To Reopen Under New Owners Monday : Federal Regulators Close Beleaguered Sun Savings
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SAN DIEGO — Sun Savings & Loan Assn., buffeted by two years of red ink and bitter squabbles, was shut down by federal regulators late Friday.
Sun’s five branches--four in San Diego and one in Mission Viejo--will reopen Monday as outlets of the newly formed Flagship Federal Savings & Loan Assn. and will be operated under a management contract by Great Western Savings of Beverly Hills.
Flagship’s five-member board will be chaired by Los Angeles financial consultant Jay Janis, a former chairman of the Federal Home Loan Bank Board.
Six-year-old Sun Savings, with $374 million in assets, has operated under severely restrictive federal guidelines for the past four months and had a $2.4-million negative net worth at the end of the first quarter.
It grew rapidly, reporting assets of $18.1 million at the end of 1981 and reaching a peak of $471.2 million at the end of 1984. But bad loans and a large number of brokered deposits took their toll. Sun wrote off $17 million in loan losses in the last six quarters and increased its loan loss reserves by $11.6 million.
Regulators said that as of Friday, about 50% of Sun’s total deposits were generated through an in-house money desk, a relatively expensive way for thrifts to raise deposit money.
On orders from federal regulators, Sun’s stock never opened for trading Friday on the American Stock Exchange pending “an announcement.”
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