Beverly Hills S&L; Leaves Home Loan Business : Mission Viejo-Based Thrift Closes 7 Offices; Consumer Branches Not Affected

Unable to sell its mortgage banking operations, troubled Beverly Hills Savings & Loan shut down its seven loan production offices Wednesday and got out of the home lending business.

The action, effective immediately, put out of work about 40 employees from Ventura to La Jolla. They will receive a minimum of two weeks’ severance pay, said David Bretoi, the S&L;’s president.

The decision to close the mortgage banking division does not affect the S&L;’s five consumer branches, but it does mean that the Mission Viejo-based thrift won’t be making any home loans out of those offices, he said.

“We will no longer make new single-family residential loans,” he said.

All loans in process, though, will continue to be processed and funded, said Bretoi, a First Nationwide Savings executive who heads Beverly Hills Savings under contract with federal regulators. Regulators declared Beverly Hills Savings insolvent and seized it in April, 1985.

“It’s unfortunate,” he said. “We’ve been attempting to sell our mortgage banking operation for the past four or five months, but we’ve been unable to find a purchaser.”

The Mission Viejo-based thrift had been funding about $300 million a year--or about $25 million a month--in home loans, but that amount had been dropping dramatically this year because of higher interest rates, he said. As rates go up, he said, “demand for mortgages goes down.”

The loan offices funded only $82 million in loans in the first six months of 1988 and little more than $16 million last month. The operation has been losing money for the last three months or so, Bretoi said.

The offices are located in Los Angeles, Ventura, Tarzana, West Covina, San Bernardino, Cerritos and La Jolla.

The decision to close down mortgage operations was strictly an economic one, Bretoi said. While it reduces overhead, it does little to affect the S&L;’s balance sheet.

Beverly Hills Savings has been selling profitable operations in an effort to meet interest expenses on its deposits. This year, it has sold its pension consulting subsidiary and its Visa credit card operation for a total of more than $43 million. It expects collect nearly $20 million more on the pending sale of its loan servicing unit.

In the first six months, the S&L; lost $63.5 million.

At the end of June, the S&L;’s jumbo deposits--$90,000 to $100,000 certificates of deposit--accounted for $1.1 billion of the $1.7 billion in total deposits.

Its assets have shrunk below the $1 billion mark to $975 million, giving the thrift an accumulated deficit of $973 million under generally accepted accounting principles.

Using more relaxed regulatory accounting, the S&L;’s deficit at the end of June was $582 million. Either way, it’s the largest amount of red ink among the nation’s 400 insolvent thrifts.