Bank to Shut Branches at 170 K mart Stores : 1st Nationwide Focuses on Acquisition Program

In a major reversal of a much publicized move into K mart stores, First Nationwide Bank said Friday that it will cease offering banking services at convenience branches located in 170 outlets of the discount chain.

The San Francisco savings bank, owned by nation’s second-largest thrift holding company and a subsidiary of Ford Motor Co., is the latest major financial institution to withdraw banking services from a retail chain. Attempts by banks and other major retailers, notably Sears Roebuck, to provide one-stop shopping for financial services have been largely unsuccessful.

Two years ago, Sears Savings Bank closed all but one of its 41 branches located within Sears stores in California. That same year, Security Pacific Bank and J. C. Penney ended a pilot program offering loan and investment products at financial centers in J. C. Penney stores in San Francisco, Sacramento and Stockton.

First Nationwide, which has been owned by Ford since 1985, said its 170 branches in K mart stores--71 of them in California--will be closed March 10. Account holders will be notified this week, and their accounts will be transferred to nearby full-service offices of First Nationwide.

A spokesman for First Nationwide said Friday that the K mart branches accounted for about $200 million in deposits of the thrift’s total deposits of $71 billion.

Priorities Changed

“Although we learned much about offering financial services in a retail environment, we have concluded that convenience branches in K marts don’t fit the company’s new strategic focus on its target markets and profitable operations,” Robert E. Lackovic, First Nationwide chairman and chief executive, said in a statement.

“K mart has given us strong support and we have an excellent relationship, but the bank has found it necessary to change its priorities,” he added.

The bank’s holding company, First Nationwide Financial, has embarked on a massive acquisition program over the last year that has dramatically cut into its profit. For the nine months ended Sept. 30, it had a profit of $11.6 million and reported that it owned assets worth $23.5 billion. The year before, profit for the nine-month period totaled $51.5 million, and assets were $16.1 billion.

The change in strategy reflects new management under Ford ownership and an expansion program pegged to acquisitions.

Several Acquisitions

First Nationwide’s main priority will be to integrate into its existing operations the 150 S&L; branch offices it has bought during the last year. The result will be a network of about 330 conventional branches in 15 states.

Among the S&Ls; it has bought are Columbia Savings and Mile High Savings in Denver; Pathway Financial and Uptown Savings, both in Chicago; Cardinal Federal in Cleveland; Lincoln Federal in Westfield, N.J., and Bloomfield Savings and First Dearborn Federal, both in Detroit.

“The new strategy is to go to full-service banking in brick and mortar branches now that we have the resources of Ford and the new acquisitions,” a First Nationwide Bank spokesman explained.

First Nationwide, during the tenure of then-Chairman Anthony M. Frank, moved into K mart in 1984. Frank, who left in February, 1988, to become U.S. postmaster general, used the expansion into the retail outlets as an inexpensive and quick way to open branches. Banking services were offered at 164-square-foot kiosks.