Orange County -- An S&L; Graveyard

Orange County is home to more failed savings and loans than any other county in California. In the last five years, regulators have seized 19 county-based S&Ls.; The failures range from industry giant American Savings & Loan in Irvine to small institutions, such as American Interstate Savings & Loan in Newport Beach.

Like S&Ls; nationwide, the county’s thrifts have failed for a variety of reasons: mismanagement, bad and risky investments and outright fraud.

Fraud appears to be more prevalent among Orange County thrifts than among S&Ls; elsewhere in the state. Of seven Southern California thrift failures deemed top-priority cases by the FBI and regulators, four are based in Orange County. In addition, the FBI is looking into wrongdoing at six other county thrifts, at the least.

There are 25 thrifts in the county still in private hands. Regulators control Lincoln Savings & Loan in Irvine--one of the nation’s biggest failures--and Charter Savings Bank in Newport Beach. In addition, New West Federal Savings & Loan in Irvine is a self-liquidating thrift created to sell off the bad assets of American Savings.

Nationwide, more than 800 thrifts have failed since 1980, and about 500 of those were put in the hands of the Resolution Trust Corp., the federal agency that manages and liquidates failed thrifts. Hundreds of other S&Ls; have been absorbed by mergers and acquisitions in either friendly deals or arrangements forced by regulators.

The part of the industry still privately owned now numbers 2,404 institutions, about 40% of its peak size in 1980, according to the Office of Thrift Supervision.

S & L RESOLUTION COSTS The cost of resolving--selling, consolidating or liquidating--failed savings and loan institutions in Orange County has already cost the federal government an estimated $4.5 billion. The total does not include costs related to the failures of Charter Savings Bank in Newport Beach and Lincoln Savings & Loan in Irvine, whose resolutions are still pending. The bailout of Lincoln alone is expected to cost taxpayers more than $2 billion.

Thrift/Location * Estimated Cost (in millions) American Savings & Loan, Irvine $1,699 Beverly Hills Savings & Loan, Mission Viejo 983 American Diversified Savings Bank, Costa Mesa 798 Pacific Savings Bank, Costa Mesa 344 Butterfield Savings & Loan, Santa Ana 281 North America Savings & Loan, Santa Ana 133 Ramona Savings & Loan, Orange 76 First California Savings Bank, Orange 74 Consolidated Savings Bank, Irvine 43 Equitable Savings & Loan, Irvine 35 Mercury Savings & Loan, Huntington Beach 34 Western Empire Savings & Loan, Irvine 24 Perpetual Savings Bank, Santa Ana 12 South Bay S&L;, Newport Beach/Gardena 5 Huntington Savings & Loan, Huntington Beach 4.5 Security Federal Savings & Loan, Garden Grove 3.9 American Interstate Savings & Loan, Newport Beach 2.1

*Estimated cost is set at the time of resolution. It includes anticipated ongoing maintenance costs and interest on notes. The estimate is reduced by any premiums paid by a buyer or sale of assets in receivership.

Source: Office of Thrift Supervison S & L INVESTIGATIONS Federal authorities have identified four Orange County thrifts for top-priority investigations. They are Lincoln, Mercury, Consolidated and American Diversified. Here are details on some completed and pending inquiries:

Lincoln: Former owner Charles H. Keating Jr. and three others indicted on state charges of securities fraud. At least 20 people including Keating targeted by a federal grand jury. One borrower pleaded guilty in federal court to bank fraud, awaiting sentencing.

North America: Janet F. McKinzie, a consultant, convicted of racketeering and sentenced to 20 years in prison. Six others convicted of lesser charges. Investigation continues.

Ramona: John L. Molinaro and Donald P. Mangano Sr., both former owners, convicted of bank fraud and conspiracy. Mangano sentenced to 15 years in prison, Molinaro to 12 years. Investigation continues.

Consolidated: Oklahoma businessman Charles J. Bazarian convicted, sentenced to four years in prison. Appraiser convicted, put on probation for five years. Investigation continues.

First California: A contractor and his attorney convicted of bank fraud. Eachsentenced to 18 months in prison and ordered to pay restitution to the federal deposit insurance fund. Investigation continues.

American Diversified: Oklahoma businessman Charles J. Bazarian convicted, sentenced to four years in prison.

Source: FBI and court records. S&L; Failures By Year Nineteen thrifts have collapsed in Orange County since 1985, with the peak being 1987, when six S&L;’s failed. Source: Office of Thrift Supervison