By bits and pieces, often collecting marked-down goods, Household Bank F.S.B. quietly has built one of Maryland's largest thrifts -- and an evolving model for the financial services supermarket of the future.
Its latest deal, the purchase of $220 million in deposits from Pikesville-based Custom Savings Bank, was finalized yesterday. It brings the California-based Household Bank to more than $1.2 billion in deposits in 24 Maryland branches, the third-biggest franchise among state savings and loans, behind Chevy Chase Savings Bank and Loyola Federal Savings Bank.
As Household Bank has grown -- in Maryland and across the nation -- it has become one of the most progressive savings institutions in the nation, borrowing marketing and product ideas from the other subsidiaries of its parent, the financial services conglomerate Household International Inc. in Prospect Heights, Ill.
Household Bank inherited a strong merchandising culture from its parent. "We primarily look at ourselves as retailers and secondarily as bankers," says John G. Moran, a former Loyola College professor and administrator who heads Household's Eastern Division.
Aside from Household Bank, the parent company operates Household Finance Corp., the nation's oldest and largest consumer finance company. It also owns credit-card, mortgage, life insurance, business lending and stock brokerage subsidiaries in the United States, Canada, the United Kingdom and Australia.
Many banks have established nonbank subsidiaries in recent years to regain business they have been losing to competitors. For example, NationsBank Corp. recently established a joint venture with brokerage firm Dean Witter Reynolds; Provident Bank last week created a consumer finance subsidiary.
But Household Bank's roots go deeper in that regard: It was created to complement its nonbank corporate sisters, and bears little physical appearance to pinstriped competitors in banking.
Household Bank's newest branches, for example, were designed an architect who specializes in department stores and other retail outlets, Mr. Moran says. And Household Bank's hours -- 10 to 7 Mondays through Fridays, 9 to 3 on Saturdays -- are longer than those of most other banks.
The familiar retail ambience "gives the customer that sort of warm feeling and the willingness and ability to buy all in one place," Mr. Moran says.
Like any good retailer, the company's consumer emphasis includes cross-marketing. Household International sells its Alexander Hamilton insurance products through Household Bank branches. And the bank has been direct marketing home equity and checking account products to customers of the credit card subsidiary, whether or not they live near a branch office.
The bank, meanwhile, processes customer checks for Household Finance, and uses Household Finance's computer system to process consumer loan applications. Some bank branches also feature products sold by Hamilton Investments, the full-service brokerage that has independent offices in the Midwest.
That vision of customer service attracted Mr. Moran to Household Bank. He marvels at the company's emphasis on training and "horizon-broadening," even for top executives.
Mr. Moran, 47, left Loyola to join Baltimore Federal Financial F.S.A. in 1979 and moved to Household Bank seven years later, becoming eastern region president in 1987. Today, he heads a region that accounts for almost a third of the savings bank's total business and includes Baltimore and Northern Virginia.
Despite the cross-selling, the unbanklike hours and the modern look of its branches, at the core of Household Bank beats the heart of an old-fashioned savings and loan: a heavy emphasis on residential mortgages, few business loans and only a modest level of profitability.
Household Bank, which has $8.5 billion in assets in seven states, was born 36 years ago in Newport Beach, Calif., as Keystone Savings and Loan. Household International acquired Keystone in the name was changed to Household Bank in 1981, and three years later it started an expansion drive fueled largely by acquiring failed savings and loans from the government.
It moved into Maryland in the mid-1980s by buying Baltimore's Fidelity Federal Savings and Loan, which was under government control. Its big splash came with two large government-assisted deals in 1990: $830 million in deposits from the failed Baltimore Federal, and $278 million from Yorkridge-Calvert.
But government deals are not the only kind Household Bank likes. It acquired two healthy thrifts in the Baltimore area -- Sharon Savings Bank F.S.B. in 1989, and tiny Municipal Savings Bank F.S.B. in 1990. Those deals amounted to about $270 million deposits.