GreenPoint Financial Corp. said Monday that it will pay H.F. Ahmanson & Co. $660 million for the New York City-area deposits of Home Savings Association of America.
The deal had been increasingly rumored during the past week, but the deluxe price tag, amounting to an 8% premium on the $8.3 billion of deposits involved, surprised many observers.
GreenPoint is acquiring 60 branch offices, many of them once outlets of the Bowery Savings Bank in New York and the suburban areas of Long Island and Westchester County. The New York thrift also will be getting up to $1.5 billion of securities.
The transaction will let Ahmanson, based in Irwindale, Calif., focus on three chosen markets, California, Florida, and Texas, according to its chairman and chief executive officer, Charles R. Rinehart.
Meanwhile, GreenPoint, based in New York, will finally be leveraging a significant part of the huge capital position it has enjoyed since converting from mutual to stock status in January 1994.
"The price is certainly very high by traditional standards, but I suspect it is worth it," said John J. Lyons of Lyons Advisors Inc., a New York consultant to financial institutions.
"The deposit bases of these traditional New York savings bank branches tend be very large and also relatively stable," he said. "We are definitely not talking about barely profitable $20 million branches somewhere.
"Many of these branches have over $100 million in deposits attached to them. Some probably have $200 (million) or even $300 million," Mr. Lyons said. "There's nothing like them anywhere else in the country."
The deal will give GreenPoint the largest share among thrifts of the New York deposit market. But GreenPoint competes with some of the nation's largest banks, so analysts put little importance on its ranking among thrifts.
From the Ahmanson viewpoint, analysts were ecstatic. "This deal is absolutely a home run. I just felt like standing up and applauding," said Jonathan E. Gray of Sanford C. Berstein & Co., New York.
Mr. Rinehart, in an interview Monday, said Ahmanson felt it could best utilize its managerial and financial resources by focusing on its home market of California and on Florida and Texas.
In California, Home Savings ranks third in deposit market share behind Bank of America and Wells Fargo Bank and second only to BofA in the populous southern portion of the state.
"Our objective is very high concentration and market share where we are doing deposit-gathering business," said Mr. Rinehart, who ideally wants Home Savings to rank among the top three institutions in its chosen markets.
"This may look like a large deal, but the $8 billion (of deposits) being sold represents only a 2% share in New York. We are not exiting a market where we had a substantial presence."
But Mr. Rinehart discouraged the idea that Ahmanson itself will be a major acquirer in other markets. "Acquisitions are not key to our objectives," he said. "We are focusing on core fundamentals of our business, like credit quality, streamlining costs, and creating efficiency."
