is closing the Palm Desert and Mammoth branches next month and relocating the corporate headquarters from Blue Jay to San Bernardino.
Regulatory approval of the sale is not expected for several months, he said.