NEW YORK -- The federal Office of Thrift Supervision placed CrossLand Savings FSB, of Brooklyn, N.Y., into receivership Friday and chartered a new federal mutual institution to take its place.
The new institution, CrossLand Federal Savings Bank, will assume certain assets and liabilities of the old thrift and will operate under the management of the Federal Deposit Insurance Corp., which insures CrossLand's accounts.
The government turned down efforts by Chase Manhattan Corp. and Republic National Bank of New York to purchase CrossLand's core New York deposit base. They submitted bids to the FDIC earlier this month.
The government agency said the receivership did not result in any interruption of CrossLand's daily operations. CrossLand's 44 branches, all located in the New York metropolitan area, will conduct business as usual.
Holders of deposit accounts are not affected by the action, which was taken by OTS to protect insured depositors and the interests of the bank insurance fund. Deposits remain insured to the $100,000 legal limit.
The receivership includes only CrossLand's main New York operation and does not affect CrossLand's wholly owned Utah subsidiary, CrossLand Savings FSB in Salt Lake City.
The Utah thrift is a federally chartered stock institution insured by the Savings Association Insurance Fund. It meets all regulatory capital requirements and operates 38 branches -- 32 in Florida, five in New Jersey and one in Salt Lake City.
OTS said it initiated the receivership action because New York's CrossLand was operating 'in an unsafe and unsound condition in that it had insufficient capital, with no prospect of replenishment without federal assistance.'
The FDIC will provide CrossLand with sufficient capital to meet applicable regulatory requirements. The FDIC said $1.2 billion in cash will be provided initially to CrossLand in this recapitalization.
'Congress has mandated that regulators seek the least costly means to resolve failing banks and thrifts,' said OTS Director Timothy Ryan. 'Although other bids were received, the FDIC decided that the least costly alternative available (was) to recapitalize the institution and operate it under new management and FDIC oversight until a final resolution can be effected.'
CrossLand fell upon hard times, the government said, primarily because of a high level of non-performing assets and an over- concentration of high-risk loans.
At year-end 1990, the last full year for which figures are available, fully 49.1 percent of its loan portfolio was composed of higher-risk real estate investments and acquisition, development and construction loans.
CrossLand's asset base continued to deteriorate due to the decline in the New York-area real estate market.
The OTS said that as of Sept. 30, 1991, assets of $1.68 billion, or 21.5 percent of total unconsolidated assets, were classified as substandard, doubtful or loss.
It said management's recent efforts to shed bad assets and restructure problem loans were insufficient to offset the rising loss reserves. CrossLand had been operating under regulatory loan and investment restrictions since December 1990.
CrossLand had net losses of $421 million in 1990 and $308 million for the first nine months of 1991. Government regulators said it was insolvent in that it had negative tangible, core and risk-based capital.
The old CrossLand Savings FSB was a federally chartered stock institution with assets, as of Sept 30, 1991, of $9.25 billion, including the Utah operation; liabilities of $9.33 billion and tangible capital of negative $638.8 million, for a tangible capital-to-assets ratio of negative 7.1 percent. Shareholders will retain no interest in the new thrift.
