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.

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 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 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 of Santa Barbara. The name, though, dates back to 1925 with the founding of the Great Western Building and Loan Association in Los Angeles.

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 to become a publicly held company.

Then in 1974 it began issuing a new mortgage instrument, the ``variable rate mortgage,'' a forerunner of today's adjustable rate mortgage. It moved some operations to the sprawling Chatsworth campus in 1979 and relocated the headquarters operations there from Beverly Hills 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 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 and publisher of the CRC 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?

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 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.

``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?''