GOODYE, GLENFED; BANK APPROVES BUYOUT FROM CALIFORNIA FEDERAL.Byline: Dave McNary Daily News Staff Writer The parent company of Glendale Federal Bank, seeking the muscle to battle California's banking giants, agreed Thursday to combine operations with 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. in a $2.5 billion merger. The deal, reflecting the frantic pace of consolidation within the banking industry, will force the 231-branch Glendale Federal to surrender its identity, 64 years after its founding as First Federal 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. of Glendale. Thus, when the deal closes later this year following regulatory and shareholder approval, Glendale Federal will join other Los Angeles-area institutions such as Security Pacific, First Interstate, Coast Savings and Great Western that have vanished this decade. The merged entity will be the nation's third-largest thrift with about 400 branches, $51 billion in assets and a 6.4 percent share of the state's deposits. ``This pairing is very logical in today's climate,'' said Thomas Theurkauf, an analyst with New York-based Keefe Bruyette & Woods. The announcement was not a complete surprise. Stephen Trafton, chairman of Glendale Federal's parent Golden State Bancorp, said he was open to buyout offers in November and analysts believed California Federal, Washington Mutual “WaMu” redirects here. For the Washington, DC radio station, see WAMU. Washington Mutual (or WaMu; NYSE: WM) is the United States' largest savings and loan association. and H.F. Ahmanson & Co. were the most likely suitors. Wall Street endorsed the deal with stock of Golden State rising 2-1/4 to 38. Analyst Charlotte Chamberlain of Los Angeles-based Jefferies & Co., who upgraded her rating on Golden State to ``buy'' Thursday, said the transaction made sense for both sides. ``Trafton did not have to do this deal for his company to survive, but this will maximize shareholder value,'' she said. For Trafton, the deal marks the completed rehabilitation rehabilitation: see physical therapy. of Glendale Federal, which was on the verge On the Verge (or The Geography of Yearning) is a play written by Eric Overmyer. It makes extensive use of esoteric language and pop culture references from the late nineteenth century to 1955. of government seizure five years ago. The executive already carried a strong reputation for pushing Glendale Federal into profitability by cutting costs and launching an aggressive ad campaign targeting BankAmerica Corp. and Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. & Co., the state's largest banks. California Federal management will run the combined entity while Trafton will stay on to oversee the outcome of lawsuits that both thrifts have filed against the federal government. Both could receive hundreds of millions of dollars if the court rules in their favor. Control to Perelman The transaction will give control over the new company to billionaire Ronald Perelman For the actor, see . Ronald Owen Perelman (born January 1, 1943) is an American billionaire investor who made his fortune buying beleaguered corporations and re-selling them later for enormous profits. through his First Nationwide Holdings Inc. Golden State Bancorp shareholders will own 55 percent to 58 percent of the company, while Perelman and associate Gerald Ford - no relation to the former U.S. president - will own the rest. Perelman also controls Revlon Inc., Coleman Co. and Consolidated Cigar Corp. and has a pending deal to take control of Woodland Hills-based movie camera producer Panavision. Barry Rubens, head of industry tracker California Research, said Perelman is likely to continue aggressive expansion in California by moving beyond home loans and into the more profitable areas of commercial banking. ``I think the whole secret will be to compete with Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. and Wells Fargo,'' Rubens said. ``And I think customers will benefit from more competition in the long run because the new organization will have economies of scale and more wide-ranging services through specialized personnel.'' The companies promised they will be able to save $131 million in annual costs by the end of next year. To do so, about 60 Glendale Federal and California Federal branches will close statewide, mostly in neighborhoods with now duplicating offices, and 1,100 of the combined companies' 8,400 jobs will be eliminated, although the companies said most of the losses will come through attrition. ``I don't think the customer will notice much change,'' said Victoria Wagner, an analyst with Standard & Poor's debt-rating service. ``They're certainly not removing themselves from the market.'' S&P placed the debt of both companies on review for a possible upgrade, citing improved market share, cost savings and the experience of California Federal's management. Trace of identity The only trace of Glendale Federal's identity remaining will be the moniker (1) A name, title or alias. See alias. (2) A COM object that is used to create instances of other objects. Monikers save programmers time when coding various types of COM-based functions such as linking one document to another (OLE). See COM and OLE. of parent Golden State Bancorp, which will be the name of the new combined company and its stock symbol. Headquarters will be at California Federal's home in San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden , and a company spokeswoman said no decision has been made as to what to do with Glendale Federal's headquarters on Central Avenue in Glendale, where 1,000 employees work. Will customers remain loyal to California Federal and Glendale Federal branches? Analyst Eric Withrow of SNL SNL Saturday Night Live SNL Sandia National Laboratories SNL School for New Learning (Depaul University) SNL Springfield News-Leader (Missouri newspaper) SnL Sweet N Low SNL Standard Nomenclature List Securities LC in Charlottesville, Va., believes they will. ``I think they will continue to have a (corporate) culture of customer service,'' he said of the new company. ``That's where they are going to beat the big banks.'' Withrow said the deal gives the company a ``very, very strong presence'' throughout California. ``It fills in a lot of the holes in each other's franchises,'' he added. The expansion of California Federal's presence could work to the advantage of some smaller banks looking to snag market share, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Gene Galloway, executive vice president for retail and community banking at Los Angeles-based Sanwa Bank California. Marketing strategy Galloway, who worked at California Federal in the mid-80s, hinted that his bank could duplicate Glendale Federal's marketing approach of aiming at big rivals. ``They've really taken a guerrilla approach over the last two or three years, so it will be interesting to see if we take a guerrilla approach against them,'' Galloway said. ``Anytime you see two major financial institutions merge it creates a lot of opportunities for true relationship banking that we provide.'' The combined companies will have a 7.34 percent market share 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. County and 11.76 percent share in Ventura County, according to SNL Securities. That will make it the fifth-largest financial institution in Los Angeles County and the fourth largest in Ventura County. The deal calls for Golden State shareholders to receive a stake based on a sliding scale slid·ing scale n. A scale in which indicated prices, taxes, or wages vary in accordance with another factor, as wages with the cost-of-living index or medical charges with a patient's income. linked to the price of their stock during a period before the transaction is completed. The transaction's value will also depend on the outcome of Golden State's breach-of-contract lawsuit against the federal government, stemming from the purchase of a failed Florida thrift in exchange for government promises that part of the purchase prices could be counted as capital. A U.S. court ruled in Glendale Federal's case that the government broke its promise. The case is now before the U.S. Court of Claims, which is expected to rule later this year. Before the First Nationwide deal closes, Golden State will carry out a previously announced plan giving shareholders the right to receive warrants equal to about 85 percent of net after-tax proceeds from the suit. Perelman and Ford will receive rights to additional shares of the combined institution based on California Federal's suit against the government. They will also receive Golden State stock as California Federal's $1 billion in tax benefits are realized. Perelman owns 80 percent and Ford 20 percent of First Nationwide. After the transaction, Perelman will own about 31 percent of the company; Ford, who will be the company's chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , will hold about 11 percent. Golden State Bancorp is the tenth-largest publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. headquartered in the Valley area, as measured by market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. . Bye-Bye Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, Los Angeles-area banks and thrifts that have been bought since 1990 include: YEAR FORMER L.A. COMPANY BUYER HQ 1991 Security Pacific Corp. BankAmerica Corp. S.F. 1996 First Interstate Bancorp First Interstate Bancorp was a bank based in the United States that was taken over in 1996 by Wells Fargo. It was headquartered in Los Angeles. The name has continued to be used in the banking world by used after the merger by First Interstate Bank who had been using the Wells Fargo & Co. S Wells Fargo & Co. Leading U.S. banking and financial services company formerly involved in express transport. Founded in 1852, Wells, Fargo transported gold between the west and east coasts in the wake of the California gold rush. .F. 1996 CalFed Bancorp First Nationwide S.F. 1997 Great Western Bancorp Washington Mutual Seattle 1997 Coast Savings Financial H.F. Ahmanson Irwindale 1998 Golden State Bancorp First Nationwide S.F. SOURCE: SNL Securities LC CAPTION(S): chart, photo Photo: (color) no caption (Glenfed building) Chart: Bye Bye Southern California (see text) |
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