Ben Loveless and his fellow investors in Sherman Oaks Financial Corp. were all set to open a one-branch savings and loan on Ventura Boulevard. They even had the vault put in.
But, despite preliminary approval, the final go-ahead was withheld earlier this year by the Federal Home Loan Bank because Sherman Oaks Financial had changed its application in mid-stream, adding new investors.
So, when it seemed likely that its application for an S&L charter would be denied, the company went shopping for an established savings and loan. And, last week, Sherman Oaks Financial announced it would buy Westmark Savings Bank, an 18-month-old, state-chartered institution in Newport Beach, for which it will pay roughly $3.5 million.
Westmark, which had $40 million in assets as of Nov. 30, was just what Sherman Oaks Financial was looking for. Assuming federal and state approval, the acquisition of Westmark will put Sherman Oaks Financial in the banking business with a going concern that eventually will have branches in two desirable locations--Newport Beach and Sherman Oaks.
The Sherman Oaks branch will open as soon as federal and state approval can be obtained, or about six to nine months, Loveless said.
What's more, said Loveless, Westmark is profitable. Over the first 11 months of this year, it posted net income of $140,000.
Loveless said his group is delighted to get Westmark. But for its current owner, a unit of Primark Corp., a $2-billion diversified holding company in faraway McLean, Va., tiny Westmark Savings was more trouble than it was worth.
Didn't Meet Expectations
Primark, whose primary business is a natural gas utility in Michigan, at first got into banking in the belief that it was a faster-growing business, said investor-relations director John Lewis. But tighter federal regulations after the collapse of numerous S&Ls curbed its growth, making Westmark less attractive, said Paul Naughton, Primark's chief executive.
Westmark was primarily in the wholesale banking business, getting funds through jumbo certificates of deposit and selling loans to other financial institutions. Sherman Oaks Financial, which will change the bank's name to Sherman Oaks Savings Bank, plans to keep the Newport Beach facility in that business.
Consumer, Business Banking
The Sherman Oaks branch, however, will focus on consumers and businesses, Loveless said.
Loveless, 38, heads a group of investors that include Stanley Glickman, a principal of Property Mortgage Co. of Los Angeles, a Sherman Oaks mortgage company; and Lawrence Field, a principal of NSB Associates, a Beverly Hills investment company.
The purchase agreement between Primark and Sherman Oaks Financial is subject to approval by the state Savings and Loan Department and the Federal Home Loan Bank Board.
Loveless, who will be president of the institution, said its headquarters will be moved to 14724 Ventura Blvd., where the group had planned to open its savings and loan in the first place.