Local thrifts may become takeover targets.

First Interstate Bancorp's expected acquisition by either Wells Fargo & Co. or First Bank System Inc. may increase the allure of some L.A. County-based thrifts as takeover targets, according to Wall Street -analysts.

Although the battle for L.A.-based First Interstate is still too close to call between Minneapolis-based First Bank and San Francisco-based Wells Fargo, most observers agree that First Interstate will not remain independent.

For years, First Interstate was widely regarded as "the jewel" for out-of-state banks wanting to establish a California presence via acquisition, said Campbell Chaney, an analyst with Chicago-based investment firm Rodman & Renshaw Inc.

"Now with First Interstate off the market, it pushes Great Western to the top of the list," he said.

Three Wall Street analysts cited Chatsworth-based Great Western Bank, the second-largest thrift in the country, as the top acquisition target for an out-of-state buyer.

Other L.A. County-based institutions seen as targets are, in no particular order, Irwindale-based Home Savings of America, Glendale-based Glendale Federal Bank, L.A.-based Coast Federal Bank and L.A.-based California Federal Bank.

Homing in on Home

Out-of-state banks viewed as would-be buyers include Charlotte, N.C.-based NationsBank, Minneapolis-based Norwest Corp. and Columbus, Ohio-based Banc One Corp., said James Marks, an analyst with San Francisco-based investment firm Sutro & Co. These banks have indicated a desire for a California presence, he said.

Of the potential targets, H.F. Ahmanson & Co., parent of Home Savings, with $52 billion in assets, and Great Western, with $44.5 billion in assets, are by far the largest and would give any buyer an immediate large presence in the state.

The other thrifts - GlenFed, with $16 billion in assets, CalFed with $14 billion in assets, and Coast with $8 billion in assets are often referred to as second-tier thrifts.

Analysts said a non-California bank might acquire two second-tier thrifts or wait for mergers to bring together some of those companies, in order to attain a large presence in California.

Jerry Gitt, an analyst with New York-based Merrill Lynch Global Securities Research, wrote in a recent report that Great Western - with its large volume of traditional bank lines of business, such as checking accounts and a consumer finance company "is the most bank-like of the California thrifts."

Chaney agreed with that assessment. He also noted that Great Western may seem more attractive than the larger Home Savings of America because "it's a little bit fatter" in operating expenses, making it more attractive for a potential buyer seeking to offset the price tag with some cost cutting.

But Charlotte Chamberlain, an analyst with L.A-.based investment firm Wedbush Morgan Securities, said she believes Ahmanson may be as attractive as Great Western.

"Ahmanson is larger; it has a little bit more market share (in California)," Chamberlain said. "It seems to me there is not a lot of difference between them."

William Browning, Western region managing partner of big accounting firm Arthur Andersen LLP, said bank and thrift chief executives are under a lot of pressure from investors to acquire or be acquired.

Successful acquisitions increase revenues at lower costs than are possible through interval expansion, Browning said. In most acquisitions both companies have certain types of operations in common, so the buyer is able to slash costs by cutting jobs and closing redundant operations.

Acquirers exist

Browning added that he does not view the local thrifts just as targets.

"I think we have a few thrifts out here that have enough management strengths that they will be acquirers:' Browning said. "I think a company like an Ahmanson or a GlenFed could be an acquirer."

He noted that there may be more mergers and acquisitions involving California thrifts if Congress merges the bank and thrift federal deposit insurance funds and their regulatory agencies, spurring thrifts to convert to banks.

Analyst Chamberlain said the fact that banks have different charters and different regulators than thrifts hinders mergers and acquisitions between the two types of institutions. If a bank acquires a thrift, as many as four regulatory agencies get involved.

Chamberlain said several thrifts will likely become banks in the near future, and mergers-and-acquisitions activity will likely pick up in California.

One local thrift-executive noted some industry insiders have been puzzling over whether it would be best for shareholders to "go first or go last" when the expected acquisition tidal wave hits. The first thrift acquired runs the risk of selling out before the true price of California thrifts is established. And if a thrift waits until all others are sold, there may not be any buyers left.

Analyst Chaney said it might be better for thrifts to sell somewhere "in the middle" of the expected acquisition spree.

"It's kind of like going to a party," he said. "If you're the first one to the party, you're self conscious. And if you're the last one to leave, it's kind of like, 'Turn off the lights."