LA JOLLA — Developer Doug Manchester on Tuesday said he has agreed to sell his 21-month-old La Jolla Pacific Savings Bank to California Federal Savings & Loan Assn. for about $4.5 million.
Manchester, the bank's sole shareholder, will make a 50% return on his $3 million investment.
The sale of the savings bank, with $42 million in assets, was initiated by Manchester and is expected to be completed within 90 days; it will give Cal Fed 10 branches in San Diego County, according to spokeswoman Eileen Koontz. With assets of $19 billion, Cal Fed is the nation's fourth-largest savings and loan.
La Jolla Pacific's net worth stands at $3.4 million, according to President Tyler Exter, who said the savings bank is profitable, but declined to disclose earnings.
The sale of the savings bank was purely an "economic decision," Manchester said, and not connected to problems surrounding his controversial bayfront Hotel Inter-Continental, whose future profitability is inextricably tied to the often-delayed downtown convention center.
Manchester and his Torrey Enterprises are in the "best financial situation we've ever been in," Manchester said Tuesday. "Just because I sell something and it's a good deal, people think I have to sell it."
Two weeks ago, Manchester sued the San Diego Unified Port District, claiming that construction delays in the waterfront convention center could cost him at least $48 million.
The hotel is prepared to operate without a convention center until 1988, said Manchester. "If there's no resolution (by then), we'd be impacted adversely."
If current timetables are met, a new convention center could be open by mid-1989, port district officials have predicted.
The sale of La Jolla Pacific was not expected. In February, Exter said in an interview that the company was "taking a posture of relatively fast growth" and hoped to eventually reach $100 million in assets.
La Jolla Pacific management, looking to expand, had even explored taking over now-defunct Sun Savings & Loan earlier this year, according to banking industry sources.
Exter on Tuesday said that the sale "seemed appropriate--we talked to a couple of large financial institutions that weren't located in La Jolla, and Cal Fed seemed to think it was a good fit" for them.
Manchester owns the building that houses La Jolla Pacific and will become landlord to Cal Fed's new branch.
Cal Fed officials have told La Jolla Pacific's 14 employees they are "hopeful that we'll all stay," Exter said.