Great American Savings Will Split Its Stock 3 for 2

Riding the crest of increased profits and a wave of successful deals that has propelled it to No. 10 among the nation’s largest thrifts, Great American First Savings Bank said Monday that it will split its stock three-for-two.

Concurrently, the San Diego-based company said, it will sell an additional 1.75 million shares of stock in a public offering that could raise more than $48 million in capital.

Company officials believe that those actions, coupled with a 25% increase in Great American’s first-quarter dividend, to 15 cents per share, will have a “positive overall market effect,” according to Roger Lindland, Great American senior executive vice president.

“We’re always interested in having the perception of the value of the company improve,” he said. “This is one of the means of doing this.”

One stock market analyst agreed, although he was less charitable, calling the move a “ploy.”

“They want the market to increase the price of the stock,” he said.

Great American stock closed Monday at 25, off 1/2. The split and the dividend are effective May 30 to shareholders of record as of May 15.

Had the company split its stock without offering a concurrent dividend increase, the action may have been “meaningless” to shareholders, Lindland said.

The company also said it will ask the Federal Home Loan Bank Board to approve a public offering of 1.75 million shares of additional common stock.

Combined with an underwriters’ option to increase the number of shares by 10%, Great American could raise more than $48 million in capital, depending on the market price of the stock, Lindland said.

Great American currently has 12.7 million shares outstanding.

About 700,000 shares will be used for Great American’s pending merger with Los Angeles Federal Savings, Lindland said.

The remaining shares would be used as new equity capital, which would “permit us to expand our asset base by $1 billion,” based on the regulatory guideline of a 3% equity-to-asset ratio, Lindland said.

Great American’s merger with Los Angeles Federal is expected to be approved by regulators in the near future, officials said Monday. Shareholders approved the plan last month.

After the merger, Great American will become the nation’s 10th largest thrift, with more than $10.6 billion in assets and 161 offices in California and Arizona.