BANKING / FINANCE : ITT Bank Takes the Road Less Traveled in Gathering Money

ITT Federal Bank is one of the larger savings and loans based in Orange County, but it is not one of the more typical institutions in the way it gathers money.

The Irvine thrift does not rely on deposits for its growth. Instead, it borrows money at cheaper rates from the Federal Home Loan Bank in San Francisco and from its giant parent company, ITT Corp.

At the end of December, it had $1.24 billion in assets but only $499.6 million in deposits, a ratio of only 40%. Typically, a financial institution’s deposits are 75% to 90% of its assets.

That’s one reason why ITT Bank didn’t make a trade publication’s recent list of the nation’s 300 largest thrifts in terms of deposits. The other eight of Orange County’s nine largest S&Ls; were on the list.

The amount of money ITT borrows, then loans out at higher rates, varies from day to day, said Fredric J. Forster, ITT Bank’s president and chief executive.

“Going into the future, we hope to borrow a quarter to a third of our money from the Federal Home Loan Bank and roughly the same amount from ITT,” Forster said. “The rest would come from deposits.”

With fewer deposits and more low-cost borrowing, ITT’s profit margin has been increasing, he said. “That explains why we can be competitive with the giants like Great Western Bank.”

The other eight Orange County institutions and their deposit ranking by American Banker, a daily trade publication, are:

American Savings Bank (6), Household Bank, (20), Downey Savings & Loan (42), FarWest Savings & Loan (55), Lincoln Savings & Loan (89), Union Federal Savings Bank (103), Western Financial Savings Bank (106) and Beverly Hills Federal Savings Bank, now Beverly Hills Business Bank, (156).

FarWest has since failed and is being operated by regulators. Lincoln failed two years ago and regulators sold its branch system earlier this year.