BANKING ON NEW SERVICES : HOME SAVINGS SHIFTS APPROACH TO BUSINESS FOR CHANGING CLIENTELE.

Byline: Saul Hansell The New York Times

The bright California sun filters through the stained-glass windows, creating a reverential mood in this cavernous edifice. Decorated with elaborate mosaics, bronze statues and lots of marble, it is a stolid temple of thrift - one of many erected by Home Savings of America in affluent suburbs like this one, outside Los Angeles, in the years after World War II.

The ornate branches gathered enough of the growing wealth of Southern California to make Home Savings the nation's largest and in many ways most successful savings and loan. But on this spring afternoon, a slender banner dangling over a half-dozen tellers bears a simple announcement: ``We now offer home equity, automotive, personal loans and credit lines.''

This would hardly be worth noting nearly anywhere else. At Home Savings, though, it is no less than heresy.

Home Savings thrived for more than a century by largely sticking to a simple dogma: Harbor the savings of people at or near retirement and funnel the money into home loans for young families. While other giant savings and loans were crashing into ruin, Home and its owner, H.F. Ahmanson & Co., returned even more devoutly to this regime five years ago after a modest but painful diversion into real estate development.

But with those losses and those caused by falling home prices largely behind it, Home is abandoning its creed. Charles R. Rinehart, the 49-year-old chairman of Ahmanson, wants to transform it into a full-service bank with loans, business accounts and the like. Indeed, it will finally add the word ``bank'' to its name - probably becoming Home Savings Bank of America - a decade after similar rechristenings at most other savings and loans.

Rinehart's goal is to refocus Home Savings on a low- to moderate-income clientele, acknowledging the demographic change in his own customers and, more generally, in California, as well as the competition for the affluent from the state's two giant banks - Bank of America and Wells Fargo.

Home Savings, in short, has finally discovered that the savings and loan business is fundamentally an anachronism. Traditional savings and loan products - savings accounts and mortgages - are now offered on such good terms elsewhere that profits are meager at best.

What is more, savings and loan clients are literally dying off: 45 percent of Home's deposits are in the hands of people over 65; their children send their savings to mutual funds.

Congress, meanwhile, is considering merging the savings and loan regulatory system with that for banks, although savings institutions can now offer almost all bank products.

Ahmanson, moreover, must adapt to the changing landscape here. No one expects a return of the surging real estate market that made mortgage lending virtually foolproof. And rising Asian and Latino immigration is changing many neighborhoods that Home Savings entered decades ago.

As the banner in Arcadia heralds, Home branches have started making personal loans, and Home has opened finance company offices to lend to an even less affluent population. New offices will be tiny storefront models. Sanctified spaces like the Arcadia branch may be divided, with corners rented out to a Kinkos copy center or a McDonald's Express.

Rinehart's heresies have not been universally appreciated among Ahmanson's directors or at its headquarters in Irwindale, a bleak patch of gravel pits and beer distributors. And that is why the full dimension of his vision is only now emerging, two years after he took over.

``There was a lot of internal debate,'' Rinehart acknowledges. ``And in one sense the opponents were kind of right. The idea of getting into a business you don't understand is fraught with peril. But ultimately it became clear to everybody that the business we were in was not viable.''

Rinehart's plan remains fraught with peril. Efficiency drives will mean laying off hundreds of longtime employees. Those who stay will have to adjust to a new regime that values profitability and sales targets, a far cry from the tradition of low-key service.

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Photo

Photo: Charles R. Rinehart has led Home Savings of Americain a new savings and loans era.

The New York Times