U.S. Agrees to Settlement in Failed S&L; Suit

Federal thrift regulators said on Tuesday that they have settled a civil suit against several former officers and directors of Southern California Savings & Loan for $12.3 million.

The suit, filed in 1985 by the Federal Savings & Loan Insurance Corp., charged the former officials with negligence and breach of fiduciary duty from 1978 to 1982. According to the settlement, all claims will be dismissed in exchange for the cash payment.

Defendants in the suit included former company President Kenneth Childs Jr. and former Chairman Peter Huang. Neither could be reached for comment.

Southern California Savings was one of many California thrifts that failed in the mid-1980s. It was declared insolvent and seized by thrift regulators in 1985, then sold in 1987 to private investors led by former U.S. Treasury Secretary William E. Simon.

Regulators said the firm’s assets grew to more than $1.1 billion from $700 million between 1979 and 1982, relying mainly on construction loans that went bad. The problem loans included a shopping center in Mammoth Lakes, condominiums in Los Angeles and office buildings near Los Angeles International Airport.

Southern California Savings is now profitable, with assets of more than $2 billion and 27 retail branch offices throughout the state. Though the privately held firm does not disclose earnings, John Yunker, chief executive officer, said it has been making money since Simon and the other investors took over.

“The settlement (of the lawsuit) has no financial impact on the company,” Yunker said.