Beverly Hills Savings to Become Bank : Banking Firm Seeks More Ailing Thrifts to Purchase

The Michigan banking company that owns Beverly Hills Savings Bank is looking for more ailing California savings and loans to buy and will eventually turn the entire operation into a commercial bank.

Though no timetable has been set, converting the Mission Viejo-based S&L; to a bank is an “inevitability,” Robert J. Mylod, chairman and president of Michigan National Bank, said in a recent interview.

Michigan National did not buy Beverly Hills Savings last December with the intent of converting it into a bank, he said. But the month-old federal law that bails out the S&L; industry’s deposit insurance system has limited a thrift’s business opportunities to mortgage lending, making a banking charter more attractive, he said.

The company cannot turn Beverly Hills Savings into a bank before 1991. California law prohibits investors outside an 11-state western region from buying banks in California or converting S&Ls; into banks until full interstate banking is permitted in January, 1991.

Michael Milunovich, an industry analyst with Robert W. Baird & Co. brokerage in Milwaukee, predicts that Michigan National will move quickly to convert the S&L; to a bank.

“I’m sure they want to convert it then so they can widen the product line,” he said.

Between now and 1991, the company can beef up its Beverly Hills Savings team to prepare it for the kinds of investments--such as commercial loans--that have been staple banking products but unfamiliar to most S&L; operators, industry analysts said.

Owning a California savings institution has fit well in Michigan National’s business strategy since the Dec. 31 purchase. Federal regulators seized the S&L; in April, 1985, and operated it until selling it to Michigan National on Dec. 31.

“Michigan National has been increasing its mortgage banking business in the last few years, and this purchase is more in tune with that,” said Michael Granger, an analyst in the New York office of Cleveland’s Prescott Ball & Turben brokerage.

The Michigan firm has revived Beverly Hills Savings’ mortgage banking operations to take advantage of what Granger and others say is an attractive mortgage banking market--Southern California.

Meantime, Michigan National plans to buy more thrifts and banks to build up its market share in California and in Texas, where it bought a small Port Lavaca bank earlier this year. The company will be shopping primarily for failed institutions that can be had for bargain prices.

“We hope to be part of the clean-up process of the S&L; industry,” Mylod said. “One of the things we hoped we could do with the purchase of Beverly Hills Savings is bring some good management to those troubled assets and remove them from the books with as little cost to the government as possible.”

He hopes his company’s effort places it in good stead when it negotiates with regulators over future purchases.

Milunovich said Michigan National, that state’s second largest banking firm, “looks like it’s establishing a national presence.” While other large Michigan banks are moving into adjoining states, only Michigan National has invested in the West and the Southwest.