Citicorp to Triple S&Ls; in State, May Shy From Banks

Citicorp, the nation’s largest banking company, expects to nearly triple the number of retail offices it has in California before the start of full interstate banking in 1991, its top West Coast executive said Tuesday.

James D. Farley, vice chairman in charge of the company’s operations in the Western United States and Pacific Rim, said Citicorp expects to have 400 to 500 S&L; branches statewide within three years and might not be in the market to buy a major bank here when that becomes possible in 1991.

“I would say it would be difficult to justify to the shareholders that you wanted to spend billions of dollars buying a bank out here when you’ve got something like that,” he told a small luncheon audience in Los Angeles at a convention of the Public Relations Society of America.

Citicorp Savings & Loan started in California in 1982 when the banking company acquired a nearly bankrupt savings firm in Oakland. It grew to 143 branches with the recent addition of 50 offices from Sears Savings Bank. Citicorp has 11 other commercial offices in the state and 4,500 employees but cannot operate as a bank.

But in 1991 the state will open its doors to banks from outside the West. Farley’s comments Tuesday added another element of uncertainty to what will occur then.

Many people in the banking industry are wondering what Citicorp will do. Some analysts and bankers expect the New York-based giant, with $196 billion in assets, to be a major player in any mergers and acquisitions in 1991. Others say New York’s Chase Manhattan is a more likely buyer because of Citicorp’s record of expanding by purchasing failing thrifts.

“Its savings and loan would provide Citicorp with the storefronts to pump its products through the market here,” said Donald K. Crowley, an analyst in San Francisco with the investment firm of Keefe, Bruyette & Woods. “The line between banks and savings and loans is pretty well blurred anyway.”

While Farley did not specify how Citicorp plans to expand, he later acknowledged that the company is continuing negotiations to purchase the 184 branches of Stockton-based American Savings & Loan, a subsidiary of troubled Financial Corp. of America.

What he did make clear in plain language was that Citicorp is not waiting until 1991 to expand in California.

“We aren’t gonna’ sit around in the meantime, you know, and suck our thumb,” he said in response to a question from a public relations consultant for Chase Manhattan. “The only problem is we have to buy these things that are failing.

“Usually the image is bad in the marketplace. The employees’ morale is bad. It takes time to turn them around. . . . 1991 is a magic date for some people, but we ain’t sitting around waiting for it.”