Severance Paid to 2 Universal Directors Who Brought In State

Universal Savings Bank reportedly has nearly settled its regulatory woes by paying about $390,000 in severance benefits to two directors who precipitated a short-lived state takeover of the Orange-based institution.

The S&L; also agreed to hire a new president approved by federal regulators.

Universal, which is owned by an Australian company, Unity Corp. Ltd. of Sydney, also has agreed as part of the settlement to put three U.S. residents on its five-member board.

One of the new board members is George C. Hale, the savings and loan’s new president and chief executive officer.

Hale, 42, of Diamond Bar, had been president for the last year of Constitution Federal Savings & Loan Assn. in Tustin, which has lost about $15 million in the last eight years. Previously, he headed Equitable S&L; in Fountain Valley until June, 1986. Federal regulators declared Equitable insolvent and closed it on March 27, transferring its assets to a Woodland Hills institution.

Hale said he was brought in by new owners at both Constitution and Equitable to try to turn them around.

“This is entirely different,” he said. “It’s a healthy institution. It needs some new internal procedures and maybe some new employees, but we can build on what’s here.”

Previously, the only U.S. residents on Universal’s board were Serge B. Woodruff, the institution’s longtime president, and Christopher J. Gadsby, the consultant Unity had hired to help it buy the bank last year.

It was Gadsby and Woodruff who went to the state Department of Savings and Loan in mid-June with allegations that the S&L; was about to make $10 million in loans to Unity’s chairman, Garry Carter, who also is one of Universal’s directors.

Unprecedented Action

The state put the S&L; under conservatorship on June 16, an unprecedented action against a financially healthy institution.

Universal had suspended Gadsby and Woodruff only days before the state moved in. But on June 18, they were reinstated under an order issued by the Federal Home Loan Bank Board, which supervises federally insured S&Ls.;

That order has been the topic of continuing negotiations between the S&L; and the bank board since a Los Angeles County Superior Court judge, in another unprecedented action, ended the state conservatorship on July 8. But the bank board’s order remained.

“We’ve had full and frank discussions with the bank board, and we have reached agreement with them,” said Christopher Blaxland, Universal’s chairman, who also is a director of Unity. “All that needs to be done is that we must propose two more candidates for the board of directors.”

Gregg Golden, a bank board lawyer, would not acknowledge that an agreement existed, but he said that if “everything works out as outlined, the bank board would be satisfied and the cease and desist order would be ultimately withdrawn.”

Details Withheld

Neither Blaxland nor Golden would provide details of the cash settlement that led to the resignations of Gadsby and Woodruff. But one source knowledgeable about the negotiations said Universal paid $250,000 to one of the men and $140,000 to the other.

Gadsby, Woodruff and their lawyer could not be reached for comment.

In addition, Bruce I. Ellner, head of Universal’s commercial lending operation, departed last week. Neither Blaxland nor Ellner’s lawyer, Bruce Landau of Los Angeles, would comment on the details. Blaxland said Ellner “received all of his normal legal entitlements.”

Ellner was one of three commercial lending department employees suspended before the takeover and reinstated under the bank board order. The other two employees remain at Universal, Blaxland said.

The agreement between Universal and the bank board does not affect a 2-month-old FBI investigation into Universal. An FBI spokesman said the agency is still looking into claims of bank fraud and embezzlement.