Downey S&L; Gets in Line for New Business

Bank mini-branches have been popping up all over in Southland supermarkets, but savings and loans haven’t rushed in.

That’s because banks make car loans and other consumer loans that are more in demand than mortgages, the bread and butter of S&Ls.; But Downey Savings & Loan became one of the few S&Ls; to join the checkout-counter crowd.

The Newport Beach thrift is setting up shop this year in at least 40 Hughes supermarkets. The first two are expected to be in new Hughes outlets in Placentia and Aliso Viejo. The 40 full-service mini-branches will boost the S&L;’s network of offices to 94.

Downey hopes mainly to increase its deposit base among local residents, giving it so-called core deposits that are prized because local depositors typically don’t change banks often. It also has an auto financing program that it hopes to sell.

The line between a commercial bank and an S&L; has been blurring steadily for more than a decade, though thrifts still must keep 70% of their assets in home financing. And all signs lead to a merger of the dual system.

Downey’s branches in Hughes stores recognize that “we’re all in the financial services business,” said Stephen W. Prough, Downey’s president. “So whether you call us a bank or a thrift, there’s not much of a distinction anymore.”

James S. Granelli covers financial institutions and fraud issues for The Times. He can be reached at (714) 966-5810 and at james.granelli@latimes.com