The Federal Home Loan Bank Board announced yesterday the second government bailout of an ailing Virginia savings and loan association in a week.
First Savings and Loan Association of Suffolk was acquired by Citizens Savings and Loan of Richmond, a federal association, at an estimated cost to the Federal Savings and Loan Insurance Corp. of $13.7 million.
Last Monday, Perpetual American Federal Savings and Loan of McLean acquired Guardian Federal Savings and Loan of Silver Spring at a cost of $10 million.
In a separate merger Monday that did not require federal aid, troubled Government Services Savings and Loan of Bethesda merged with Equity Programs Investment Corp. of Falls Church.
First Suffolk, a state-chartered stock association, was closed by the Virginia Commissioner of Financial Institutions during the day yesterday. Its stock is now worthless. The FSLIC agreed to indemnify Citizens against losses on problem loans amounting to $8.2 million made by First Suffolk.
In addition, federal regulators will put in enough money to bring the return on First Suffolk's assets at the time of the acquisition up to the level of Citizens' assets, an estimated total of $13.7 million. That means the government insuror--FSLIC--is paying Citizens to take over First Suffolk, which is cheaper for the FSLIC than letting the savings and loan fail.
The survivor, a federally chartered stock association, will get $111 million in assets and four offices from First Suffolk, bringing Citizens' total to $339 million in assets and 15 offices.
Yesterday's assisted merger was the 24th arranged this year by the FSLIC.