Magnate John Mabee Buys Into Bank of S. Calif.

Horse breeder, supermarket chain magnate and insurance company owner John Mabee has made an investment in Bank of Southern California that, if approved by regulators, will give him a more than 20% stake in the institution, Mabee’s son, Larry, said Thursday.

Mabee made the investment along with 14 other investors as part of a 400,000-share, $2-million private placement of stock and warrants completed July 31, Bank of Southern California President Ronald Bird said Thursday.

Bird refused to say specifically how much of the $2 million was put up by Mabee. Larry Mabee confirmed published reports that the investment was enough to give his father a “slightly more than 20% interest” in the institution. The elder Mabee was unavailable for comment Thursday.

In recent years, the bank has suffered from serious loan problems that caused it to lose a total of $2.15 million in 1984, 1985 and 1986. Since 1985, the bank has been operating under a cease-and-desist order issued by regulators that restricted its business activities until its primary capital-to-assets ratio was “enhanced” to 7% or more, Senior Vice President Ernest Ewin said Thursday.

The proceeds from the private sale of stock and warrants will increase the bank’s capital-to-assets ratio to 8.6% from 5.1%, Ewin said. As of June 30, the bank had $59.6 million in assets.

For the first six months of 1987, the bank posted a profit of $203,000, and bank officials say the institution’s bad loans have been substantially swept from the books. Gerry Findley, publisher of Brea-based Findley Reports, a bank-rating publication, said that Bank of Southern California appears to be in the midst of a “real turnaround.”

Bird and Ewin took over the bank’s management in the spring of 1985 and have since attempted to rid the bank of more than $7 million in problem loans and steer it away from its reliance on high-interest, short-term brokered deposits that in early 1985 totaled $28 million.

Through emphasis on customer service, Ewin said the bank has been successful attracting non-interest-bearing accounts such as corporate and personal checking accounts. Meanwhile, brokered deposits at the bank have been reduced to a total of $900,000.

Mabee, 66, is chairman of Big Bear Super Markets, which has 21 locations in San Diego County. Mabee also owns Par Liquor Stores and Cook’s grocery stores in Imperial County, in addition to Golden Eagle Farm, a Ramona horse farm with more than 400 thoroughbreds.

Larry Mabee, 44, who was elected Tuesday to the bank’s board, said his father’s horse farm is among the top 10 in the nation in breeding revenues.

The elder Mabee also owns Golden Eagle Insurance of San Diego, a property/casualty and workman’s compensation insurer that will write $200 million in policies in 1987, Larry Mabee said Thursday.

As part of their investment, Mabee and the other investors received 400,000 stock warrants exercisable over the next four years at $5.50 per share. Bank of Southern California shares have traded in the $6 bid range over the counter recently.

Ewin said the bank expects approval of the private stock placement from the federal comptroller of the currency within 60 days.