The country's biggest thrift, $41 billion-asset Home Savings of America, has begun a push to sell a broader range of consumer loans.
The Irwindale, Calif.-based unit of H.F. Ahmanson & Co. is beginning to sell home equity, auto, and personal unsecured loans in addition to the mortgage loans that are its primary business.
Home Savings also plans to launch a consumer finance company by yearend. Initially, the finance unit will have two offices in Southern California, and will target customers younger than the 50-somethings who come into Home Savings branches.
Ahmanson's chief executive, Charles R. Rinehart, previously held that position with Avco Financial Services, a sizable player in consumer finance. Because he and several other of the thrift's senior executives came from Avco, officials believe they have the expertise to expand this business.
"We're sort of moving much more towards being a one-stop-shopping bank," said William A. Barrett, executive vice president of the new consumer lending division that is overseeing the campaign.
Mr. Barrett conservatively estimates that Home Savings will be able to book $3 billion of home equity, automobile, and unsecured personal loans in the next three years. About $100 million of the loans are expected to be made this year, and $800 million to $1 billion in 1996.
Home Savings plans to keep three-quarters of these loans in its portfolio, and sell the remainder. Mr. Barrett added that these types of consumer loans are two to two and a half times as profitable to make as the mortgage loans Home Savings now focuses on.
While these loans are riskier and costlier to manage, "higher yields more than offset the risk and expenses involved," Mr. Barrett said.
Home Savings started getting the lenders who work in its 111 mortgage lending offices in 11 states to sell home equity loans in May. Mr. Barrett said this product is a natural add-on to the mortgages they normally handle, and has been selling better than expected.
More than 600 applications have been taken, though only 200 were expected by the end of July.
Next month, the company plans to start testing sales of the new consumer loan products in 40 branches. If the tests go well, the program will be expanded to all of Home Savings' 358 retail branches in five states.
Home Savings has nearly completed the hiring of 200 consumer loan specialists to help with the sales effort in its branches. The company also is training other branch personnel to sell the new consumer loan products.
The plan is to have at least one consumer lending expert among the 15 employees - on average - at a branch.
Home Savings also has hired Electronic Data Systems Corp., Plano, Tex., to run the computers and software that will track the new consumer loans.
Mr. Barrett said that Home Savings has been aided by its acquisition last month of 51 branches and $1.25 billion of deposits in Southern California from Household Bank.
Thirty-six of these branches have reopened under the Home Savings name. Mr. Barrett said the employees who worked in these branches were good at selling the types of consumer loans Home Savings is adding.