Downey S&L; Plans Expansion Into Arizona

The ink had barely dried Friday on its agreement to buy and resurrect one insolvent thrift when Downey Savings & Loan revealed that it is considering the purchase of another troubled S&L;, this one in Arizona.

Downey is only considering the Arizona deal, but it does plan to move into that state and already has begun a sizable branch expansion in California.

Downey would like to buy the insolvent Universal Savings in Scottsdale to speed up its plans to open a branch system in Arizona, said Maurice L. McAlister, Downey’s president.

“In northern Arizona, there’s a real need for a good loan operation,” McAlister said. “There’s tremendous growth along the northern border, and we’ve always worked in the outlying areas of the state.”

Owns 15 Shopping Centers

Downey, a major builder of neighborhood shopping centers in California and Arizona, owns 15 shopping centers in Arizona and has built and sold a number of others there. The Newport Beach-based thrift has been eyeing Universal for about a year, McAlister said.

“They have a good feel for things happening in the Arizona market,” said J. Michael Materie, Universal’s president, about Downey’s executives. “They are very knowledgeable about real estate.”

McAlister said any offers or talks would not occur until next year, if at all.

But Downey will probably have to speed up its timetable if it hopes to acquire Universal, which is not related to the Universal Savings in Orange. Federal regulators, who seized the Arizona thrift in May, are seeking bids now, Materie said.

Downey, though, doesn’t need Universal to move into Arizona, McAlister said. It can open up branches through Butterfield Savings & Loan, the Santa Ana thrift that it acquired Friday with $40 million of its own money and $281.1 million in federal assistance.

Butterfield is a federally chartered savings institution and can cross state boundaries to open new branches more easily than can state-chartered Downey, McAlister said. Sometime next year, he said, Downey hopes to begin opening Butterfield branches in Arizona, a process that should be facilitated by Downey’s shopping center operations.

Reserves Building Sites

As it does routinely, Downey has reserved building sites for possible branches at many of its Arizona centers, including several it already has sold. “We have four excellent locations in our centers that we could occupy right now,” he said.

The purchase of Butterfield also gives Downey a market in Bakersfield, where Butterfield has its only other branch. McAlister said Downey is negotiating to buy four more Bakersfield branches from one or more S&Ls; in the area to help it break into the central California market.

Downey has 14 branches in Northern California, 29 in the southern part of the state and is building four more north and east of Los Angeles County.

“The Bakersfield area will fill in our branch system for us all the way to San Jose,” McAlister said.

And while the economy for thrifts might be slowing up a bit in Bakersfield, he said he believes that “you have to be there in good times and slow times. Besides, California is the best market in the world to be in.”

Taking over as president of Butterfield is Richard D. Silver, Downey’s controller. He and Gary R. Steinberg, Downey’s general counsel, negotiated the takeover deal with regulators over the last year and spent most of the past six months shuttling between Downey headquarters and savings industry regulatory offices in Washington and San Francisco to close the deal.

Universal has branches in Scottsdale, Kingman, Bullhead City and Sun City, all locations that McAlister figures are rich with deposits from local residents. Downey owns two shopping centers in Kingman and is building a third, and owns the largest center in Bullhead City.