South Bay Savings & Loan Assn. in Gardena has been seized by federal regulators and sold to a Costa Mesa home-building company. The institution has been renamed Standard Pacific Savings & Loan Assn.
The takeover occurred Friday night and the new institution opened Monday with no disruption to customers, said Harry Fukuwa, South Bay S & L's outgoing chairman.
He said the simultaneous takeover by the Federal Home Loan Bank Board and the sale to Standard Pacific last week culminated several months of negotiations to limit South Bay's exposure to litigation after its debt had reached $2.2 million.
Fukuwa, a Gardena accountant and developer, said the S & L's financial problems stemmed from "aggressive" construction and real estate loans and poor investments made by the association's former chairman and major stockholder.
Former Chairman Ousted
San Diego developer Frank Domingues was ousted as chairman in April, 1985, by regulators after the Federal Savings & Loan Insurance Corp. named him as a defendant in a $50-million fraud suit the agency filed against a number of investors in another financial institution, the now-defunct San Marino Savings & Loan Assn. The suit has not been resolved.
Under an agreement with the agency, Domingues was ordered to place his 76% of South Bay's stock in a blind trust and to sell the shares over a three-year period beginning in 1985. However, Fukuwa said, the trust was never created.
"In essence that was the greatest detriment to our recapitalization efforts," Fukuwa said, "because no one could vote his majority stock." To make matters worse, he said, Domingues had used the stock as collateral for loans.
"It frustrated and complicated recapitalization efforts by making it virtually impossible to deal with interested new investors," Fukuwa said.
Domingues' shares were invalidated by the bank board's seizure. He could not be reached for comment.
South Bay S & L opened offices in Gardena and Costa Mesa in 1983. The association was headquartered in Costa Mesa until it moved to Newport Beach last year.
A Standard Pacific official said the company would not disclose the financial terms of the acquisition until later this month when it files its required reports with the Securities and Exchange Commission.
The building company's chief financial officer, Robert St. Lawrence, said Standard Pacific had been negotiating with the Federal Home Loan Bank Board for several months to acquire South Bay.
Under the acquisition agreement, Standard Pacific will provide an undisclosed capital contribution to the new institution in exchange for all the common stock of South Bay S & L.
Easier to Make Loans
The acquisition of the savings and loan association is not a significant event for Standard Pacific, said Robert Curran, a securities analyst with Merrill Lynch in New York. But it does give the builder one more means of providing financial assistance to its customers.
"The company is thinking about expanding ways to make it easier for customers to buy homes," Curran said. Standard Pacific already operates a mortgage banking subsidiary, he said, and the S & L is simply another means of making loans available to home buyers.
Standard Pacific specializes in building and selling medium-priced houses throughout the state, although none has been built in the South Bay. The company reported 1986 net earnings of $25.7 million, up 33% from $19.4 million in 1985. Revenues for 1986 were $310.6 million, up 17% from $265.8 million.