The Los Angeles Times from Los Angeles, California • 63

BUSINESS Games Friday, November 2, 1984 CCtPart IV Seeks to Prevent Bidding War for Choice Spots on Waiting List 2 Los Angeles Banks, 1 1 Others Get OK for Units in Other States State Regulating Non Chartered Sales By JOHN O'DELL, Times Staff Writer Attempting to head off a possible bidding war for choice spots on the long waiting list for state savings and loan charters, the California Department of Savings and Loan has begun prohibiting organizers of new from profiting if they sell before opening for business. In some cases, sellers have asked for premiums of $1 million or more for an organization that is high on the state's waiting list, according to Regan Kelly, special assistant to state Commissioner Lawrence Taggart. The rule forbidding the sale for profit of charters is contained in a set of internal guidelines drafted several months ago by Kelly, who discussed them with The Times in a recent interview. He said the policies were set after industry representatives told him that as many as 80 of the 200 organizations seeking charters from the state are now for sale. Only two sales have been consummated, but many other organizers are discussing mergers or outright sales, Kelly and others say, because they no longer can afford to wait for permission to open for business.

The informal guidelines so far are enforceable only because the department has the final say on approving any charter. But Kelly said the department is considering making them formal regulations so that there would be no question about what the department will and will not permit. Many of the on the list, called de novo filed their initial charter applications 18 months to two years ago. A lobbying group for the de novos contends that many organizers are spending more than $1 million a month on salaries, office leases and interest on loans while waiting for final state approval to open. Under the guidelines, Kelly said, applicants that have waited in line get first priority for charter approval.

The next to be considered would be applications in which two de novos have merged, enabling one to "leapfrog" to a choice position. And in cases where investors who were not already on the waiting list buy a de novo, Kelly said, the application will be moved to the bottom of the pile. "In a normal situation we would not be nearly as concerned," Kelly said. "But it is Please see Page 2 Air Has Record Profit By BILL SING, Times Staff Writer Moving another step closer to full-scale interstate banking, the Comptroller of the Currency Thursday tentatively approved applications by 13 bank holding companies, including two based in Los Angeles, to set up limited-purpose banks across state lines. Defying threats that Congress would overturn his approvals, C.

T. Conover approved applications for 29 banks in nine states. The applications must also be sanctioned by the Federal Reserve Board, which is expected also to give them the green light. They then must win final approval from Conover. The applications involve so-called non-bank banks, limited-purpose institutions designed to circumvent the longstanding Bank Holding Company Act, which prohibits interstate branching in part to protect small banks and preserve the safety of the banking system.

332 Non-Bank Banks That law defines a bank as an institution that both accepts deposits for checking accounts and makes commercial loans. However, these non-bank banks would accept deposits but not make commercial loans, or vice versa, thus falling outside current legal restrictions. Of the 29 non-bank banks approved Thursday, 17 will not make commercial loans and the other 12 will not accept checking -account deposits. Forty -seven banking firms have applied for a total of 332 non-bank banks. Conover said he would proceed on deciding the remaining applications despite threats from Sen.

Jake Gam (R-Utah) and Rep. Fernand St Germain chairmen of the Senate and House banking committees, to push legislation closing the loophole and forcing bank holding companies to divest themselves of non-bank banks not approved by July 1, 1983. But Conover, noting that Congress has had plenty of time to close the loophole, said his office has no choice but to proceed. "These banks are clearly legal under existing law," he said. Conover, who supervises 4,700 nationally chartered banks, had announced Oct.

15 that he was ending a series of moratoriums on the approval of such banks for 18 months to give Congress time to act. 10 Applications Pending The two Los Angeles-based firms that won approvals are First Interstate Bancorp, the nation's seventh-largest bank holding company, and Security Pacific the eighth largest. First Interstate won approval for non-bank banks in Pittsburgh and Philadelphia, which will not make commercial loans. It has another 10 applications pending. Security Pacific won approval to set up non-bank banks in Honolulu and King of Prussia, which will not accept checking-account deposits.

It has another 17 applications pending. Other California-based firms with pending applications include No. 2 -ranked Bank America Corp. and No. 14-ranked Crocker National both based in San Francisco.

Among the others receiving approvals were No. 1-ranked Citicorp and No. 3-ranked Chase Manhattan both based in New York. Some of these firms said they would set up non-bank banks despite the congressional threats. "We're not going to wait on Congress," First Interstate spokesman Paul Minch said.

Fourteen limited-service banks, approved before Conover's moratoriums, already are operating, while an additional number are operating under state jurisdiction. WHS I -200 S-fc 3 41 1 2 3 41 1 2 3 0 nn" 19821 1983 I 1984 Net In millions of dollars Profit Loss1 More U.S. Oil Firms to Pay Less for Crude Domestic Cuts Conflict With Gains Elsewhere From Times Wire Services Five more U.S. oil companies Thursday cut the price they are willing to pay for certain grades of crude oil, although prices showed strength on international trading and futures markets. The domestic price cuts followed similar reductions by other U.S.

oil companies earlier in the week and reflected what analysts said was a general pessimism that the Organization of Petroleum Exporting Countries will be able to bring production more in line with world demand. OPEC members agreed Wednesday to trim production by 1.5 million barrels a day to reduce world oil supplies and prop up sagging prices. Meanwhile, new cracks began to surface in OPEC. Japanese trading sources in New York, who spoke only on the condition that they not be identified, said Iran was offering discounts of up to $1.50 a barrel from the official selling price for its open-market sales of light-grade crude oils and discounts of up to 80 cents a barrel for heavy crude oils. Yamani Denies Reports Oil company representatives in the Middle East said discounts of 50 cents to 60 cents a barrel remain available from Abu Dhabi in the United Arab Emi -ates, an OPEC member.

Saudi Arabian Oil Minister Sheik Ahmed Zaki Yamani denied reports that Saudi Arabia had agreed to absorb some of the production cuts from Indonesia, Venezuela and Ecuador if those OPEC members find themselves in a revenue bind. OPEC won some support Thursday when Mexico, which is not a member of the cartel, announced a production cut of 6.7, or 100,000 barrels a day, to help support prices. Domestically, Shell Oil Conoco Phillips Petroleum Diamond Shamrock Corp. and Marathon Oil Co. announced price reductions ranging from 75 cents to $1.50 a barrel.

The companies said their actions to reduce what they will pay U.S. producers were a response to an oversupply of the high-quality, light-grade oils and Please see OIL, Page 2 Major Retailers Report Sluggish October Sales 2 3 1983 improvement is being closely watched by the airline industry and Wall Street, where the size of the 'turnaround was unexpected. "These good earnings are surprising given that a year ago they were virtually on their knees," said Timothy Pettee, airline analyst with L. F. Rothschild, Unterberg, Towbin.

"Today Continental appears a viable carrier and a competitor with whom the other air- 3 4 I 1 1982 Revenues -400 In millions of dollars -300 Filed for chapter 1 1 protection -40 -20 -0 20 -40 "60 -80 2 3 1984 Los Angeles Times lines in the business must reckon." Pettee said that a major factor in Continental's change of fortune was the "significant earnings power" it has now but did not have two years ago, a "clear reflection that the airline's cost structure is drastically different from what it used was." Continental, which is a subsidiary of Texas Air operates its planes at a cost of about 6.2 cents Please see AIRLINES, Page 2 struction was up 4.2 above the August level. Robert Ortner, chief economist at the Commerce Department, said declines the past three months in mortgage interest rates should help to reverse the slide in single -family construction. He noted that sales of single-family homes took a 22 jump in September. "We can be encouraged to look for better times ahead because of the drop in interest rates," he said. "Rates in July were at a level where they were a drag on the economy." But Michael Sumichrast, chief economist for the National Assn.

of Home Builders, predicted that construction spending would edge lower in coming months despite the slight decline in interest rates. "What little strength there is in construction is in the wrong places," Sumichrast said. He said gains in office buildings, shopping centers and multifamily housing won't continue because of major overbuilding in all three areas. The report said non-residential construction was up 5.5 in September to an annual rate of $80.9 billion. Spending on shopping cen-Please see BUILDING, Page 2 Major U.S.

Retailers' Sales In millions of dollars 1 Oct. Oct. 1984 19B3 change Sears 1.815 1 1,779 1 2.1 mart 1.539 1,307 17.8 Penney 908.0 836.0 8.6 Federated 733.0 669.6 9.5 Dayton Hudson 670.7 498.7 14.4 Wal-Mart Stores 550.0 422.0 30.1 Montgomery Ward S20.7 464.7 12.1 Woolworth "4TT0 401.0 2.7 May Dept. Stores 352.4 318.3 10.7 R. H.

Macylnc. 317.0 304.0 4.4 Carter Hawley Hale 313.7 261.2 20.1 Assoc. Dry Goods 301.9 290.7 6.6 Continental Posts Income for Quarter; Pan Am Net Slides By ROBERT E. DALLOS, Times Staff Writer NEW YORK-Continental Airlines, which filed for bankruptcy protection just a little over a year ago, said Thursday that it had net income of $30.3 million in the third quarter, the best quarterly net profit in the Houston -based carrier's 50-year history. The figure represents an earnings turnaround of $107.5 million from the third quarter of 1983, when Continental lost $77.2 million.

Meanwhile, Pan Am the parent company of Pan American World Airways, reported a third-quarter net profit of $5.6 million, a sizeable slide from the profit in the same quarter last year, Pan Am said its results were affected in part by losses from foreign currency exchanges due to the strength of the U.S. dollar. Pan Am operating profit in this year's third quarter was $34.1 million, less than half of last year's $78.5 million. Continental also reported an operating profit for the current third quarter $43.8 million. That figure also was a record and represented a $91 -million improvement from the operating loss that the airline reported in last year's third quarter.

"These numbers are gratifying and provide graphic examples of the traveling public's demand for our low-fare, full-service, quality product," said Continental Chairman Frank Lorenzo. Continental's dramatic financial Clorox Co. Says Product Shifts Depressed Net By JUBE SHIVER Times Staff Writer Oakland-based Clorox which has been adding to its household product line while moving into the paint and food-service fields, said Thursday that, although those moves helped boost revenue, they produced slightly lower earnings in the most recent quarter because of start-up costs. Although famous for its bleach, Clorox which acquired Lucite Paints from Du Pont Co. in July, 1983 has diversified into the restaurant supply equipment and other product areas.

Last summer it undertook a costly expansion of its bottled Hidden Valley Ranch salad dressing and Fresh Step cat litter. "The decision to take Fresh Step and bottled Hidden Valley Ranch (nationwide) at the same time meant that the company would be investing heavily for introductory advertising and promotion of two brands," company President C. R. Weaver told a meeting of the Los Angeles Society of Financial Analysts at the Biltmore Hotel. Weaver also said that sales of Lucite paints have been disappointing but that Clorox has taken steps to improve promotion and store displays to boost sales.

Last month, Clorox reported $258.5 million in sales for the first quarter ended Sept. 30, compared to $241 million for the same period last year. Net earnings were $23 million in the quarter, compared to $23.2 million a year ago, when the sale of the Cream of Rice cereal brand produced a one-time after-tax gain of $2.7 million in addition to the $20.5 million in earnings from operations. Construction Spending Up 1.1; Best Gain Since May es-based Carter Hawley Hale Stores owner of the Broadway, Neiman-Marcus and other chains. While a number of chains had double-digit increases, such gains were far more general earlier in the year.

"The most obvious (factor) is Please see RETAILERS, Page 2 From Times Staff and Wire Service Reports The nation's major retailers said Thursday that they had sluggish sales in October, when unseasonably warm weather discouraged shoppers from buying winter clothes and high interest rates kept down demand for "big ticket" goods. "The numbers are pretty disappointing across the board," said Walter F. Loeb, a retail analyst with the New York investment firm of Morgan Stanley Co. Monroe H. Greenstein, an industry analyst with Bear, Stearns Co.

of New York, described October sales as "poor," particularly for durable goods. October gains from year-ago sales for major retailers ranged from 2.1 reported by Sears, Roebuck the nation's largest retailer, to 30.1 for Wal-Mart Stores a Bentonville, retailer that has opened 104 stores since October, 1983. Sales rose 20.1 at Los Angel 198311984 M1 Currency deposits and thrift institutions. Weekly averages WASHINGTON CB-New-con-struction spending, propelled by gains in office buildings, apartments and shopping centers, rose 1.1 in September, the best increase in four months, the government said Thursday. Spending climbed to a seasonally adjusted annual rate of $315.3 billion in September, 12 above the level a year ago, the Commerce Department said.

The increase was the strongest since a 2.5 gain in May. Since that time, spending dropped in June and July before posting a modest 0.3 gain in August. Rising interest rates have been blamed for the midyear building slowdown, but those rates have been declining recently. In another report Thursday, the government said the rate on conventional fixed -rate mortgages fell to 14.72 in October from 14.90 in September. They had hit a peak of 15.23 in July.

The construction report said spending on residential buildings declined 0.9 in September to an annual total of $132.8 billion. It was the fourth monthly decline in this category. The drop came from a 2.6 fall in construction of single-family homes. Apartment con in circulation, plus demand other checkable deposits at banks and It includes Super NOW accounts. in billions of dollars.

U.S. Money Supply Drops $2.5 Billion NEW YORK CB The nation's basic money supply fell by $2.5 billion in mid-October, the Federal Reserve Board reported Thursday. It was a larger decline than most private economists had expected. Analysts noted that the decline left money-supply growth for the year at the lower end of the range that the Fed has said would ensure steady economic growth without inflation. They said the decline also put pressure on Fed policy -makers, who meet in private next week, to take steps to encourage lower interest rates.

Bond prices, which were up for the day before the money-supply report, extended their gains after its release. Prices on some actively traded 30-year Treasury issues added point to their -point advance for the day in the wake of the report. That meant prices of those issues rose nearly $10 for every $1,000 in face value compared to the previous close. Short-term interest rates also extended their decline for the day. The Fed said Ml fell to a seasonally adjusted $544.7 billion in the week ended Oct.

22 from a revised $547.2 billion the previous week. Ml includes cash in circulation, deposits in checking accounts and non-bank travelers checks. The previous week's figure had been reported initially at $547.4 billion. Please see MONET, Page 2 560 550 540 530 520 Key Money supply Fed target 4-8 510 500 .490 June Aug. Oct.

Los Angeles Times 7 Markets at a Glance Thursday, Nov. 1, 1984 DOW 30 NYSE AMEX NASDAQ WIL8HIHE i i i i i ri i i 9.71 0.74 0.46 0.94 12.129 Dec. Feb. Apr. Sourc: Ftdwal Rmamrv Bomrd..