University Savings of Newport Beach to Try Its Hand at Direct Investments : BANKING / FINANCE

University Savings Bank figures it may find its niche by jumping into a risky but potentially lucrative business that many savings and loans are leaving.

The small S&L;, which moved its headquarters to Newport Beach from Fresno early this year, has tentatively agreed to purchase a 75% stake in a shell company that would invest directly in residential and commercial real estate projects, mostly with partners.

A University subsidiary, Unicap Inc., would acquire its stake in California Venture Group in Sherman Oaks for $500,000 and move the operation to Newport Beach, the S&L; said. The deal is subject to regulatory approval and completion of a definitive agreement. The investment would give the unit $675,000 to launch its business.

Many S&Ls; with direct investments are reining in those activities or even shutting down operations because new federal law does not allow them to list their investments as part of their regulatory capital, which is the minimum amount they must have as their final reserve against losses.

University is well capitalized and can afford to use a small part of its capital to engage in limited direct investments, said Thomas J. Bernard, the S&L;’s chairman, president and chief executive. After its purchase, University would still have about $4 million in capital, which would more than support its $80 million in assets, he said.

“An important point is that the legislation does curtail especially smaller S&Ls; from doing direct investments and that’s going to create a significant shortage of cash available to small builders,” Bernard said.

The subsidiary would capitalize on that cash shortage, he said, by investing $1 million to $2 million in each joint venture it forms with small builders to develop small real estate projects in Southern California and the Fresno area, where the 3-year-old University Savings maintains its original branch.