Home Federal Requests to Form Holding Company
Home Federal Savings & Loan hopes to form a holding company that would house its existing S&L; as well as “permit expansion into a broader range of financial services and other business activities,” according to proxy materials released Tuesday.
A HomeFed spokeswoman offered no explanation for the timing of its holding-company application made last month with the Federal Home Loan Bank Board, saying only that the move was necessary to facilitate HomeFed’s eventual move into non-traditional S&L; businesses.
Diversification of Services
Under the proposed holding company, HomeFed’s S&L; business would continue to expand its existing consumer banking and real estate lending and development business. But the holding company would eventually move into “more diversified financial services” that would bolster the corporation’s non-interest income, according to the proxy.
HomeFed’s “ability to act promptly to take advantage of any desirable acquisition opportunities that may arise in the future would be seriously jeopardized if formation of HomeFed Corp. is deferred,” according to the proxy.
The holding company would “provide greater operating flexibility” than the existing, publicly traded S&L;, according to the proxy statement.
Industry analysts on Tuesday applauded HomeFed’s decision to reincorporate as a Delaware-based holding company.
“This is a very attractive option for an S&L;,” according to Mike Wilson, director of research for the Chicago-based U.S. League of Savings & Loans. “Many of the larger institutions already have created holding companies.”
The Federal Savings & Loan Insurance Corp., the agency that insures S&L; deposits, restricts which businesses an S&L; can enter, according to Wilson.
However, “a holding company creates a corporate fire wall that separates those non-FSLIC businesses from the S&L;,” Wilson said. “A holding company could, for instance, acquire a (Federal Deposit Insurance Corp.-insured) bank that would be separate from the FSLIC-insured S&L.;”
HomeFed shareholders will vote on the restructuring at a special meeting Aug. 12. Stockholders would receive equal numbers of holding-company shares in exchange for their existing S&L; shares. The proposed holding company must also be approved by the Federal Home Loan Bank Board and the Internal Revenue Service.
