Great American Hopes to Acquire Colorado Thrift
Great American First Savings Bank, which last month agreed to acquire a savings and loan in Washington state, hopes to expand its retail banking business by acquiring a small and financially troubled thrift in Colorado, Great American said Friday.
San Diego-based Great American hopes to conclude negotiations early next week to buy federally chartered First Security Savings & Loan, according to Great American spokesman Kenneth Ulrich. The proposed acquisition would be subject to federal regulatory approval.
First Security, with two offices in Grand Junction, Colo., reported a $1.6-million negative net worth and $52 million in assets in November when the Federal Home Loan Bank Board placed the thrift in receivership and turned its management over to another Colorado savings and loan.
Terms of the proposed deal were not disclosed. However, S&L; industry analysts said the Federal Savings and Loan Insurance Corp. probably will not absorb some of the troubled thrift’s future losses because of its small size and the fact that Great American would be gaining relatively inexpensive access to the Colorado market.
Great American would gain access to the “attractive” Colorado market if it completes the acquisition, said Jonathan E. Gray, a New York-based S&L; industry analyst with Sanford C. Bernstein. If completed, the deal likely would have “an insignificant dilutive effect on Great American’s book value,” Bernstein said.
Last month Great American signed a letter of intent to merge with Olympia, Wash.-based Capital Savings Bank, with $725 million in assets. That proposed acquisition follows changes to laws in several Western states effective July 1 that allow financial institutions to cross state lines, according to Great American.
No such reciprocity agreement exists between California and Colorado, however, so Great American plans to acquire First Security through its Home Federal Savings & Loan subsidiary in Arizona. Great American acquired the Tucson-based thrift last year in a deal valued at $102 million.
The move into Colorado would give Great American a retail presence in four states that are “extremely attractive places to do business in, when you look at population growth, the creation of new jobs (and) personal income,” Ulrich said.
“Great American has been on the make to get into these markets in the West,” observed Allan Bortel, a San Francisco-based industry analyst with Shearson Lehman Brothers. “They’re building an exciting structure.”
Great American currently has 177 branches in California and Arizona. If the Washington and Colorado acquisitions go through, total branches would increase to 216.
