Troubled Beverly Hills Savings to Sell Its Visa Portfolio to Household Bank

Financially beleaguered Beverly Hills Savings & Loan has agreed to sell its money-making Visa credit card portfolio to Household Bank, N.A., for slightly more than the $38 million in outstanding debt owed by cardholders.

The deal, approved by federal regulators, is expected to close July 28, said David B. Bretoi, president of Beverly Hills Savings, which is based in Mission Viejo.

The transaction is relatively insignificant in the multibillion-dollar charge-card industry, but it means that a dozen people can keep their jobs and not worry about the future of the insolvent institution.

All 12 of Beverly Hills Savings’ credit card employees have been offered jobs at Household’s Irvine credit card operation, Bretoi said.

The sale proceeds, he said, will be used to pay off some of the cash advances that Beverly Hills Savings has received from the Federal Home Loan Bank of San Francisco, which oversees the thrift industry in three Western states.

Household Bank, N.A., in Salinas is the credit card subsidiary of Household International, a Chicago conglomerate. Other subsidiaries include Household Bank, F.S.B., a six-state federal savings bank based in Newport Beach, and the more familiar Household Finance Corp.

Household has been aggressively grabbing market share in the credit card field since it bought Valley National Bank in Salinas in 1981. Last year, it bought Avco National Bank, a credit card operation in Irvine.

It is now the 15th largest bank card issuer in the nation, with about 1 million cards in the hands of customers in 35 states, said Joseph Saunders, the bank’s president. It has about $1 billion in receivables, he said.

“Beverly Hills Savings had the types of accounts we wanted and a facility close to ours, and the computer conversion of accounts is going to be easy because we use the same processing company,” Saunders said.

Of the 20,000 accounts Household will be acquiring, about 12,000 are customers who have been issued “premium” credit cards, he said.

Three years ago, Beverly Hills Savings became the first S&L; in the nation to be seized by federal regulators and put into receivership under the government’s management consignment program, which allows S&Ls; to continue operating with new managers hired by regulators.

Since the takeover, the thrift has been the target of congressional, civil and criminal probes, but a lack of money has prevented the Federal Savings and Loan Insurance Corp. from closing its doors and refunding about $2 billion in deposits.

The S&L;’s liabilities at the end of March exceeded its $1.6 billion in assets by $561.5 million, according to regulatory statistics. In the last three calendar years, Beverly Hills Savings lost $777.5 million. It lost an additional $21.6 million in this year’s first quarter, according to regulatory figures.

Bretoi, a First Nationwide Savings executive heading the team hired by regulators, said Beverly Hills Savings is selling its viable assets as regulators look for ways to avoid closing the S&L; and paying off depositors.