MountainWest Savings and Loan Association, declared insolvent last June, has been acquired by a federal mutual association, created by the Federal Home Loan Bank Board to make the institution more marketable, officials said.
The Ogden-based institution's 10 branches in Utah and Wyoming opened Thursday under federal receivership, but otherwise the change would be unnoticeable to customers. MountainWest's deposits are insured up to $100,000 by the Federal Savings and Loan Insurance Corp. and accounts will maintain the same terms originally negotiated by depositors."This action is a very positive step for MountainWest, its customers and its employees," president and chief executive officer John L. Richards said. "The FHLBB's action separates MountainWest Savings from the problems of its former owner, WINN Enterprises, and positions the company to better attract new capital."
The newly created mutual association has also taken over stock of MountainWest's various financial services subsidiaries. Richards said the company will continue to provide savings, investment and mortgage loan products.
Richards will serve on a new board of directors appointed by the FHLBB. Other directors will be Gail Weggland, former local director of the Securities and Exchange Commission; Burton Cassidy, formerly with Equitable Life Insurance Co. of New York; David Hamblin, private management consultant; and Jeanette Watkins, with the accounting firm Hansen, Barnett and Maxwell.
With MountainWest, formerly a stock company owned by bankrupt, California-based WINN Enterprises, placed in a new federally chartered mutual association, it becomes part of the bank board's management consignment program - the first in Utah and eighth in the country this year.
WINN Enterprises filed for Chapter 11 bankruptcy two years ago.
The MCP is a regulatory tool used to stabilize institutions with severe problems. MountainWest was declared insolvent in June when the institution's $287 million in assets were found $9 million short of covering liabilities.
"Examination reports reveal that under the direction of prior management and the association's parent company, WINN Enterprises, the association engaged in an unsound lending policy that included loan underwriting deficiencies and inadequate appraisals," the FHLBB said.
"These activities have resulted in a large volume of non-performing assets that have eroded the institution's regulatory capital."
Now removed from its troubled owner, MountainWest will operate under the consignment program while regulators evaluate long-term solutions to the institution's financial problems, including searching for a buyer, officials said.