REGULATORS TAKE CONTROL OF FIRST AMERICAN, N.C.
REGULATORS TAKE CONTROL OF FIRST AMERICAN, N.C. WASHINGTON, June 5 /PRNewswire/ -- The Office of Thrift
Supervision (OTS) today placed First American Savings Bank, F.S.B., Greensboro, N.C., in receivership and chartered a new federal mutual institution to take its place.
The new institution, First American Federal Savings Bank, will assume certain assets and liabilities of the old thrift and will operate in conservatorship under the management of the Resolution Trust Corporation. The receivership did not result in any interruption of First American's day-to-day operations. The institution and its 34 branches will remain open for business as usual. Holders of insured accounts are not affected by the action, which was taken by OTS to protect insured depositors and the interests of the thrift insurance fund. Deposits remain insured to the $100,000 legal limit. First American was being marketed through the government's Accelerated Resolution Program (ARP), designed to sell certain troubled or insolvent thrifts without subjecting them to a lengthy and more costly government conservatorship. However, lack of congressional funding for the ARP forced regulators to take control of the institution. OTS initiated the action because First American was operating in an unsafe and unsound condition in that it had insufficient capital, with no prospect of replenishment without federal assistance. First American's condition is due primarily to imprudent investments and poorly underwritten commercial real estate loans made by previous management in the early 1980s. The thrift's capital position was impaired further by losses on loan sales during that period, and by the 1982 deregulation of interest rates, which increased the institution's cost of funds. First American also assumed a substantial amount of goodwill in the 1982 acquisition of East Federal Savings and Loan Association, Kinston, N.C. Current management had improved operations, but past practices resulted in deferred loan and investment losses that could not be overcome. The institution is insolvent in that its liabilities exceed its assets. Despite its condition, First American, the state's largest thrift, was eligible for the ARP because of its operating profits, its sound management and because several investors already had expressed interest in the institution. "It is with great reluctance that we seize institutions like First American, which could have attracted a buyer and been resolved at less cost to the taxpayer," said OTS Director Timothy Ryan. "But lack of congressional funding for thrift resolutions has left us no choice. Unsafe and unsound institutions cannot continue to operate without some resolution plan underway." First American Savings Bank, F.S.B., a federally chartered mutual institution, had been operating under regulatory growth and lending restrictions since 1989. As of March 31, 1992, First American Savings Bank, F.S.B., reported assets of $804.3 million, liabilities of $812.7 million and tangible capital of negative $45.2 million, for a tangible capital- to-assets ratio of negative 5.9 percent. -0- 6/5/92 /CONTACT: Paulette Odum, 404-888-8549, or Marc Adams, 202-906-6677, both of the Office of Thrift Supervision/ CO: Office of Thrift Supervision; First American Savings Bank ST: North Carolina IN: FIN SU:
MH -- DC014 -- 7485 06/05/92 13:20 EDT
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|Date:||Jun 5, 1992|
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