In what one analyst said may be a precursor to similar developments at other big California thrifts, H.F. Ahmanson & Co. has announced its first stock repurchase plan.
The $50 billion-asset company's board this week authorized repurchases of up to $250 million of its common stock. This would equal between 5% and 10% of the thrift's shares outstanding, depending on the price at which the shares are purchased, said spokeswoman Mary Trigg.
The repurchase plan by Ahmanson, the country's biggest thrift, is the result of its sale last month of 60 retail branches in New York to GreenPoint Bank. Ahmanson received $670 million from that transaction. Analysts had expected the Irwindale-based company to use at least a portion of the proceeds to buy back its own stock in an effort to increase earnings per share.
"When we announced the sale of our New York branch system earlier this year, we emphasized our commitment to enhance shareholder value," said Ahmanson chairman and chief executive Charles R. Rinehart. "The stock repurchase program is an important step in achieving this commitment," he declared.
Analysts said the remainder of the branch-sale proceeds may be used to buy a consumer finance company, branches in California, or to pay for a one-time charge that expected early next year from the merger of the thrift and bank deposit insurance funds.
Ms. Trigg said that such acquisitions had been mentioned by Ahmanson's management as possibilities but that they would be made only if they were more profitable than the effect of buying back stock.
Gary Gordon, a stock analyst with PaineWebber Inc., said that Ahmanson's stock repurchase could presage similar common stock repurchases next year by two other big California thrifts - California Federal Bank and Glendale Federal Bank.
Mr. Gordon said that rising profits, continuing branch sales, and slow loan growth were likely to put these two thrifts in the possession of significant quantities of excess capital by next year.
He saw a distinct possibility that the two companies would use the capital to buy back stock, since such repurchases are now very popular with investors.
Mr. Gordon commented that common stock repurchases by Glenfed and Calfed would be a watershed event, since in 1992 and 1993 both thrifts were forced into massive restructurings.
