'I would not be leaving if the ship were sinking.'
Ted C. Hill
president, chief executive,
Investment Savings & Loan Assn.
After nearly 30 years in the banking business, Ted C. Hill has decided to trade his pinstripes for an apron.
Hill, 52, has been president and chief executive of closely held Investment Savings & Loan Assn. since it opened in 1978. But for the past year, he says, he has wanted to move to the San Luis Obispo area, where his children could grow up in the country and be closer to their grandparents.
So he bought a food market in Templeton and a nearby ranch to live on, enabling him to resign as both an officer and director of Woodland Hills-based Investment Savings. He expects to leave the institution by the end of November.
Some Are Skeptical
Some have greeted Hill's move with skepticism, pointing to Investment Savings' sub-par net worth and meager earnings recently.
"Generally, high-priced CEOs don't leave for purposes of opening a grocery store," said Gerry Findley, editor of Findley Reports newsletters, which focus on California financial institutions.
But Hill and Investment Savings Chairman Robert A. Nordskog insist that Hill's departure is motivated solely by pastoral stirrings within the president's bosom, and not everyone in the industry finds that so hard to believe.
"I've often thought I'd like to do that," said Gene Cazier, vice president of finance at Encino Savings & Loan. "The regulators are really tough now on small institutions. Everybody feels like they're on the hot seat."
Perhaps particularly so at once fast-growing Investment Savings, which had assets of $316.7 million as of Aug. 31, but earnings of just $103,000 during the first eight months of the year. Moreover, its net worth amounts to just 2.1% of its assets, below the 3% minimum generally required by federal regulators.
Mark to Be Achieved
As a relatively new institution, Investment Savings need not meet the standard of a 3% net worth until 1989, said board member Herbert F. (Bert) Boeckmann II, owner of Galpin Motors, a Sepulveda auto dealership. But Boeckmann and Nordskog acknowledged that federal regulators have reminded the institution that its net worth should be higher. Boeckmann said the 3% mark is likely to be achieved long before the deadline.
Investment Savings officials also say that earnings soon will be on the upswing. Richard Voll, chief financial officer, said earnings may soon get a $400,000 boost because a large loan classified as a bad debt appears likely to be repaid.
More important, Hill said, Investment Savings is now lending almost exclusively for single-family homes and has de-emphasized commercial lending. He said it also is increasingly a mortgage banker, initiating loans and then reselling them to other institutions. By concentrating on selling and servicing loans, the theory goes, profits and net worth can be improved while taking on little added risk or assets.
Investment Savings' assets, in fact, are down slightly from the end of last year's third quarter, when they stood at $324.5 million.
Six Branches Remain
The institution still gets 20% of its deposits in the form of volatile large deposits that are lured by costly high interest rates but can be lured away just as easily. Hill said the risks are minimized by mortgage banking: funds aren't tied up for long periods, so they are available if depositors want to take their money out.
In another move to curtail its asset growth, Investment Savings has sold its branch in Montecito, and is about to sell another in Pacific Palisades. That will leave it with six branches--two in Woodland Hills and the others in Agoura, Encino, Northridge and Simi Valley.
Hill and Nordskog said that, despite its ups and downs, Investment Savings, with 415 shareholders and 170 employees, is now on firm footing. Nordskog said that he was sorry to see Hill go, and that he had so much faith in the S&L's president that he offered to bankroll him in any business he wanted to enter.
Hill said his independent purchase of the Templeton food market fulfills a dream he and his wife, Diana, have had of working together, raising their family in a rural setting and being close to family. His wife's parents live in San Luis Obispo.
For Hill, the move also is a return to his small-town roots. He was born and raised in Farina, Ill., about 80 miles east of St. Louis. He began college at the University of Illinois, Champaign/Urbana, but interrupted his studies in 1954 to join the Navy.
After finishing his Navy stint in California, Hill resumed his education at UCLA. In 1959, while attending school, he got his first job in the area, as a teller in Burbank for what was then Pioneer Savings, now part of Gibraltar Savings.
Eight years later, Hill was named assistant treasurer for the S&L. In 1969, he moved to Century Federal Savings & Loan in Santa Monica, where he was senior savings officer. He left Century Federal in 1978 to help establish Investment Savings.
Now, Hill says, Investment Savings is strong enough for him to leave the job to someone else.
"I would not be leaving if the ship were sinking," he said.
Nordskog said no replacement has been found.
"We've been interviewing like crazy," he said.