Financier Looks to Politics : Stickel Sets Sights on Treasurer Post

San Diego financier Tom Stickel has blended business and politics into a potent brew over the past several years, creating a growing, publicly traded financial services company while gaining an increasingly high standing with Gov. George Deukmejian.

But Stickel, a 38-year-old self-made millionaire, hopes in a few years to be faced with a choice between the two endeavors.

Stickel has yet to make a formal announcement, but states flatly that he will run as a Republican candidate for state treasurer in 1990. He has begun exploratory discussions with key Republican Party figures and fund-raisers about forming a campaign.

If he were to win the treasurer’s post in the 1990 election, Stickel said, he would sell his company, TCS Enterprises Inc., to a larger financial institution or help engineer a buy-out by remaining executives. Though not required by law, the sale of TCS would be “imperative from an ethical standpoint,” because TCS does business with the state, Stickel said.

Enormous Influence

Stickel covets the state treasurer’s job because of the enormous influence the office exerts over the state’s finances. The state treasurer directs how California raises billions of dollars through bond issues, and has considerable say over how the assets of the mammoth pension funds of state teachers and employees are invested.

Stickel figures he’s up to the job. Holder of a master’s degree in business and public administration from USC, Stickel founded Point Loma Savings and Loan in 1978 at the age of 28, and later converted it to Bank of Southern California, the first and thus far only such conversion in the state’s history. Stickel sold his stock back to BSC directors for what he says was “a little better than $1 million” in 1982.

After leaving the bank, Stickel in 1983 founded TCS Enterprises, a diversified financial services company that posted 1986 revenues of $3.6 million. Stickel, who is TCS chairman and chief executive, owns roughly 1 million of the 2.4 million TCS shares outstanding, a holding worth roughly $5.5 million at today’s market prices.

But it is Stickel’s relationship with Deukmejian that makes political observers take his professed desire for statewide office seriously. As president of Point Loma Savings and Loan, Stickel was one of the first San Diego County executives to jump aboard Deukmejian’s campaign bandwagon in 1982. In 1986, he was county chairman of Deukmejian’s reelection committee, which raised about $200,000.

Stickel personally donated a total of $20,000 to Deukmejian’s reelection campaign in 1985 and 1986.

Stickel’s good standing with Deukmejian has caused his named to be grouped with half a dozen others as possible nominees the governor could put forth to complete State Treasurer Jesse Unruh’s term if Unruh is forced to resign for health reasons before his term expires in 1990. Unruh, who is battling prostate cancer, was hospitalized last month for the second time in three months, and has been seen less and less in his Sacramento office.

Stickel refuses to discuss the speculation surrounding an appointment to the state treasurer’s office, saying he has never broached the subject with the Governor.

Deukmejian already has shown his appreciation for Stickel, appointing him in 1983 to the California State University Board of Trustees. In addition, Stickel serves as state GOP party finance co-chairman. The state banking superintendent’s job was his for the asking in 1983, Stickel maintains, but he turned it down for personal reasons, including a divorce, and a desire to start TCS.

Highly Regarded

“Stickel’s really regarded as a comer in the (state Republican) party,” said Ken Khachigian, a San Clemente attorney and close Deukmejian adviser who helped manage both of Deukmejian’s gubernatorial campaigns. “I think the governor has a high regard for him.”

“He’s energetic, wants to participate, always looking for ways to help and a self-starter. All of those things are good and things we are looking for. That’s why he was asked to take on more responsibility within the state party,” Khachigian said of Stickel’s being named to the party finance post last year.

Khachigian said Stickel is wise to aim for a 1990 elective office for which he “doesn’t have to create credentials.”

Dan Greenblat, former chief of staff for Congressman Bill Lowery and now a political consultant with FTM Enterprises in San Diego, said Stickel “has come a long way very fast.”

“He has rare ability to mix good business decisions and political insights,” Greenblat said. “He is probably one of the best (political) figures to emerge from the local business community in a long, long time.”

Greenblat said Stickel is leveraging his influence locally in the Golden Eagle Club, a group of “philosophically aligned” business figures “looking toward a less restrictive kind of government.” Other Golden Eagle members include contractor Morley Golden and local GOP figures Allan Royster and Jack Templeton.

On a corporate level, Stickel’s company, TCS Enterprises, has also been good to Republicans. The company donated $6,700 in office space, supplies and staff time to Republican causes in 1986. Among TCS’s board members is Clair Burgener, former state Republican party chairman and Deukmejian confidante. TCS pays Burgener $18,000 per year to be a board director.

While acknowledging that the contributions and the Burgener association open him to criticism that he is using his company to feather his political nest, Stickel insists his political connections have benefited TCS shareholders by expanding the company’s network of contacts.

Burgener, whom Stickel described as “my mentor . . . my big brother,” is a source of good advice and image for TCS, he said.

“I’ve become a better person by being around Clair Burgener. He’s helped me mature quite a bit,” Stickel said. “There are skills that are marketable I pick up by just being around Clair. (The skills) are hopefully transferred to the six operating companies (of TCS).”

Lackluster Performance

So far, TCS’s financial performance has been unspectacular. For the fiscal year ended last October, the company posted a profit of $211,000. That figure would have been considerably less had Stickel not forfeited his $156,000 salary, a “sacrifice” Stickel said he will continue until TCS’s profits reach acceptable levels.

Although Stickel has not taken a salary since the company’s stock began trading publicly in April, 1985, he has raised money over that time by selling about 70,000 of his TCS shares for more than $280,000. Stickel insists the stock sales were prompted more by a need for him to “provide liquidity to the market” than any need for pocket money.

“Due to the fact we had demand (for TCS stock) and no sellers at the time, our market makers had no choice but to sell my stock,” Stickel said.

TCS’s financial picture has brightened so far his year. The company posted net income of $281,000 on revenues of $2.5 million for the six months ended April 30. In fact, speculation about a Stickel move to Sacramento comes when, for the first time in its history, all TCS elements are profitable.

TCS’s mortgage banking operation headed by Rick Jarrett, a former Van Nuys High School classmate of Stickel’s, continues to be the horse that pulls the TCS cart, accounting for more than two thirds of TCS revenues. TCS Mortgage will write more $200 million in loans this year, up from $160 million last year, Stickel said.

The company recently formed a “mortgage conduit” joint venture with Great American First Savings Bank called Mortgage Capital Corp. It will package loans for resale to California State Teachers Retirement System (CSTRS), a $23-billion pension fund.

The pension fund, which was ordered by the state Legislature to invest more of its assets in California residential mortgages, may buy as much as $100 million in loans from MCC over the next year, or about 25% of the $400 million total mortgage investment that CSTRS has budgeted. By 1990, the pension fund may be buying a total of $1 billion in mortgages through conduits such as MCC, said CSTRS chief administrator Larry Kurmel.

Stickel said TCS probably will not begin to book appreciable profits from the MCC venture until next fiscal year.

Kurmel said he sometimes calls on Stickel for advice in financial matters. Stickel last year helped him design the pension fund’s mortgage conduit investment program “with no expectation of return on his end,” Kurmel said.

“He understands the character and nature of the California mortgage business as well as anyone I’ve ever met,” said Kurmel, who prior to his appointment to the pension fund post was a savings and loan industry lobbyist.