Hawthorne Financial Corp. in El Segundo, Calif., has promised investors to stop making risky construction loans and said it plans to focus on retail banking.

Simone Lagomarsino, Hawthorne's new president and chief executive, told investors this week during a national road show that the $1.6 billion-asset thrift would cross-sell new products through its seven branches in South Bay, an affluent string of beach neighborhoods in west Los Angeles. Hawthorne, parent of Hawthorne Savings, may also open branches in South Bay, where it ranks fifth in deposit share. This is a major shift for Hawthorne, which had focused on high-risk, high-yielding real estate loans under former CEO Scott A. Braly. Its specialties were single-family tract loans and real estate jumbo loans; underwriting for these types of loans is based on the equity in the property rather than a borrower's repayment ability.

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