CalFed Could Agree Soon to Takeover by First Nationwide

California Federal Bancorp could reach an agreement to be acquired by First Nationwide Bank as early as Monday in a deal valued between $1.1 billion and $1.2 billion, according to sources familiar with the negotiations.

If consummated, the takeover would create the nation’s third-largest thrift institution with assets of $31 billion and a statewide network of branches, according to Sheshunoff Information Services Inc.

Talks were continuing Thursday between the highest executives of Los Angeles-based CalFed and San Francisco-based First Nationwide, a unit of New York financier Ronald Perelman’s MacAndrews & Forbes Holdings, according to the sources.

The sources confirmed a report in the Wall Street Journal that First Nationwide was looking to pay between $22 and $24 a share for CalFed, which would amount to 1.7 to 1.9 times the bank’s tangible book value.

Analysts said a Monday announcement, coinciding with CalFed’s second-quarter earnings statement, made sense.

Rumors of the takeover talks sent CalFed’s common stock up $1.25 to close at $21.375 Thursday in trading on the New York Stock Exchange on volume of 2 million shares.

Spokesmen for both CalFed and First Nationwide declined comment; Perelman could not be reached.

CalFed has $14.3 billion in total assets and 125 branches and loan offices, including 88 in Southern California.

First Nationwide, which has no publicly traded stock, reported assets of $17 billion and 117 branches, including 73 in Northern California and 17 in Southern California.

The takeover would be the second in as many weeks and could mark the beginning of a trend, analysts said. On Monday, Washington Mutual Inc. announced it would take over Irvine-based American Savings Bank in a deal valued at $1.4 billion.

“So far this week, we have one and a half mergers,” said Thomas O’Donnell, a savings and loan analyst with Smith Barney Inc. in New York. “I think one and a half is enough to make the beginnings of a takeover wave.”

Analysts said a takeover would make sense for both institutions. CalFed shareholders would be enriched and “First Nationwide . . . would be a much more meaningful statewide presence with a bigger base of operations in the south,” said Thomas F. Theurkauf Jr., an analyst with Keefe, Bruyette & Woods in New York. “Who knows? At the end of the day, First Nationwide could be a candidate for sale.”

One key issue is how to value CalFed’s expected windfall from its so-called goodwill claim against the federal government.

CalFed is a potential beneficiary of a U.S. Supreme Court ruling earlier this month in favor of several thrifts in a breach-of-contract suit stemming from the 1980s S&L; bailout.

CalFed has already spun off 25% of its expected award in the form of special shareholder certificates. The remaining value of the award, amounting to an additional $3 or $4 per share, could also be spun off in the form of special certificates, analysts said.

“That makes the deal easier to be done,” said Emanuel Friedman, chairman of the investment banking firm of Friedman, Billings, Ramsey & Co. in Virginia.

First Nationwide Bank has been on an acquisition binge since Perelman acquired it from Ford Motor Co. in 1994 for $1.1 billion. The bank is 20% owned by Chief Executive Gerald Ford.

On Feb. 1, First Nationwide completed the $250-million buyout of San Francisco Federal Savings, with 35 branches and $4.1 billion in assets.

In June, First Nationwide closed its $70.6-million takeover of Home Federal Financial Corp., with 15 branches and $735 million in assets.

CalFed has struggled back from the brink of disaster under the stewardship of Edward G. Harshfield, president and chief executive, who joined the thrift in 1993.

The company is now profitable, and in the first quarter, California Federal Bank originated and purchased $646.7 million in loans, more than 13% higher than the $571.9 million in the like quarter of 1995.

Expectations of further takeovers sent other California thrift shares higher Thursday. Great Western Bank shares edged up $1 to $23; Coast Federal Bank shares were up 37.5 cents to $31.125, and Glendale Federal Bank stock went up 25 cents to $17.75.

* CHANGING STATUS

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