Calfed's Harshfield Is Driving Hard to Achieve His Vision of a Turnaround

By Zuckerman, Sam | American Banker, April 25, 1994 | Go to article overview

Calfed's Harshfield Is Driving Hard to Achieve His Vision of a Turnaround


Zuckerman, Sam, American Banker


LOS ANGELES -- Six months after taking control of California Federal Bank, Edward G. Harshfield doesn't just run the institution -- he utterly dominates it.

During his brief tenure as chief executive of Los Angeles-based California Federal, Mr. Harshfield has indelibly stamped his brand on the nation's seventh-largest thrift.

He is close to completing one of the most ambitious turn-around exercises ever attempted in the savings industry. His five-part strategic plan promises to clean up a deeply troubled institution that was short of capital and burdened with bad loans. Mr. Harshfield says he will turn California Federal into a consistent money-maker.

By summer, when all elements of the plan are finished, California Federal will have "a healthy balance sheet and positive earnings that will gain a lot of momentum," predicted Campbell K. Chaney, a San Francisco-based analyst with Dakin Securities.

'He'll Crush You'

By virtually all accounts, this is a considerable feat. But to achieve it, the 57-year-old Mr. Harshfield has run roughshod over everything and everyone that has gotten in his way.

He contemptuously dismissed the appeals of shareholders who pressed for an early sale of the institution and complained that Mr. Harshfield's capital-raising initiatives diluted their holdings. He imposed his will on a fractious board, forcing one dissident director to resign and cowing another into silence.

And he didn't merely elude the takeover campaign of Golden West Financial Corp. chairman and chief executive Herbert M. Sandler. He humiliated him by painting his Oakland-based rival as a cheapskate trying to steal California Federal at a fire-sale price.

"He bulldozed over the old shareholders," said one stockholder who asked not to be identified. "You are either with him or against him, and if you're against him he'll crush you."

But that same stockholder added that he had grudgingly come to admire the focus and determination of California Federal's CEO, noting, "You needed somebody as ruthless as him to accomplish what he has accomplished."

Recently, Mr. Harshfield vacated his opulent, wood-paneled CEO suite for a functional office bereft of trappings or personal adornments. In a recent interview there, he displayed the air of a bantam-weight Marine officer, brisk and no-nonsense, answering questions sharply, directly, and without a trace of self-doubt.

That is the face Mr. Harshfield always shows.

In recent presentations to potential investors, he was "down-to-earth, plain-spoken, with a slightly world-weary manner," recalled David Hilder, formerly an analyst with California Federal's investment bank, CS First Boston. "His message was, 'I've been through this drill before. I know how to do it.'"

In the interview, Mr. Harshfield played down talk of his control over the $15.3 billion-asset California Federal. He stressed the role of his fellow board members and senior managers, and called talk of domination an "unfair characterization."

Wide-Ranging Troubleshooter

"Am I a strong leader? Absolutely," he said. "Do I say what I think? Of course. But I don't think it is a question of domination. It is more a matter of persuasion through logic and sound conclusions."

Mr. Harshfield, whose resume includes stints at Household Financial Services and Citicorp, is a financial institution troubleshooter with close ties to regulatory agencies.

His most recent stops include Beverly Hills, Calif.-based Columbia Savings and Loan Association, which he ran after the Office of Thrift Supervision forced out previous management, and First City Texas National Bank, where he arrived after a 1992 federal takeover.

As for speculation that his goal is a top bank regulatory post, Mr. Harshfield admitted that he had thought seriously about the matter. But, he added, "I don't want it anymore.

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