Household Buys 48 S&L; Branches, Wants More
From an unassuming two-story building on MacArthur Boulevard, near the high-rise office towers populating the business strip along John Wayne Airport, Household Bank has been quietly booming.
The savings and loan, which had only $262 million in deposits at 12 branches in Southern California at the end of December, has nonetheless more than doubled its assets in the last three years by gobbling up thrifts and S&L; branches in six other states.
On Friday, Household made its biggest killing, picking up 48 Southern California branches of failed Imperial Savings & Loan for $14.05 million--the latest step in a buying binge that has boosted its assets from $3.4 billion at the end of 1987 to $7.9 billion at the end of December.
“We’re still looking for more,” said Dinah Keefe, vice president for marketing. “We’re committed to growing. Our primary interest is to grow where we already have an operation.”
The Imperial branch acquisition will add $2.9 billion in deposits to Household’s California operation. Household will close seven Imperial branches and reopen 41 on Monday for business as usual. Household plans to sell or return $400 million in brokered deposits, highly volatile accounts brought in by money brokers looking for high rates.
Household also picked up $2.6 billion of Imperial’s $7 billion in assets, mainly cash, consumer loans, investment-grade securities and mortgage loans. It can also return to regulators all assets it decides that it doesn’t want.
Bank of the West in San Francisco bought Imperial’s remaining 30 branches, with $1.3 billion in deposits in Northern California, for $3.65 million. The sale includes $990 million in cash and consumer and mortgage loans.
The Resolution Trust Corp., which has managed Imperial since it failed, estimated the cost to taxpayers of resolving Imperial at $1.6 billion.
Household’s California operations have shrunk considerably in recent years with the sale of 18 branches, mainly in Northern California.
The northern branches had been involved more in commercial lending activities, while Household wanted to concentrate on consumer and mortgage lending, Keefe said. The branches also were too far away from its Newport Beach headquarters, she said.
The thrift is a subsidiary of Household International Inc. in Prospect Heights, Ill., which is better-known for its consumer finance unit, Household Finance Corp.
Household International entered the S&L; industry by buying a troubled California thrift in 1976. Gradually, it added to the franchise by buying both healthy and troubled thrifts in six other states.
In 1981, the parent firm bought Valley National Bank in Salinas and turned it exclusively into a credit-card operation, mainly for the thrift. Today, that operation has $2.3 billion in receivables and 2.6 million customers nationwide, which makes it the 10th largest bank issuer of credit cards.
In the mid-1980s, Household Bank revamped its marketing effort with the theme of becoming “America’s Family Bank.” In 1988, the parent company decided to launch the bank on an aggressive growth plan.
Household Bank’s capital--its final reserve against losses--exceeds each of the three tough capital standards required by federal law.
