Home Savings to Acquire Bank Network : Thrifts: Purchase of Household Bank’s 52 Southern California branches would add $1.35 billion in deposits.
In a move to further bolster its deposit base, Home Savings of America on Tuesday announced an agreement to purchase the 52-branch Southern California network of Household Bank, which has deposits of $1.35 billion.
When the sale is complete in the second quarter of 1995, Home Savings will have acquired $4.5 billion worth of deposits in Southern California in about a year. It says this will keep it in second place in the region behind Bank of America in terms of deposits.
Home Savings, the nation’s largest thrift and the principal subsidiary of H.F. Ahmanson & Co., is beginning to rebound from a painful period. In late 1993, it got rid of $1.3 billion in non-performing loans in bulk sales, taking losses of $378 million. Through those and similar sales during 1994, the thrift dramatically strengthened its balance sheet, according to analyst Campbell K. Chaney of Rodman & Renshaw in San Francisco.
About 20 of the Household offices will be closed and folded into nearby Home Savings branches, a spokeswoman said. Of the 325 people who work in the Household network, those whose branches remain open will stay there, and Home Savings will try to shift the rest to other locations, she said.
Household depositors will probably see little change in interest rates after the transition, a Home Savings spokeswoman said. Customers who have loans with the bank will continue to make payments to Household, which retains the branch network’s loans.
Neither Household Bank--a unit of Household International of Prospect Heights, Ill.--nor Home Savings would disclose the terms of the sale. However, thrift industry sources put the price at just under 4% of deposits--or between $50 million and $55 million.
By contrast, in another deal announced Tuesday, Household agreed to sell its Maryland branch system, with $1.1 billion in deposits, to First Fidelity Bank for $76.1 million, or about 7% of deposits.
The price difference reflects a stronger real estate market in the mid-Atlantic region, and more competition for those deposits, analysts said.
Charles R. Rinehart, chairman and chief executive officer of Home Savings, said in a statement Tuesday that the acquisition will bring the thrift’s Southern California deposit market share to over 9% and will “provide the opportunity for us to enter 30 markets we have targeted for expansion where we do not have a presence.”
Household International is de-emphasizing banking and focusing on its more profitable credit card and consumer finance operations, said analyst Katrina Blecher of Gruntal & Co. in New York.
The Household branches in the Southern California network are located in eight counties, with 16 in Los Angeles County, 10 in Orange County, 11 in San Diego County, six in Riverside County, three in Santa Barbara County, three in Ventura County, two in Imperial County and one in San Bernardino County.
