From a second-floor balcony inside Family Savings & Loan's headquarters, Robert E. Bowdoin gazed down--seemingly with a sense of relief--on the empty teller windows in the quiet banking office.
Just nine months ago, jittery customers lined up outside Family Savings in Los Angeles' Crenshaw district and withdrew about $3 million--a staggering amount for the tiny thrift--as reports about questionable loan practices surfaced.
The run forced Bowdoin, then Family Savings' president, to quickly borrow about $4 million to make sure that the thrift had enough cash to get through the short-lived crisis.
Although deposits are starting to trickle back, Family Savings' woes are not over. A federal investigation has already forced a management shake-up at Family Savings, the nation's second-largest black-owned thrift and a one-time pillar of conservative banking.
The firm's majority shareholder, real estate investor Oliver A. Trigg Jr., resigned last month as chairman and chief executive. Several members of Trigg's management team have quit. Five of the company's seven directors have resigned.
Trigg, under pressure from the Federal Home Loan Bank of San Francisco, has turned control of his shares over to a trustee.
After 15 years at Family Savings, Bowdoin now finds himself the new chief executive of the 40-year-old thrift as well as remaining its president. The task ahead of him is not an easy one.
Headed for New Era
He is trying to restore confidence in the institution at a time when it is losing money after earning record profits just two years ago. What is more, the FBI is investigating possible fraud that is believed to have taken place during Trigg's tenure.
And there is no assurance that Bowdoin and the firm's other top managers will remain if Trigg sells his shares. The former chairman is said to be in sale discussions with two separate investors.
Still, Bowdoin, a graying executive who chooses his words carefully, insists that the worst is over for Family Savings. "I like to think that we are going into a new era at Family Savings. . . . We will gradually work our way out of this total situation."
In many ways, the new era at Family Savings marks a return to the conservative policies of its founder, El Monte hog farmer M. Earl Grant, who died in 1981. Grant eschewed large mortgage loans, automobile loans and other consumer lending, focusing on home mortgages.
Under Trigg, Family Savings did a dramatic about-face. Trigg pushed the thrift into consumer and business lending and endorsed loans for more than $2 million, believed to be the highest ever made by the thrift.
Trigg also aggressively led the company into real estate investment, including a controversial $5.2-million purchase of undeveloped land in Whittier that later attracted the attention of regulators.
Trigg's strategy bolstered profits at Family Savings at first. The thrift reported a record profit of $1.56 million in 1986. But later, profits deteriorated as a $2.65-million loan soured, and Family Savings failed to sell the Whittier land quickly. Family Savings earned just $430,000 last year. During the first three months of this year, the thrift lost $150,000 and expects to lose more money in the second quarter, which ends June 30.
Needs Community Support
Under Bowdoin, Family Savings will make no real estate loans of more than $500,000 unless its board of directors approves. The thrift also will not make any more consumer loans, and plans to steer clear of real estate purchases. Before moving back into riskier areas, "we need to stabilize," Bowdoin said.
With his conservative policies, Bowdoin hopes to regain the confidence of the black community, which has long supported Family Savings. Without that support, he said, Family Savings will have a hard time attracting deposits, the cheapest and most important source of funds for small S&Ls like Family Savings. Its total assets were just $183 million at the end of last year.
Bowdoin and his colleagues have spent a good deal of time on the telephone, soothing anxious customers. The thrift is also exploring ways to polish its image in the community. For example, it recently initiated an anti-graffiti campaign in its neighborhood.
At the same time, Family Savings is making at least a symbolic effort to attract business from non-black customers. For the first time, its revamped board of directors includes one white and one Latino.
However, several of the new directors acknowledge that this gesture probably is not enough. To compete effectively with other institutions, Family Savings needs to expand beyond its two offices, in Los Angeles and Pasadena, and to provide automatic teller machines and other electronic consumer services that are staples at larger banks and S&Ls.