Magazine article American Banker

Parker Pen Co. Won't Take a Banking Refill; Will Sell Its 80% Interest in First Deposit Corp.; First Nonbank Firm to Call It Quits

Magazine article American Banker

Parker Pen Co. Won't Take a Banking Refill; Will Sell Its 80% Interest in First Deposit Corp.; First Nonbank Firm to Call It Quits

Article excerpt

NEW YORK -- Parker Pen Co. -- which got into banking in 1981 with grandiose plans to solicit business nationwide through telephone and direct mail -- has decided to stick with pens after all.

the Janesville, Wis., company said Thursday that it has agreed to sell its 80% interest in First Deposit Corp. to Capital Holding Corp., a Louisville, Ky., insurance holding company.

Parker is the first to bail out since nonbanking firms discovered early in the decade that they could enter the banking business by stripping a target bank of either its commercial loans or demand deposits and forming a nonbank bank.

First Deposit, which is a San Francisco holding company, owns a New Hampshire nonbank bank, a San Francisco savings and loan association, and an Arkansas insurance company.

"The financial services field is getting pretty competitive, and our progress was slower than we hoped, "Robert Collins, vice president and general counsel of Parker Pen, said in a telephone interview.

"It was a speculative venture into financial services, and we hoped we could get a piece of the market. But there are others out there with a lot more experience."

Mr. Collins said the company plans to concentrate on its two main lines of business, pens and a temporary employment service called Manpower.

Andrew S. Kahr, president and chief executive officer of First Deposit, declined to discuss First Deposit's profitability.

Mr. Kahr is best known as the architect of Merrill Lynch & Co.'s Cash Management Account.

He said he expects no regulatory problems with the transaction, which is subject to approval from the Office of the Comptroller of the Currency and the Federal Home Loan Bank Board.

"We are not creating a nonbank bank," he said. "We are just transferring control."

Federal bank regulators in the last year have attempted to stop the proliferation of nonbak banks. The Comptroller of the Currency's moratorium on processing applications to establish nonbank banks will expire March 31.

The Federal Reserve Board, in its revised Regulation Y, expanded its definitions of commercial loans and demand deposits in part to stop nonbank banks. The Fed's revisions are the subject of a number of lawsuits.

Ownership of First Deposit by an insurance holding company also is not a problem, Mr. Kahr said, adding that other insurance companies -- including Prudential Insurance Co. and Travelers Corp. -- already own nonbank banks. A $10 Million Deal

Thomas C. Simons, chairman and chief executive officer of Capital Holding, said the acquisition "should be viewed in the short run as purely a venture capital investment for us."

Scott Peterson, an assistant vice president for Capital Holding, said there are no plans at present to combine the insurance operations of capital holding with the banking operations of First Deposit.

The insurance holding company last month signed an agreement that will enable it to sell its insurance wares at branches of Bank of America NT&SA.

Capital Holding will pay $10 million for First Deposit, including the price paid for Parker's holdings and an additional equity investment.

The 20% of the company not owned by Parker will continue to be held by Mr. Kahr and Adolph Mueller 2d, executive vice president.

Besides designing the Cash Management Account, Mr. Kahr, a former consultant, developed a similar account for Charles Schwab & Co. …

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