Just six months after federal regulators seized the Santa Ana-based savings and loan he headed, former Butterfield S&L executive David B. Ross has found himself at the helm of another troubled financial institution.
Ross, who was named acting president of Seapointe Savings & Loan Assn. in Carlsbad just last month, confirmed Thursday that the small S&L has lost at least $20 million and been driven into insolvency by a series of securities transactions that occurred earlier this month.
Federal regulators, he said, have asked the 10-month-old S&L to let government officials negotiate either a sale or merger of the company's assets.
Seapointe's board of directors has not yet decided whether to accept the Federal Savings and Loan Insurance Corp.'s request, Ross said.
Ironically, Ross--originally an executive with Great American First Savings Bank in San Diego--was named chief operating officer of Butterfield just nine months before federal regulators declared the controversial S&L insolvent and seized it last summer.
Seapointe, with $45 million in assets and $3 million in stockholders' equity as of Jan. 31, lost at least $20 million between Feb. 3 and Feb. 18 from what company officials described as the "liquidation and transfer of certain securities brokerage accounts."
According to Seapointe sources, the losses, which could eventually exceed $20 million, may have stemmed from "hedging" the market, complicated securities transactions that include the use of commodities futures.
Ross would not disclose the exact nature of the losses, nor would he identify the outside brokerage firm that handled Seapointe's investments.
Seapointe's board has launched an investigation into the transactions, said Ross.
"It's complicated and esoteric," he said. "But because of the confidential nature of this, we haven't pinpointed" the exact transactions that sparked the losses.
Regulators could allow Seapointe to operate or they could "come in tomorrow and appoint a receiver or close it down," acknowledged Ross.