WHAT'S ON HORIZON FOR GREAT WESTERN? : TAKEOVER OFFER CREATES UNCERTAINTY.Byline: Gregory J. Wilcox Daily News Staff Writer
Two weeks ago Great Western Financial Corp. bid adios to its time-worn cowboy image, saying it would pay an advertising agency $15 million this year for a new corporate persona persona /per·so·na/ (per-so´nah) [L.] in jungian psychology, the personality mask or facade presented by a person to the outside world, as opposed to the anima, the inner being.
Now it appears that the Chatsworth-based financial giant - a Fortune 500 company whose charter dates back a century - may itself ride off into the sunset before the ink is dry on any of those ads.
Last week, Great Western executives became unwilling participants in a high-stakes corporate poker game, scrambling to stave off stave
1. A narrow strip of wood forming part of the sides of a barrel, tub, or similar structure.
2. A rung of a ladder or chair.
3. A staff or cudgel.
4. Music See staff1. a hostile $6 billion takeover by rival A.H. Ahmanson & Co.
Their jobs, and those of about 3,000 other workers who staff Great Western's 57-acre campus headquarters in the 9200 block of Oakdale Avenue, are at risk. So is the company's own identity.
Great Western executives have declined to discuss the issue but released a statement saying that their board is evaluating Ahmanson's proposal.
Ahmanson's chairman and chief executive, Charles R. Rinehart, discussed the offer at length with reporters Tuesday but the company has turned down interview requests since them.
Meanwhile, some analysts say there is a good chance that Great Western won't survive as a corporate entity much longer even if it fights off Ahmanson's bid. This sector of the financial industry is ripe for consolidation and a variety of suitors could surface for either company.
``It is highly unlikely that Great Western will remain as an independent company,'' said Reid Nagle, a banking industry analyst at 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 in Charlottesville, Va. ``It doesn't have the kind of quality management that is necessary to survive and prosper . . . as an independent company.''
He is referring to James F. Montgomery, Great Western's chairman who has been with the company for 20 years, and its president and chief executive, John F. Maher, an 11-year employee.
``Great Western has been staggering for a long time under the same management,'' Nagle said.
The company, though, maintains that it is changing with the times.
It notes that today it has ``significantly'' wider net interest margins and higher levels of fee income that its major competitors. And last year it put together a new senior management team experienced in consumer banking, put in place some new technology to reduce costs and support revenue-generating business lines and restructured the mortgage origination business to reduce costs.
Great Western's product line now includes home equity lines of credit, new and used auto loans and small-business loans and credit cards.
The company traces its roots back to 1887 with the founding of Citizen Savings and Loan Association savings and loan association, type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public.
The first U.S. savings and loan association was founded in 1831. of Santa Barbara Santa Barbara (săn'tə bär`brə, –bərə), city (1990 pop. 85,571), seat of Santa Barbara co., S Calif., on the Pacific Ocean; inc. 1850. . The name, though, dates back to 1925 with the founding of the Great Western Building and Loan Association 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. .
Great Western and Citizens Savings merged several years later, with the Great Western name surviving.
And the company is responsible for several industry innovations. In 1955, it became the first 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. to become a publicly held company.
Then in 1974 it began issuing a new mortgage instrument, the ``variable rate mortgage,'' a forerunner A family of ATM adapters from Marconi (formerly Fore Systems). See Marconi. of today's adjustable rate mortgage This article is about the US mortgage type. For an international perspective, see Variable rate mortgage.
An adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on an index. . It moved some operations to the sprawling Chatsworth campus in 1979 and relocated the headquarters operations there from Beverly Hills Beverly Hills, city (1990 pop. 31,971), Los Angeles co., S Calif., completely surrounded by the city of Los Angeles; inc. 1914. The largely residential city is home to many motion-picture and television personalities. in 1992.
The future of that facility remains in question. Ahmanson officials said if they are successful in their pursuit of Great Western that some of the company's operations could be located in Chatsworth and the number of people working there might increase.
Both companies survived the turmoil of the early 1990s, when rising interest rates and declining real estate values battered bat·ter 1
v. bat·tered, bat·ter·ing, bat·ters
1. To hit heavily and repeatedly with violent blows.
2. To subject to repeated beatings or physical abuse.
3. the balance sheets of thrifts and drove some out of business.
Meanwhile, new federal laws and subsequent regulatory changes led to the blurring of the lines between traditional banks and thrifts.
For example, in the past thrifts basically issued certificates of deposit and made home loans. Today, though, the industry is moving to be more banklike, offering checking accounts, issuing credit cards and making consumer and small-business loans.
It is setting off a scramble for market share, that in part is fueling the consolidation movement.
Barry Rubens, president of California Research 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. and publisher of the CRC (Cyclical Redundancy Checking) An error checking technique used to ensure the accuracy of transmitting digital data. The transmitted messages are divided into predetermined lengths which, used as dividends, are divided by a fixed divisor. Report, a banking industry newsletter, believes a merger like the one proposed by Ahmanson would maximize the economic muscle of the two companies.
``It's a good combination,'' he said. ``It would create a solid financial giant to compete with the banks in California and it would be very good for Home Savings.''
Combined, the two companies would have assets of about $93 billion. SNL's Reid said the new company, in terms of deposits, would rank third in California with a 13.4 percent market share.
So what makes Great Western an attractive takeover target Takeover target
A company that is the object of a takeover attempt, friendly or hostile.
See target company. ?
Reid cites its franchise, nearly $43 billion in assets at the end of 1996 and a 416-office operation that ranks fourth in California for deposit market share.
And it's one of the few viable entry vehicles for an outside company looking to enter the California market.
Two names that surfaced in the analyst community last week were NationsBank Corp. of Charlotte, N.C., and 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. Washington Mutual Inc. in Seattle.
A spokeswoman at NationsBank said the company does not comment on speculation.
Washington Mutual is already in the California market after buying Stockton, Calif.-based American Savings for $1.7 billion.
That company now has 150 branches throughout the state and is in the market for more.
``We continue to believe that there are opportunities to grow our California franchise both through acquisition and internal growth,'' said company spokeswoman Libby Hutchinson.
But she declined to say whether the company will make a bid for Great Western.
Analyst Reid said that even though Washington Mutual is digesting a recent purchase it could still forge ahead with an offer for Great Western.
In the end, Ahmanson could end up fending off an unwanted suitor SUITOR. One who is a party to a suit or action in court. One who is a party to an action. In its ancient sense, suitor meant one Who was bound to attend the county court, also, one who formed part of the secta. (q.v.) .
``If Washington Mutual does the acquisition, my prediction is that within a year they would take over Ahmanson as well,'' Nagel said. ``In one way or another Great Western and Ahmanson are coming together. The issue is: Are they coming together as just the two or with a third party protagonist?''