Ford to Sell Unprofitable Thrift Unit to Dallas Firm : Automotive: The auto maker also says it will buy the 46% of Hertz it doesn’t already own and raises its quarterly dividend.
In an eventful day for Ford Motor Co., the nation’s No. 2 auto maker agreed Thursday to sell its money-losing First Nationwide Bank unit to First Madison Bank of Dallas, a thrift controlled by financier Ronald O. Perelman, for $1.1 billion.
The sale of the nation’s fifth-largest thrift is being billed as the largest ever outside the government bailout of the S&L; industry.
Ford also increased its quarterly dividend by 12.5% to 45 cents per share, declared a stock split and said it will buy the 46% of Hertz Corp. that it does not already own from the rental car firm’s managers and Swedish car maker Volvo. The value of the Hertz buyout was not disclosed.
The sale of San Francisco-based First Nationwide relieves Ford of an albatross that it once envisioned as its avenue into a nationwide mortgage and commercial finance business. Instead the investment soured, as Ford found it could not participate in the mortgage market as a minor player and as the thrift made misguided forays into commercial lending.
First Madison, a Dallas thrift with $1.1 billion in assets, edged out Great Western Financial of Chatsworth in the bidding for First Nationwide, which has $15.5 billion in assets and 180 branches in eight states.
A Great Western source, who said his thrift’s offer was “very close” to First Madison’s bid, said Great Western was especially attracted to First Nationwide’s $6-billion portfolio of single-family-home loans and its branches in California and Florida. Golden West Financial of Oakland, parent of World Savings, also submitted a bid.
First Madison’s principal owner is MacAndrews & Forbes, the New York holding company owned by Perelman, one of the nation’s wealthiest investors. Perelman, who also owns cosmetics firm Revlon Inc., formerly owned First Gibraltar Bank of Texas, a collection of five failed thrifts that he sold to BankAmerica Corp. last year.
First Madison, established last year with assets retained by Perelman after First Gibraltar’s sale, has four offices and 300 employees. Gerald J. Ford, formerly chief executive of First Gibraltar, will become First Nationwide’s chief executive. Perelman’s group plans to merge First Nationwide with First Madison under the First Nationwide name.
Despite Ford’s efforts to restructure and drastically shrink the thrift--at its 1988 peak, it had $34.5 billion in assets and 349 offices--First Nationwide racked up losses of $330 million under the car maker’s ownership, including $55 million last year.
Ford said it will take a $440-million charge on first-quarter earnings to cover its losses on the sale. It will retain $1.2 billion of the thrift’s bad loans. Still, Ford shares closed up 37.5 cents at $58.50 in New York Stock Exchange trading Thursday.
Even as it rids itself of First Nationwide, Ford is acquiring total control of Hertz, the nation’s No. 1 rental car company. Hertz, which earned $53 million on sales of $2.9 billion last year, relies on Ford for 70% of its rental cars.
Ford also owns Budget Rent-A-Car. Its move deeper into the rental car business comes despite General Motors Corp.’s and Chrysler Co.’s problems earning profits from their stakes in the industry.
Ford also disclosed that former Chairman and Chief Executive Harold Poling was paid $11.7 million in 1993, including $8.1 million in stock options. His successor, Alex Trotman, earned $3.9 million.
And the company said it will continue production of the Aerostar rear-wheel-drive minivan in response to higher-than-expected demand.
Times staff writer Chris Kraul reported from San Diego; Donald W. Nauss reported from Detroit.
