Ahmanson Reports 59% Earnings Rise
H.F. Ahmanson & Co., locked in a bitter takeover battle for rival California savings and loan Great Western Financial Corp., on Tuesday reported higher-than-expected earnings.
The Irwindale-based parent company of Home Savings of America said its net income rose 59% in the first quarter to $103.1 million, or 87 cents per share, from $64.8 million, or 45 cents.
The latest figure was far ahead of the 70 cents per share estimated by industry analysts.
“We are delivering strong performance across the board,” said Charles Rinehart, Ahmanson’s chairman and chief executive.
The stronger earnings can only help Ahmanson pursue its bid for Great Western, analysts said. Great Western rejected the bid and agreed on March 6 to be bought by Seattle-based Washington Mutual Inc.
“This is a game of degrees,” said Gareth Plank, a thrift analyst at UBS Securities Inc. “Any time you can add another penny or nickel, your credibility goes up substantially. This sends the right signal.”
Smith Barney Inc. thrift analyst Thomas O’Donnell said the earnings report “is a positive, but it’s not going to win the battle. They need investors to assign a $2 to $3 premium to its offer in order to carry the day.”
Ahmanson’s shares rose $1.625 to $37.125 on the New York Stock Exchange. Based on Tuesday’s price, Ahmanson’s bid to exchange up to 1.20 of its shares for each Great Western share was valued at $44.56 a share, or about $6.2 billion.
Still, Tuesday’s gains were matched by a $1.4375 increase in Washington Mutual shares to close at $49.375 on Nasdaq. Washington Mutual’s offer to exchange 0.9 of one of its shares for each Great Western share also was valued at $6.2 billion Tuesday.
Ahmanson’s results for the quarter included an after-tax gain of $9.5 million, or 8 cents per share on the sale of its Arizona branches.
Net interest income totaled $317.6 million for the first quarter of 1997 compared with $317.0 million a year earlier.
In this year’s quarter, noninterest income, excluding the gain on the sale of the Arizona branches, was $72.9 million, up from $60.5 million reported in the year-ago quarter.
Sanford Bernstein analyst Jonathan Gray raised his 1998 earnings forecast for Ahmanson to $3.40 a share from $3.30 a share after the thrift’s first-quarter results exceeded his estimates.
