Great American : San Diego S&L; to Take Over Tucson Thrift
Great American First Savings Bank announced plans Monday for a $102-million merger with Home Federal Savings & Loan Assn. of Arizona, a Tucson-based S&L; that gained a California foothold last year when it took over the ailing San Marino Savings & Loan Assn.
If approved, the merger would create an institution with joint assets of $9.4 billion, based on 1984 figures. The merger, which must first gain regulatory and shareholder approval, is likely to test a federal policy that generally has prohibited mergers or acquisitions involving healthy S&Ls; from different states, according to savings and loan industry analysts.
Letter of Intent Signed
Home Federal Vice President Richard S. Hudgins said: “All we’ve done so far is sign a letter of intent. From there we must reach the definitive details of an agreement to be acquired or to merge.”
“The regulators probably will give this (proposal) a lot of scrutiny because it is one of the first major moves (by an S&L;) to get into a state and then get swallowed up in this manner,” said Allan Bortel, an analyst with Shearson Lehman Bros. in San Francisco. “Although there’s not a formal (rule) against healthy S&Ls; merging, it has been Federal Home Loan Bank Board policy not to approve across-state-line mergers.”
Don Alexander, a vice president of the Federal Home Loan Bank Board of San Francisco, which regulates federally insured thrifts in California, Arizona and Nevada, said the kind of merger being proposed has, “generally speaking, not been permitted.”
Alexander said he had not yet seen a copy of the letter of intent.
“A lot of innovative, creative things are being proposed in this industry these days, so it is difficult at this point to know what they’re proposing,” he added.
However, another analyst who asked not to be identified said: “Great American isn’t likely to do something that’s obviously not going to work. I have to believe they think it will work.”
Control of 34 Branches
Home Federal and Great American maintain that Home Federal’s acquisition of the financially troubled San Marino S&L; branches gives it the right to merge with or be acquired by a California institution.
“The San Marino acquisition put us in California,” Hudgins said. “Consequently, we are authorized to expand and grow. We have a right to be acquired because we’re doing business in California as Community Federal.”
The proposal would give Great American, which now operates three real estate transaction offices in Arizona, control of 34 Home Federal of Arizona branches and eight former San Marino S&L; branches in the Los Angeles area that are being operated under the name of Community Federal Savings & Loan.
Natural Expansion
“Great American knows the Arizona business climate and its people,” said Jan Strode, Great American’s vice president for corporate information. “We’ve found that (Home Federal would be) a natural expansion. They’ve got a good deposits market, good earnings and good projected earnings and a business approach that’s similar to Great American’s.”
A spokeswoman for Great American added that the first approach about a deal had been made by Home Federal.
Great American has agreed to pay $36.50 per share for Home Federal’s 2.8 million outstanding shares. Home Federal’s stock was at $29 when trading was halted at about 12:45 p.m. PST for the announcement.
For the quarter ended June 30, Great American reported record earnings of $10.5 million, a 92% increase over the same quarter a year earlier.
Home Federal reported quarterly net income of $3.8 million for the same quarter, up from $396,000 a year ago.
