Wilshire Financial Services Group Inc., which was based in Beaverton, Ore., has moved out of the state and will soon change its name and president to reflect a shift in focus to California banking.
The $1.2 billion-asset company said this month that Joseph W. Kiley 3d will succeed Stephen P. Glennon as the president and chief executive officer when Mr. Glennon resigns next month. Mr. Kiley is the president and CEO of Wilshire’s $911 million-asset First Bank of Beverly Hills, which is based in Calabasas, Calif.
Wilshire, which recently moved its own headquarters to Calabasas, also said it plans to change its name to Beverly Hills Bancorp.
Edmund Kaufman, its vice chairman, said all of its recent actions reflect the board’s desire to be more aligned with First Bank, particularly since the company sold its mortgage loan servicing subsidiary, Wilshire Credit Corp., for $49 million last month to Merrill Lynch Mortgage Capital Inc., a division of Merrill Lynch & Co.
Wilshire Credit and the Beaverton headquarters were Wilshire’s last holdings in Oregon.
“Now that we’re no longer servicing mortgages in Oregon, there was no reason to stay there, and we just want to concentrate on the bank now,” Mr. Kaufman said in an interview Monday.
Wilshire had made money with its servicing subsidiary, but the board believed the parent company now has more expertise on the banking side, Mr. Kaufman said. Wilshire Credit Corp.’s specialty is subprime mortgage servicing, a business where Merrill is more experienced. Wilshire’s board consists mainly of professionals from the banking industry.
“All of our plans at this point is for internal growth at the bank,” Mr. Kaufman said. “It’s very well capitalized, and we have good individuals working there.”
In 1999 the Office of Thrift Supervision deemed First Bank a troubled institution, because of inadequate loan-loss reserves and other concerns. A year later it switched its emphasis from single-family mortgages to commercial real estate and apartment loans. Mr. Kiley, a longtime expert in those lines of business, was hired in March 2001, and First Bank’s performance has steadily improved since.
Wilshire’s net income for the first quarter rose 36%, to $2.1 million. Though that figure includes income from the servicing unit, higher net interest income as a result of increased loan originations also helped, Wilshire officials said.
By freeing up the board to pay full attention to First Bank, the sale of the servicing unit will help propel the bank much farther, Mr. Kiley said in an interview Tuesday.
“First, we’re definitely going to grow into our capital” of roughly $130 million, he said. “In five years we want to have $2 billion in assets, but we want to keep a very simple approach” — focusing on commercial and apartment lending “and keeping our branch network to a minimum.”
First Bank will open at least one branch this year, in Calabasas. Additionally, officials are considering whether to exchange First Bank’s thrift charter for a state commercial bank one.
Wilshire’s current focus on traditional banking is worlds apart from its strategy during most of its history, particularly in its early years, when it also had a subsidiary that bought and sold underperforming real estate loans.
Andrew Wiederhorn and Lawrence Mendelsohn, the original CEO and president, respectively, were considered banking prodigies when, still in their 20s, they founded Wilshire in 1987. Within its first five years its assets skyrocketed to $1 billion.
At that time Wilshire used First Bank — a tiny thrift at the time — primarily to fund the activities of its other subsidiaries.
However, the founders’ fast-growth strategies were based on poor underwriting standards, which drove Wilshire to bankruptcy in 1999, Mr. Kaufman said.
A new board fired the two founders in September 1999 and then concentrated on improving the company’s fundamentals, he said. Now it wants to become even more conservative by directing most of its attention to banking. (However, it will still operate a smaller nonbanking subsidiary, Wilshire Funding Corp., which invests in mortgage-backed securities.)
Wilshire also announced that Mr. Glennon will remain a director of both the company and the bank.
