Federal regulators yesterday shut down five savings and loan institutions in Louisiana with assets totaling $563.7 million, saying the S&Ls grew too fast and made investments that were too risky.
The federally insured deposits at the S&Ls were transferred to a mutual savings institution that regulators created seven weeks ago to handle deposits of another failed thrift in the state, they said.
A mutual institution is owned by depositors.
The estimated cost of the five failures to the Federal Home Loan Bank Board, which regulates S&Ls and insures deposits up to $100,000, is $280.9 million, regulators said.
The five closings bring the number of S&Ls liquidated this year to 11. The S&L industry has been strained by increased competition stemming from deregulation and by a drop in oil and real estate prices that has soured many risky loans.
Four of the failed S&Ls are federally chartered, federally insured institutions in or near New Orleans: Audubon Federal Savings & Loan, with assets of $223 million; New Orleans Federal Savings & Loan, with assets of $115.3 million; North Lake Federal Savings & Loan, with assets of $100 million; and Crescent Federal Savings Bank, with assets of $87.2 million.
One was a state-chartered, federally insured thrift in Baton Rouge: Community Savings & Loan, with $38.5 million in assets.
The assets of the five S&Ls were transferred to Horizon Federal Savings & Loan, a mutual savings bank regulators set up in Baton Rouge in April. Horizen is managed for the bank board by a subsidiary of Dixie Savings & Loan, a New Orleans thrift with assets of $1.3 billion.
Regulators said that they expect less than $8 million in deposits are uninsured. Individual deposits above $100,000 are not insured, and those who deposited such sums must wait for the thrifts' assets to be liquidated to learn how much of each uninsured dollar they will get back.