The proposed sale of Pioneer Savings & Loan in Newport Beach to Irvine developer John E. Wertin has died.
Wertin, who bought a recovering Bank of San Clemente in late 1987, had been negotiating for the purchase of Pioneer since September. He gave up on July 3, according to a recent notice from the state Department of Savings and Loan.
Neither Wertin nor James F. Deane, Pioneer's chairman, could be reached to explain why the deal fell through.
Pioneer, which hasn't had a profitable year since it opened in 1985, has seen its initial capital outlay of $2 million dwindle to $572,000 by the end of March. The S&L's assets have similarly dropped to $15.1 million from a high of $22.2 million in December, 1986.
Wertin's $1.5-million cash deal would have helped to end a bitter dispute over ownership of the S&L. Two years ago, the Hammond Co., a Newport Beach mortgage-banking operation, scuttled a tentative $2-million deal to buy Pioneer because of uncertainty over who owned the S&L.
Gerry Findley, a financial-institutions consultants in Brea, said the sale of Pioneer is hampered by a general uncertainty about the tattered S&L industry. Congress is working on an S&L rescue bill that would drastically increase requirements for capital--an institution's final reserve against losses--and would subject S&Ls to examinations by banking regulators.
"The way the regulations are coming down is not going to make the thrift business profitable to be in," Findley said.
Such flagging interest in the thrift business, along with Pioneer's ownership problems, doesn't make Pioneer an attractive purchase, he said.
Originally, eight investors were going to open Pioneer, according to a pending Orange County Superior Court lawsuit. Instead, the group decided to loan $1.8 million to 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 $1.8 million 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.