A rumor surfaced last week in Los Angeles that Banc One Corp. was about to reenter the merger fray by making a deal for H.F. Ahmanson & Co.
Auditors from the Columbus, Ohio, regional powerhouse were said to have been sighted three times visiting Ahmanson's main unit, Home Savings, supposedly to review the books in preparation for a deal.
Talk of a Banc One-Ahmanson deal was just one of the rumors circulating in California last week. Washington Mutual Savings Bank, Seattle, which has said it was in talks with some California institutions, was said to be taking a hard look at First Nationwide Bank - itself an active acquirer - Glendale Federal Bank, and Coast Savings Bank.
But the idea that a big, out-of-state player would reenter the merger market through a California deal supported the notion that the state's rebounding economy could speed consolidation.
Banc One has mostly sat out the current acquisition wave, though it was reported to be a serious bidder for Boatmen's Bancshares. The Columbus bank has been preoccupied with melding its loose-knit confederation of acquisitions into large, statewide franchises, an effort that is largely completed.
William P. Boardman, senior executive vice president of Banc One, declined to comment on the Home Savings talk. He acknowledged, however, that Banc One was interested in California - among other states - and had "looked at" First Interstate Bancorp before it was acquired by Wells Fargo & Co.
"We are an acquiring company and expect to be going forward. There is no question about that," Mr. Boardman said. "We've been involved in virtually every transaction that's taken place, but principally for pricing reasons, have not been competitive with those who have been willing to pay more."
Analyst Michael Granger of Fox-Pitt, Kelton Inc., said buying Home Savings would be consistent with Banc One's strategy of entering a market by buying a top player. As "a proven leader" in selling consumer products, Banc One's strength would mesh nicely with Home Savings' stated strategy of becoming more like a consumer bank, Mr. Granger said.
But out-of-state banks buying a California thrift face daunting obstacles, said Philip Erlanger, a Lehman Brothers investment banker who represented American Savings Bank when it was sold to Washington Mutual earlier this year.
In buying a thrift, an out-of-state bank gets only a relatively small share of deposits in California's notoriously competitive market, Mr. Erlanger said. Even Home Savings, the state's largest thrift, has only 8% of the state's deposits versus a combined 36% for the top two players, Bank of America and Wells Fargo, according to SNL Securities, Charlottesville, Va.
Moreover, an acquiring bank would have to face the same challenge thrifts now face, that of developing new, more profitable lines of business to replace the thin-margin mortgage business, he added.
"It's very intimidating," Mr. Erlanger said. "With rare exception, a non-California bank looking to get into California today will find it difficult to make a strong argument" for such an acquisition to its shareholders.
H. Rodgin Cohen, a bank merger specialist at the law firm of Sullivan & Cromwell, New York, said history argues against a bank-thrift deal in California. "I think the most likely (outcome) is that the consolidators - Washington Mutual and First Nationwide - will continue to consolidate."
A spokeswoman at Home Savings acknowledged Friday that various merger rumors were circulating within the company, but added: "We don't comment on rumors." Representatives of Coast and Glenfed declined to comment, and First Nationwide did not respond to telephone calls.
