Feds order Topa outlets to boost their capital ratios; Anderson says new cash brings institutions up to snuff.

Topa Thrift & Loan and Topa Savings Bank, two financial institutions with combined assets of nearly $1 billion -- both of which are owned by John E. Anderson, namesake of the UCLA School of Business -- are under orders by federal regulators to increase capital ratios.

The Federal Deposit Insurance Corp. disclosed this month that in November it had ordered Topa, which with $484 million in assets is the third largest thrift and loan in the state, to cease and desist from unsafe banking practices.

Los Angeles-based Topa Thrift & Loan did not meet the federal requirement for risk-based capital as of Sept. 30. But Anderson said in December he injected $4.4 million of new capital into the thrift and loan and it now meets all capital requirements.

Topa Savings Bank, an L.A.-based savings and loan with $451 million in assets, is also operating under an agreement from its regulator, the Office of Thrift Supervision.

Anderson said he injected $12 million of new capital into that institution in the fall and it currently meets all capital requirements.

"These companies are not in trouble, that is the critical thing," said Anderson, who owns 100 percent of the shares of both institutions.

He said he is committed to injecting additional capital as needed.

Anderson said that federal regulators are very tough on institutions these days. "You have the regulators coming in with a number of failures taking place with the Keatings (referring to Lincoln Savings chief Charles Keating) and other people and they are saying, 'We want more capital in this industry.'"

Anderson attributed the problems of the two institutions to the recession in the Southern California real estate market. "Real estate has gone down 25 to 35 percent and if you made a loan ... and the borrower has lost his job, you've got some problems."

At Topa Thrift & Loan, $95.4 million or 19.6 percent of its total assets were non-performing as of Sept. 30, according to information provided by the Bauer Financial Reports, a Florida-based bank information and rating service.

At Topa Savings Bank, $36 million or 7.9 percent of assets were non-performing, according to the Bauer reports.

Topa Savings Bank lost $9.1 million for the first nine months of 1992 compared to a loss of $4.1 million a year earlier.

Topa Thrift & Loan lost $2.4 million for the first nine months of 1992 compared to earnings of $2.8 million a year earlier.

Both institutions rated zero stars out of five stars in the Bauer rating of last June, said Karen Dorway, director of research for Bauer.

Only 121 of 11,600 commercial banks nationwide and only 72 of 2,100 savings and loans received a zero star rating, Dorway noted. Statistics were not available for the number of thrift and loans which received a zero star rating.

Barry Rubens, chief executive officer of California Research Corp., a Santa Monica-based bank consulting firm, noted that the Topa institutions have been profitable for years.

The current situation "reflects the current real estate market," Rubens said, noting that the institutions were "aggressive lenders."

Richard Young, president and chief executive officer of Topa Thrift & Loan, said the institution made about $100 million of loans a year in the late 1980s and 1990 and 1991.

Last year was the first in the 17 years Young has worked at the thrift and loan that it reported a loss, he said.

Numerous banks in the Los Angeles area, including City National Bank, are operating under orders to increase capital, Rubens said.

Anderson "is a very solid individual," Rubens said, adding that Forbes Magazine last year rated him as one of the 400 richest people in America.

The UCLA School of Business was named after Anderson in 1987 after he donated $15 million to the university.

The Topa institutions are "extremely well managed and I think they'll be around for many years to come," Rubens said.

Another financial institution owned by Anderson, L.A.-based First Business Bank, was listed in the "The Highest Rated Banks in America," an annual publication by Sheshunoff & Co., a national bank rating service.

First Business Bank, with $655 million in assets, earned $4.7 million for the first nine months of 1992. That bank primarily makes commercial business loans and is not affected by the Southern California real estate market, Anderson said.