Golden State to Buy RedFed in Stock Deal
In an effort to stake a claim in the Inland Empire market, Golden State Bancorp, the nation’s sixth-largest thrift, agreed on Monday to acquire RedFed Bancorp, the holding company of Redlands Federal Bank, for $158 million in stock.
By adding the 14 Redlands Federal branches in San Bernardino and Riverside counties, Golden State--parent of Glendale Federal Bank--would gain a foothold in a region of Southern California where Golden State Chairman and Chief Executive Stephen Trafton has said the thrift is underrepresented.
Campbell Chaney, an analyst with Sandler, O’Neill & Partners, said the acquisition would “open up the Inland Empire for Golden State.”
In a similar effort to boost its market share in the Los Angeles area, Golden State in August agreed to acquire Pasadena-based CenFed Financial Corp. for $210 million in stock.
The acquisition plans are in tandem with other strategies by the company to boost its presence around California. Golden State has been expanding its automated teller network in various locations, including sports venues, hotels, theaters and copy centers. Last month, it signed an agreement with McDonald’s Corp. to place ATMs in selected McDonald’s restaurants.
Richard Fink, vice chairman of Golden State, said the thrift plans to extend its reach even further by tapping into markets in the Central Coast region, the San Francisco Bay Area and Sacramento.
“We are interested in strengthening our presence and building mass,” he said.
Under the terms of the agreement announced Monday, Golden State will trade $20.75 of its common stock for each RedFed common share. The exact number of shares has yet to be determined.
Shares of Glendale-based Golden State rose 56 cents to close at $33.88 on the New York Stock Exchange. RedFed shares were unchanged at $20 in Nasdaq trading.
To solidify its hold on the region, Golden State said it has no plans to close any of the branches of Redlands-based RedFed, but does expect to trim operating costs by cutting an unspecified number of administrative and managerial jobs.
According to Trafton, the purchase of RedFed, which has $912 million in assets, will add 1.8% to per-share earnings by the end of fiscal 1999.
The acquisition, to be treated as a tax-free exchange, is expected to be completed by June 1998.
