Developer John E. Wertin, who bought control of a recovering Bank of San Clemente last year, has agreed to acquire Pioneer Savings & Loan in a $1.5-million cash deal that would help end a bitter dispute over ownership of the Newport Beach savings institution.
Wertin, head of the Pacific Co. in Irvine, will take over as sole owner of Orange County's smallest savings institution if state and federal regulators give their approval, according to an application filed with the state Department of Savings and Loan.
Wertin and Pioneer's president, Tim Peralta, had tried to open an S&L in the mid-1980s when regulators had an unofficial moratorium on new thrifts.
Neither Wertin nor Pioneer Chairman James F. Deane returned telephone calls Monday and Deane's lawyers refused to discuss the matter. An attorney for Wertin said the developer hopes to get regulatory approval by the end of the year and that no change in management at the S&L is contemplated.
It is not known if Wertin must pump more money into Pioneer's capital base after paying the purchase price. The S&L's capital is about 4% of its $20.4 million in assets, a higher level than regulators require of older S&Ls but well below the 7% level mandated for new thrifts.
Pioneer hasn't posted a profitable year since it opened in January, 1985, and its starting capital of $2 million had dwindled to $849,000 by the end of March. It lost $146,000 in the first quarter of 1988.
"They're losing money on operations, and those kind of S&Ls are the most difficult ones to turn around," said Gerry Findley, a Brea financial institutions consultant.
Findley, who compiles and analyses the financial data that S&Ls submit to regulators, said more than 95% of Pioneer's deposits are in the form of large certificates of deposits. Those CDs are typically considered expensive to get and hard to keep.
Last year, Pioneer's profit margin between interest it earned on loans and interest it paid out on deposits was only 2 percentage points, not enough to pay expenses, Findley said.
Pioneer's ownership has been unsettled since the S&L opened, and the uncertainty over its true ownership scuttled a proposed $2-million purchase last year by the Hammond Co., a regional mortgage banking firm based in Irvine.
Originally, eight investors were going to open Pioneer, according to a pending Orange County Superior Court lawsuit. Instead, the group decided to invest $1.8 million through Deane in a complicated financing arrangement that allowed Deane to hold all the shares as sole owner.
But by June, 1986, state and federal regulators saw that the apparent loan to Deane wasn't being repaid and decided that Pioneer was, in fact, owned by eight individuals. The regulators required the other seven individuals to reveal their interests and to seek state approval to become S&L owners.
Instead, six of the seven other investors withdrew their applications for approval and, eight months later, sued Deane and the lawyers who arranged the original deal. The suit seeks to rescind the contract, alleging fraud.
While the 1987 lawsuit scuttled Hammond's proposed buyout, the six investors who sued Deane have approved the sale to Wertin, according to William C. Ring, a Corona del Mar real estate agency owner and one of the other investors. He said the plaintiffs now view the investment as a loan.
Under a stipulated agreement in court, about two-thirds of the proceeds of the sale will go to the plaintiffs and the rest will go to Deane, said David W. Wiechert, one of the lawyers for the plaintiffs. The lawsuit, he said, will still be pursued to collect the amount alleged to be remaining--about $800,000.