Shamoon to Stress Liquidity at Apple
If learning the pitfalls of commercial lending is good training for the top financial post at a savings bank, then Alan Shamoon is well suited to his new job.
The 10-year veteran of Chemical Banking Corp.'s finance division has just been named chief financial officer of Apple Bank and treasurer of its parent, Apple Bancorp.
Adopting a strategy that many commercial bankers now use, Mr. Shamoon said he intends to favor liquid investments over loans.
Rx for Success
His three-pronged prescription for a successful savings bank: Minimize credit risk; clamp down on expenses; and develop some ability to use money-market investments.
"You take in deposits; you tack on minimal expenses; and you lay it off at low risk," he said. "It's not brain surgery, but it's what works."
His last post at Chemical was as chief of staff for the capital markets group. Before that, Mr. Shamoon was director for several years of asset-liability management.
During his tenure, Chemical's core funding increased sharply, giving the company a competitive advantage, in Mr. Shamoon's view. Deposits now fund 90% of Chemical's loan portfolio, up from 50% five years ago.
100% at Apple
Apple, where deposits accounted for nearly 100% of total liabilities at Sept. 30, has the same philosophy.
Mr. Shamoon said he is also bringing an affinity for low-risk assets. Chemical found itself saddled with billions of dollars in souring loans in recent years, and Mr. Shamoon has no interest in seeing lots of similar problems surface at Apple.
"You don't want to just turn around and put [new money] in new real estate loans," he said.
Mr. Shamoon's influence was evident last week when Apple bought $10 million in asset-backed securities issued by a Chrysler Corp. unit. The yield on the securities will float 50 basis points over the one-month London interbank offered rate. The yield today is roughly 5.8%, well above the Treasury bill rate of about 5.16%, though the Chrysler securities are expected to carry a triple-A rating.
Appetite for Government Paper
Not that Apple dislikes government securities. In the first nine months of the year, holdings of government securities increased more than fivefold, to $190 million.
Apple, the 36th-largest thrift in the country last December, was acquired by the real estate developer Stanley Stahl late in 1990 after protracted resistance by management. He has since installed a chief executive officer, William Laraia. And with Mr. Shamoon joining controller George Hornburg, the financial team is also in place.