Wells Fargo Will Buy 130 New Branches : Finance: Great American, which lost $263.4 million in 1989, agrees to sell its California operations for $492 million.

Struggling Great American Bank announced today that it has agreed to sell its California branch network to Wells Fargo & Co. for $492 million, pending approval by shareholders and federal regulators.

The proposed transaction includes Great American’s 130 California branches with assets of $5.9 billion, Great American said in a statement.

The San Diego-based thrift, the country’s eighth-largest savings and loan, has been struggling against a rising tide of losses since the fourth quarter of 1988, largely because of a widening loan problem acquired with an Arizona thrift that Great American bought in 1986.

Losses during 1989 hit a staggering $263.4 million and left Great American unable to meet minimum federal capital standards. The thrift must raise $350 million by the end of the year to avoid a government takeover.

The deal with Wells Fargo would pare down Great American’s $15.4 billion in assets to between $8 billion and $9 billion. Great American would retain 81 branch offices in Washington, Arizona and Colorado.

The sale of the branches would be completed in two stages. The 92 offices in San Diego, Riverside and Orange counties would be sold by late this year, and the rest of the California branches would be sold in 1992.

It was unclear this morning how many of Great American’s estimated 1,800 employees in California would be retained by Wells Fargo.

With the sale, Wells Fargo is expected to solidify its market position in San Diego County, where it has been battling with Security Pacific Bank, the state’s second-largest bank.

Before the Great American deal, Wells Fargo had 486 branch offices in California and ranked as the third-largest bank in the state with $50.2 billion in assets.

Wells Fargo currently has 24 branches in San Diego County and would have 88 after the deal is completed. Security Pacific has about 65 branches in the county.

Wells Fargo and Security Pacific have been buying up smaller California institutions in the last several years.

Security Pacific, with assets of $94.5 billion, remains as the state’s second-largest bank behind Bank of America. Security Pacific is expected to become the largest bank in San Diego County, with 65 branches, once it gets final approval from regulators for its $112-million purchase of La Jolla Bancorp.