Wedbush Seeks Bigger Role in Great American

Wedbush Corp., a Los Angeles-based financial services corporation that holds a 17% share in Great American Bank, wants federal regulators to drop guidelines that limit its management role in the San Diego-based S&L.;

Wedbush, which has held one board seat since 1986, wants additional representation, along with permission to acquire more than 25% of Great American’s common shares.

In its filing, Wedbush asks the federal Office of Thrift Supervision to eliminate guidelines established by the Federal Home Loan Bank Board in 1986, when Wedbush was allowed to acquire up to 24.9% of the S&L;’s common stock. Regulators limited Wedbush to one board seat and prohibited the company from trying to take over the S&L.;

Great American, which in 1986 asked regulators to prohibit Wedbush from acquiring additional stock, has “no present intention to oppose the application,” a Great American spokesman, Brian Luscomb, said Tuesday. “That’s the right of any shareholder or any investor of his size. We don’t plan to oppose it.”

Wedbush Corp. filed the request because the S&L; is “at a crucial juncture,” Edward W. Wedbush, president of the Wedbush Corp., said in a statement released Tuesday. “Wedbush Corp. needs the flexibility to suggest and implement changes in the direction of Great American to the same extent as the largest shareholder of any publicly owned company.”

Wedbush’s regulatory filing was “related” to the $123.9-million net loss that Great American reported Friday for the year ended Dec. 31, said Philip J. LoBue, Wedbush senior vice president.

Great American, which has been substantially hurt by Arizona’s ongoing real estate slump, also reported a $59.3-million net loss for the fourth quarter ended Dec. 31, and said it would not pay a fourth-quarter dividend. The $123.9-million loss was the S&L;’s first annual net loss since it became a publicly traded company in 1983.

Financial industry analysts on Tuesday were uncertain about Wedbush Corp.’s motive in the filing.

“I don’t know what it means,” said Michael Abrahams, an S&L; industry analyst with Bateman Eichler Hill Richards in Los Angeles. “Maybe he was just trying to jack the price of the stock up.” Great American closed at $5, up $.125, on Tuesday. Just six months ago, the stock was trading at $12 or more.

“The only thing I can think of is that he feels he doesn’t have his finger on the button, that (management) is running the show and he’s got no input,” said Irving Katz, director of research for Thomas Green/San Diego Securities. “But I don’t know what he’d do different.”

Another analyst suggested that Wedbush is tired of being ignored. “In the past, Great American has been willing to take his money but not his advice,” said the analyst, who knows top executives in both organizations. “Maybe in the future, they won’t get his money, but they’ll have to take his advice.”

Wedbush Corp. hopes to strengthen Great American’s business plan through the “addition of some independent board members,” LoBue said. “We would like Wedbush Corp. to be in a position to . . . give direction to Great American’s short-term, as well as its long-term, strategies.”

Wedbush, which “might” increase its 17% share to the 24.9% ceiling, has “no current intention” of exceeding that level, LoBue said.

LoBue said that a review by the Office of Thrift Supervision would take at least “several months, given the higher priorities” facing the agency elsewhere.