Charles Rinehart, a mathematician by training, says he has no reservations about tinkering with the time-tested business formula at H.F. Ahmanson & Co.

The formula is elegantly simple: take deposits and make mortgages, preferably of the adjustable-rate variety. But Ahmanson, the nation's largest thrift company, is starting to venture into mutual funds and other new areas. And Mr. Rinehart, elevated to chief executive last month, says he is prepared to take more radical steps if that's what it takes to thrive in the 1990s.

"A savings and loan could conceivably exit any one of its main lines of business," Mr. Rinehart said in a recent interview. "It could stop taking deposits if S&Ls were at a significant disadvantage, and could raise funds in other ways."

Welcome to a new era at Ahmanson. Having weathered a severe shakeout in its industry and an economic collapse in its home state of California, the company is headed for a return to prosperity and, possibly, sweeping changes in the ways it does business.

Four-Year Tenure

Exactly how it all unfolds is in the hands of Mr. Rinehart, 46, an innovative veteran of consumer finance and insurance industries. He has been with Ahmanson just four years - a period marked by a struggle to cope with bad loans.

Now, analysts say, the Irwindale, Calif., company appears to have put most of that burden behind it. And Mr. Rinehart is inheriting a solid company from the legendary Richard Deihl, chief executive for the past 26 years.

The $49.5 billion Ahmanson, parent of Home Savings of America, has been showing improved profits before writedowns in recent quarters, helped by high interest margins. But there are still problems that need tending.

Perhaps most serious, asset growth has stalled, largely because consumers have been shunning adjustable mortgages in order to lock in the lowest interest rates in a generation with fixed-rate mortgages.

Mission to Expand

It will be Mr. Rinehart's mission to resume the aggressive expansion that has marked Ahmanson's 65-year history.

As a relative newcomer to the company, Mr. Rinehart may have an advantage: He has not worked long enough in the giant shadow cast by Mr. Deihl to become frozen in the business strategies that have served the company well in the past.

In fact, he says he open to change at the most basic level possible.

"We look on ourselves as having three basic lines of business," he says. "Loan originations, loan servicing, and deposit taking." But, he said, the company could conceivably withdraw from any of them.

"If we can't compete effectively, we should exit the business," he said. "We may look at entering what have historically not been our basic businesses."

Jonathan Gray, an analyst with Sanford C. Bernstein & Co., New York, thinks product-line diversification could be an important theme for Mr. Rinehart, whose career he has followed closely.

"Clearly, he will look for acquisition opportunities within Ahmanson's main business," the analyst said. "But it's my guess that he will also be looking objectively at diversification possibilities."

Mutual Funds

Indeed, Mr. Rinehart said Ahmanson would probably jump into the second-mortgage business soon. And the company recently joined the investment-products boom by launching its own line of mutual funds, the Griffin Funds.

Such efforts exemplify Mr. Rinehart's determination to squeeze maximum value out of Ahmanson's existing customer base and the detailed marketing intelligence that is available.

Cross-selling, though, is one of the more orthodox elements of Mr. Rinehart's vision for Ahmanson.

Consider his suggestion that Ahmanson could get by without taking deposits - or for that matter without making mortgages.

"We can raise funds in other ways," he said. "We don't have to generate assets through home loan originations. We could do car loans. But right now we don't see any reason to change."

Message to Regulators

In raising these possibilities, Mr. Rinehart appears to be sending a warning to regulators that heavy deposit-insurance fees could drive successful thrifts such as Ahmanson away from the business.

He said Ahmanson could fund its loans through commercial paper or other debt and even securitize home loans into mutual-fund type products for its own customers.

"I hope it doesn't happen, "he said. "But we have to face the fact that government is involved. Punishing S&Ls may punish us right out of the savings deposit business."

Mr. Rinehart - an affable, even-tempered man who once worked as an actuary - joined Ahmanson as president in 1989 after holding the same title at Avco Financial Services. At Avco, a big finance company, he was credited with vastly improving profits through a major restructuring.

Previously, he was an executive vice president at Fireman's Fund Insurance Co.

In surveying the brave new world before him, Mr. Rinehart his hardly turning his back on Ahmanson's historic strength in mortgages. As recently as the late 1980s. Ahamanson was the nation's largest mortgage originator, though it has since slipped to No. 11, according to SMR Research, Budd Lake, N.J.

Mr. Rinehart said he hopes to build Ahmanson's home-loan origination capabilities to the point where it is generating enough volume to feed its own portfolio as well as selling steadily into the secondary market. In the first half of this year, originations hit $8 billion.

He said the company would consider acquiring a mortgage banking company as a fast way to build originations, but he was pessimistic about finding once in today's market at a price Ahmanson would be willing to pay.

Growth Ontside California

Ahmanson will also be expanding its origination capabilities outside California. Mr. Rinehart said he sees the most potential for the company in relatively young areas such as Chicago, Dallas, and Houston.

"We don't need much in the way of any new reach in Californi," he said.

Ahmanson will also be looking to get more mileage out of its existing origination efforts, Mr. Rinehart said.

"Of those customers that apply for loans, roughly a third don't qualify," he noted. "We go through the whole process and get no revenue. We have worked with another lender and they think a third to a half of these rejected applications will qualify by their standards."

He would identify the second lender only as a major consumer finance company.

Regardless of how Mr. Rinehart proceeds, he is clearly starting with a solid base.

David S. Hilder, an analyst in New York with CS First Boston, initiated coverage of Ahmanson last week. "Ahmanson quite simply has the strongest franchise of any savings institution in the country," he wrote in his first report.

"It built that franchise ... by developing a network of mausoleum-like marble-clad branches that project an image of financial strength and stability."

Mr. Hilder and others suggest that Mr. Rinehart is just the right person to carry Ahmanson forward. Says Bernstein's Mr. Gray: "He's noted for being very smart and technically oriented, and he knows the numbers and the systems much more thoroughly than the average CEO."

Mr. Rinehart acknowledges that he has an affinity for numbers. After all, he majored in math at the University of San Francisco. But sometimes he said. his mathematical bent gives him problems.

"Reading about what's going on in Congress is unpalatable," he says. "The rationale for conclusions often defies logic. I tend to be a very logical sort of person, and it disrupts my thinking process."

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