Great American Says It Will Seek Outside Help to Raise Capital : Compliance: Move to meet federal compliance regulations triggers reports that the S&L; has put itself up for sale.

Great American Bank, the nation’s seventh-largest savings and loan, on Monday sought outside help in raising capital to meet federal standards--a move widely interpreted as posting a “for sale” sign on the San Diego institution.

Sources close to the bank said it has already begun discussions with a number of investors and potential acquirers, including Wells Fargo Bank.

Rumors also were rampant Monday of impending management changes at Great American. President Roger Lindland denied, however, through a spokesman, that top-level changes were in the offing. Chairman Gordon Luce was unavailable for comment.

Great American said in a statement that it would hire an investment banking firm to help raise the outside capital in order to “accelerate” its plan of complying with capital adequacy standards set forth in last summer’s S&L; rescue bill. Wracked by continuing losses from its problem Arizona commercial loan portfolio, the 214-branch thrift as of Dec. 31 was deficient in all three capital adequacy tests instituted by the bill.

Sources close to thrift’s board said Great American is looking to raise as much as $300 million in outside capital through a sale of stock and/or warrants, a sum that would enable the S&L; to meet all three adequacy tests, as well as obtain a “buffer” against possible future loan losses.

The yet-to-be-selected investment banking firm “will explore opportunities relating to capital investment in Great American, which should accelerate the compliance progress outlined in the bank’s capital plan,” Great American said in a statement. But spokesman Brian Luscomb said the S&L; was declining comment on whether it is offering itself for sale.

“This is a prudent decision that we feel is in the best interest of Great American and its shareholders, customers and employees,” said Chairman and Chief Executive Gordon C. Luce. “We have already received a number of unsolicited inquiries from potential investors related to Great American.”

Gary Gordon, a stock analyst at Paine Webber in New York, said Great American is “seriously short of capital, so they had to do something. . . . They either had to shrink assets or do something like this.” With $16.1 billion in assets, Great American is the nation’s seventh largest savings and loan.

Wells Fargo declined to comment on a possible acquisition of Great American. The San Francisco-based bank is known to be interested in expanding its Southern California retail base, but up to now has stayed away from available savings and loans, opting instead to purchase a number of smaller community banks. Wells Fargo previously has announced deals to buy La Jolla Bank & Trust and Torrey Pines Bank, both based in San Diego County.

Great American’s announcement comes four days after it disclosed that its deficient capital levels are soon likely to fall even lower. In an unusual Thursday statement, Great American said its auditor, Deloitte & Touche, had decided to extend its review of problem loans in Arizona and the Southwest.

The audit extension came two weeks after Great American had released an earnings statement showing fourth-quarter and full-year losses for 1989 of $59.3 million and $123.9 million, respectively. The extended audit will likely result in further loan loss provisions, deeper fourth-quarter and 1989 losses and thus a further erosion of capital.

Great American declined comment on when the extended audit may be completed or how large any additional loan loss provisions may be.

Great American, like other financial institutions, has had its earnings severely affected over the past two years by losses in its Arizona commercial loan portfolio. Last year, Great American’s bad loan loss provisions totaled $221 million, the “great majority” of which were attributable to Arizona.

Last week’s announcement of the audit extension, paired with a Friday story in the Wall Street Journal that said the Office of Thrift Supervision had rejected Great American’s capital compliance plan, sent Great American stock reeling Friday with shares closing down $1.625 to $3.75, a 30% one-day drop.

On Monday, the Office of Thrift Supervision and Great American denied the Journal’s report that the capital compliance plan had been rejected. The Office of Thrift Supervision had simply requested further information, its deputy district director, Eric Shand, said.

The stock market responded favorably to the Monday announcement as Great American stock closed up $.50 to $4.25 in New York Stock Exchange trading.

According to sources, Great American is considering several financing alternatives including an outright sale of the S&L.; Also being considered is a sale of stock and warrants giving an investor a minority equity position now but possibly a controlling interest later.

The sources said that the recapitalization process has been stirred up by board member Ed Wedbush, whose firm Wedbush Corp. owns 17% of Great American stock. Last month, Wedbush served notice that he would seek permission from regulators to take a more active role in management affairs and to possibly raise his stake in the S&L.;

Great American’s tangible capital at year end was $225.3 million or 1.43% of assets, slightly below the 1.5% regulatory minimum. Its core capital capital was $439.2 million or 2.78% off assets, below the 3% regulatory minimum. And risk-weighted capital was $632 million or 4.78% of assets, below the 6.4% regulatory minimum, spokesman Luscomb said.

Times staff writer James Bates contributed to this story.