Huntington S&L; Agrees to Cash Merger

Like a bride left at the altar, Huntington Savings & Loan has to be gun shy when it comes to new marriage proposals. Still, the Huntington Beach S&L; said Monday that it will walk down that aisle for the fifth time in as many years.

Huntington Savings has agreed to a $750,000 cash merger with a corporation to be formed by Pasadena architect Renato Corzo. Under the agreement, Corzo would pump up the 7-year-old S&L;’s sagging net worth with $3.25 million in new capital.

The $4-million deal, signed by directors and Corzo on April 22, is subject to approvals by state and federal regulators and by the S&L;’s 500 shareholders, who are expected to meet in early August.

The purchase price and other details may also be subject to changes during the long approval process, said Robert C. Terry, the S&L;’s president.

Corzo plans to keep all top managers, including Terry, and to continue the same operating course for the two Huntington Savings branches in the city.

Corzo said he hopes that the Huntington purchase will be the first of several S&L; acquisitions from Los Angeles to San Diego. He said he views the industry generally as undervalued and believes that both Huntington Savings and other S&Ls; can be obtained at bargain prices.

With stiffer regulations and fewer new charters issued by regulators, “the demand is going to be greater than the supply, and we want to be on the supply side,� the 40-year-old architect said. He said he is looking for other S&Ls; with $60 million to $200 million in assets.

Huntington Savings has been in dire need of capital, which is down to about $100,000, Terry said. For an institution with $106.2 million in assets, Huntington Savings should have more than $3.2 million in capital now under federal regulatory requirements and would gradually need more than $6 million in capital in the next three to five years.

Terry said the S&L;’s financial troubles were caused mainly by a former employee’s unauthorized dealings in government securities in 1983-84. The S&L; lost nearly $3 million in the transactions, which the S&L; had to write off over a two-year period. Some bad loans, particularly participations with other savings institutions, also contributed to the problems.

Since 1983, Huntington Savings has posted about $2 million in net losses, Terry said. Its dwindling capital situation helped to scuttle two mergers, one in 1983 with Mascot Industries Ltd. in Melbourne and one in 1984 with Continental Pacific Enterprise in Anaheim.

But regulators effectively nixed two other deals by questioning plans to use equity in real estate as part of the needed capital base. Regulators rejected the 1985 purchase offer by Malibu developer Anthony Regan and sent back a 1986 proposal by Intergroup Corp. in Los Angeles, which also decided to withdraw as stiffer regulations were being adopted by regulators.

Terry said the deal with Corzo should be acceptable to regulators because it is an all-cash deal.

Corzo also owns all or part of a San Diego marina, a South Pasadena equestrian center and three Pasadena firms involved in manufacturing, exporting and real estate management.