First Interstate Seeks Bigger Piece of State Pie Via Sacramento Savings

First Interstate Bancorp said Wednesday that it will buy Sacramento Savings Bank for $331 million in cash, a move designed to strengthen its presence in 13 counties in Central and Northern California.

The seller is Alleghany Corp., which would retain about $132 million of the thrift’s real-estate-related assets, generally the lowest-quality loans. Sacramento Savings has 45 branch offices and 24 mortgage lending offices as far south as Modesto and as far north as Redding. The deal requires the approval of federal regulators.

The acquisition would be First Interstate’s second-largest ever in dollar terms, behind only its acquisition this year of San Diego Trust & Savings Bank for $340 million.

Executives said the acquisition is designed to improve the bank’s strategic position in Northern and Central California. Statewide, its strategy is to be within the top three banks in terms of market share in all markets with a population of 100,000 or more, said James Simon, a First Interstate spokesman.

The Sacramento deal would make First Interstate the No. 2 bank, behind Bank of America, in Sacramento, Butte and Yuba counties and would enhance its presence in 10 others. It would also sharply increase First Interstate’s mortgage-origination capability in those regions.

The transaction, for which Los Angeles-based First Interstate would pay 1.6 times Sacramento Savings’ adjusted common book value, is expected to close in the fourth quarter of this year.