Wells Fargo Gains Strength in Southland : Banking: The purchase of Great American Bank’s 130 branch offices would make the state’s oldest lender No. 1 in San Diego County.

A year ago, Wells Fargo & Co. Chairman and Chief Executive Carl E. Reichardt put the banking industry on alert that his company would consider buying thrifts to beef up its relatively small presence in Southern California.

With its planned $492-million purchase of the California branch network of Great American Bank, a troubled but well-known savings institution in San Diego, Wells would quickly zoom to first from seventh place among banks and thrifts in fast-growing San Diego County.

Its market share of deposits there would quadruple, to 16%, surpassing the 7% or so of both Security Pacific National Bank and Bank of America.

For 138-year-old Wells Fargo, California’s oldest bank, the purchase is the latest example of its dramatic shift from its historical stance as a bank primarily for Northern California. It also signifies the growing dominance of much more populous Southern California as a market for banking services.

The deal also underscores Wells’ strategy of sticking to its bread-and-butter home turf of California for expansion, rather than growing into other states or countries. Rivals Security Pacific and Bank of America also have been expanding their California branch networks but are making acquisitions elsewhere as well.

William Zuendt, vice chairman for retail banking for Wells, said he views the deal as possibly more significant than Wells’ 1986 purchase of Crocker National Bank, which doubled the bank’s presence in Southern California.

“This acquisition accomplishes more important growth than Crocker,” Zuendt said Tuesday after the Great American deal was announced. “We will be first in San Diego and (essentially) tied in Orange County” with Bank of America and Security Pacific.

In the last two decades, Wells has slowly built its presence in the Southland by opening branches and buying other institutions.

Early this year, Wells completed purchases of the seven-branch Torrey Pines Bank in Solana Beach, San Diego County; American National Bank, with 28 branches in the Central Valley, and the seven-office Valley National Bank, based in Glendale.

Great American Bank’s 130 California branch offices under familiar blue slate roofs would give Wells Fargo a strong franchise and enable it quickly to pump up its presence in Orange and Riverside counties. Great American has branches as far north as Sonoma County, but most are in Southern California.

“It’s a good way to get market share in a hurry,” said Michael Abrahams, a banking industry analyst with the investment firm of Bateman Eichler, Hill Richards in Los Angeles.

This almost certainly won’t be Wells’ last purchase, according to Zuendt. “Wells is obviously interested in acquiring good franchises,” he said.

Although Security Pacific is launching a nationwide expansion bid, it recently purchased financial institutions in San Diego, La Jolla and Valencia. It also bought the 83-office California network of Gibraltar Savings.

“We’re looking for good-quality acquisitions at the right price,” said Terry Perucca, senior vice president for corporate planning and acquisitions at Security Pacific.

Bank of America, with a powerful retail banking network of 857 branches throughout California, recently bought four branches of First Federal Savings & Loan in Bakersfield but consolidated three of those into its existing seven offices in the area, for a net gain of one.

Bank of America also is still shopping. “We continue to review operations in other Western states and California as well,” said spokesman John Keane.

LEADING CALIFORNIA BANKS AND S&Ls; Based on deposits as of year-end 1989

Total deposits Institution Headquarters (in billions) 1. Bank of America NT&SA; San Francisco $53.9 2. Wells Fargo Bank San Francisco 43.6* 3. Security Pacific National Bank Los Angeles 33.7 4. Home Savings of America Los Angeles 27.9 5. Great Western Bank Beverly Hills 23.1 6. First Interstate Bank Los Angeles 16.6 7. Glendale Federal Bank Glendale 15.9 8. California Federal Bank Los Angeles 15.2 9. American Savings Bank Stockton 13.6 10. HomeFed Bank San Diego 13.0

* Includes Great American’s deposits of $6.4 billion

Source: Findley Reports on California Banks