CalFed takes over operations of Empire Savings; Empire had 13 branches in state; CalFed will close 10.CalFed takes over operations of Empire Savings Empire had 13 branches in state; CalFed will close 10 California Federal Bank California Federal Bank, often abbreviated to "Cal Fed", was a savings and loan bank in California. It existed from 1926 until 2002, when its parent company Golden State Bancorp was acquired by Citigroup, resulting in the bank being merged into Citibank. will acquire $265 million in deposits and 13 local branches of an insolvent savings and loan savings and loan n. a banking and lending institution, chartered either by a state or the Federal government. Savings and loans only make loans secured by real property from deposits, upon which they pay interest slightly higher than that paid by most banks. in a move to strengthen retail lending operations. California Federal, based in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , will close 10 of the 13 remaining California branches of Empire Federal Savings of America, of Buffalo, N.Y., consolidate Empire deposits into nearby California Federal offices and operate three other Empire branches located in Santa Monica Santa Monica (săn`tə mŏn`ĭkə), city (1990 pop. 86,905), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1886. Tourism and retailing are important, and the city has motion-picture, biotechnology, and software industries. , Monterey Park Monterey Park, city (1990 pop. 60,738), Los Angeles co., S Calif., a growing residential suburb of Los Angeles; inc. 1916. It is a wholesale, retail, and financial services center. and Woodland Hills. California Federal and Empire executives declined to disclose the terms of the sale, which is is scheduled to take effect Sept. 7, pending federal approval of the transaction. A California Federal executive said that the move will fortify for·ti·fy v. for·ti·fied, for·ti·fy·ing, for·ti·fies v.tr. To make strong, as: a. To strengthen and secure (a position) with fortifications. b. To reinforce by adding material. the company's local operations. "We recognize this as a good opportunity to expand our retail deposit base in the Southern California market and at a relatively low cost," said Rhanda Kahawaii Dunn, California Federal vice president of investor relations Investor relations The process by which the corporation communicates with its investors. . Since 1989, the savings and loan has been discontinuing unprofitable areas of business and concentrating on its core retail lending operations. In August 1989, the S&L sold its credit card portfolio; in October it phased out its real estate development subsidiaries and its direct mail insurance system, and in February the company sold its property-casualty insurance business. Analysts said that while the acquisition is small and will not affect CalFed stock, the company will likely be paid a reasonable price for assets and liabilities which may strengthen its operations. CalFed's stock closed at $9.25 Aug. 7, the day of the announcement. "Retail deposits are very desirable," said David Hochstim, an analyst at New York-based Bear Stearns & Co. "Acquiring branches and deposits is a way to reduce the cost of funds Cost of Funds The interest rate paid on an outstanding loan. Notes: Money isn't free! Cost of funds is the cost of borrowing money. See also: Interest Rate Cost of funds Interest rate associated with borrowing money. . You can pay off higher cost borrowings or increase your funding base." CalFed expansions this year include the July 20-effective acquisition of three empire branches, two in San Francisco and one in Pasadena, and the opening of branches in Henderson, Nev. in February and in Laguna Hills, Newhall and Yorba Linda in May. With the latest Empire transaction, the savings bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. will operate 203 offices in five states, including 141 in California and 107 in Southern California. Dunn said that the company will attempt to place the 79 employees of the 13 Empire offices at California Federal offices. California Federal's holding company, CalFed Inc., earned $82.4 million on total revenues of $3.1 billion in 1989, compared to net earnings of $134 million on total revenues of $2.7 billion in 1988. Dunn said that 1988's higher net income resulted largely from exceptional gains from loan sales and loan payoffs from earlier acquisitions. Empire Federal Savings was placed in receivership by the Resolution Trust Corp. in February. The thrift had 125 branches at the time and currently has 107 branches. |
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