Huntington Savings & Loan Assn. in Huntington Beach has agreed to be taken over by Intergroup Corp., an East Coast owner and operator of apartment properties that recently relocated to Los Angeles.
John V. Winfield, Intergroup's president, said Thursday that the agreement has been approved by the boards of both companies after two months of negotiations, but still must be approved by the S&L's shareholders and by state and federal regulators. Huntington S&L officials could not be reached.
Under the acquisition plan, Huntington's current shareholders will exchange all of their shares for non-voting, preferred stock in the S&L, Winfield said. Intergroup will acquire newly issued common stock, he said.
The exact status of the preferred stock was not disclosed, and Winfield and his company's lawyer, Jeffrey Tisdale, would not release any other details of what they called a complicated deal until the shareholders receive the proposal and the Securities and Exchange Commission is notified. Both companies are subject to SEC regulations, Tisdale said.
Huntington S&L, already under supervisory orders from the Federal Home Loan Bank Board, had to get bank board approval even to enter into the agreement, Winfield said. That approval came Thursday, he said.
The 5-year-old institution has lost more than $1.2 million in the last two years. It had assets of $125 million at the end of 1985, but its capital had fallen to little more than $1 million. Its net worth ratios were well below the minimums required by state and federal regulators.
The S&L is "already on the endangered species list," said Gerry Findley, a Brea financial institutions specialist. "They got a double whammy. They had bad loans and they were not able to run the operation profitably."
He said he believes that regulators will want Intergroup to infuse up to $5 million in new capital before they approve the takeover.
Intergroup--which purchases, rehabilitates and operates apartment complexes and other multifamily residential projects--was created in 1965 to provide rental housing for those who otherwise could not easily obtain it, Winfield said. Intergroup has units in nine Eastern and Midwestern states.
The company relocated its headquarters to Los Angeles from New York in January to begin West Coast operations. Winfield said the company wants to expand into financial services areas to "provide financing in areas we feel will expand social responsibility."