Columbia Savings May Go Private, Chairman Discloses

Columbia Savings & Loan, the maverick California thrift that made its name by investing in junk bonds, may go private if its stock does not arise from the doldrums, Chairman Thomas Spiegel disclosed in an interview.

“The chances (of going private) are fairly high if the stock doesn’t start reflecting the underlying value of the company,” Spiegel said during a 90-minute interview at the firm’s Wilshire Boulevard headquarters in Beverly Hills. Spiegel also indicated that buying out the public shareholders would provide him with more personal privacy.

Spiegel said the company and his family have acquired more than 3 million shares of Columbia stock in recent months, boosting his family’s ownership in the savings and loan to about 67%. Columbia’s common stock is trading at $9.50, well below its net worth even though the financial institution is one of the best capitalized large thrifts in the nation.

The disclosure comes at a time of great sensitivity and uncertainty for Columbia Savings, whose assets total nearly $13 billion, including $4 billion in junk bonds, which are high-yielding but risky debt securities.

Pending legislation in Washington to bail out the troubled savings and loan industry threatens to curtail Columbia’s controversial junk bond operations, and federal investigators are looking into whether the company engaged in an illegal trading scheme with the junk bond department of Drexel Burnham Lambert, a New York-based investment banking firm.

Spiegel also drew widespread attention last weekend when it was disclosed that he helped Assistant House Majority Leader Tony Coelho (D-Merced) buy a $100,000 junk bond in 1986. Coelho failed to report a $50,000 loan from Columbia Savings that was used to finance the purchase, but Spiegel denied any impropriety for his role in the sale. Such reports are required by House rules.

Spiegel agreed to the interview, held late Tuesday afternoon, but he required the presence of his corporate attorney, Kenneth R. Heitz, and chief spokesman, Lenore G. Hatch. Lawrence K. Fish, Columbia’s president, also attended.

Hatch attempted to record the interview, but Spiegel balked when a Times reporter turned on his own tape recorder. “I don’t want those on,” the 43-year-old executive said after conferring privately with Heitz. As a result, neither recorder was used.

Nothing Said About Probe

Spiegel said nothing about the pending securities investigation and little about the Coelho controversy. Though relaxed in private, Spiegel is often wooden and uneasy in public situations. “I would prefer to get a lot less publicity than I am getting,” he said at one point.

But the attention is not likely to evaporate any time soon.

For one thing, Spiegel has had close personal and business ties to Michael Milken, who headed Drexel’s junk bond trading operations until his indictment on sweeping securities fraud charges in March. A government probe that reportedly centers on Drexel’s clients is continuing.

“My guess is Tom’s a little nervous right now,” said one erstwhile legal adviser who asked not to be identified.

Spiegel learned the junk bond business from Drexel and Milken in the early 1980s, and Columbia Savings is now a leading corporate investor in this kind of securities. That is one reason that investors are not flocking to buy Columbia’s stock.

“Analysts are scared to death of the Milken tie,” said one financial analyst with an investment banking firm in New York.

As many as 20 boxes of Columbia’s trading records with Drexel, covering the 1982-87 period, have been delivered to the Securities and Exchange Commission and the U.S. attorney’s office in New York. But Columbia will confirm only that the savings and loan is under investigation by the SEC.

“We have disclosed all we are going to say at this time,” Heitz said.

High Compensation

Spiegel also draws attention because he is among the highest-paid corporate executives in California. His $4.1-million compensation package in 1988 included a $3-million bonus, a company car and personal use of the company’s airplanes. His peers at other S&Ls; make less than half that.

Yet, government figures show that Columbia Savings has more cash capital as a percentage of assets than even its largest competitors, such as Home Savings of America and Great Western Bank, giving Columbia broad bragging rights about its financial health.

Columbia’s shareholders equity stands at close to $700 million, up from less than $10 million eight years ago, Spiegel noted in defending his high pay. “I don’t think there are many financial institutions in the country that have achieved that kind of record,” he said.

Despite that success, Columbia Savings has undergone widespread changes in the ranks of its upper management in recent months as several longtime colleagues of Spiegel have resigned. Gone are executives like Larry W. Reed, former head of residential lending operations, and David Rosenthal, chief financial officer.

In their place are people like Fish, the president who came from Bank of Boston, and James A. D’Aquila, the new chief financial officer, who came from Drexel. One of the old guard who did survive was David A. Sachs, who runs Columbia’s extensive securities investment operations. Sachs, 29, received a $1.1-million bonus last year on top of his $160,000 salary.

Spiegel, who is chief executive, also recently assumed the post of chairman from his 82-year-old father, Abraham, a longtime real estate developer in Southern California and close friend of and adviser to Los Angeles Mayor Tom Bradley. The elder Spiegel still receives an annual salary of $500,000 as Columbia’s vice chairman.

15 Million Shares

To take the company private Columbia Savings would have to buy out the public shareholders, who own the equivalent of 15 million shares of common stock. Columbia’s $9.50 stock price is far below its book value of more than $16 a share. Book value is calculated, essentially, by subtracting a firm’s liabilities from its assets.

Such a move would provide a protective shield for Thomas Spiegel, who tries hard to guard his privacy. As a public company, Columbia Savings is required to disclose his salary in the annual proxy statement sent to stockholders.

“I have no desire to have my compensation printed in the Los Angeles Times every year,” Spiegel said.