A Northern California community thrift denied a Business Week report that it had unsuccessful merger talks with First Nationwide Bank.
California Financial Holding Co., parent of Stockton Savings Bank, confirmed that it had received a merger offer last year from $14 billion- asset First Nationwide, but had told the larger company that it intended to remain independent.
Robert V. Kavanaugh, president and chief executive of Stockton Savings, said the proposed deal, first broached in December, was of a cursory nature only.
"We weren't in discussion with First Nationwide," he said. "They presented us with an offer by letter and we did our duty and had the board review the offer, but that was all."
Business Week's April 8 edition, which came out the first of the month, reported that talks between First Nationwide and $1.3 billion-asset California Financial "recently broke down." The deal was said to be worth $24 a share, roughly 30% over market price.
In an April 2 statement, California Financial said that while it had a duty to evaluate offers, it was the thrift's long-standing policy to remain independent and the board had determined that route best served the company's interests.
Founded in 1887 and based 50 miles south of Sacramento in the San Joaquin Valley, Stockton Savings Bank is one of California's oldest thrifts and one of the largest in that part of the state.
The thrift is a bread-and-butter mortgage lender with more than $875 million in permanent mortgages, a $538 million mortgage servicing portfolio and only $8 million in consumer loans, according to Sept. 30 data from Sheshunoff Information Services.
Steven J. Didion, analyst with Hoefer & Arnett, San Francisco, said California Financial's board does have a policy of reviewing each offer it receives, but that the company knows it will be in a better position to sell if it waits.
"I would characterize this company as one that will look at any offer, but they also believe they have some good opportunities with California's rebirth," he said. "They don't want to sell at the bottom or at a downturn."
California only recently has begun to emerge from a real estate-driven recession that gripped the state for half a decade. Land values throughout the Central Valley are now beginning to rebound.
Mr. Didion said the proposed deal is a logical one for the Texas giant, which has branches throughout the Bay Area and up into Sacramento.
"The deal makes sense for First Nationwide," he said. "Stockton Savings has size and it would be a natural extension of markets for them."
For its part, First Nationwide has been making waves in the state recently, acquiring two San Francisco thrifts over the past year, while downsizing operations out-of-state.
Last summer, the thrift reached agreement to buy SFFed Corp., a 35- branch, $4.1 billion-asset thrift company that owns San Francisco Federal Savings and Loan Association. And in December, First Nationwide agreed to buy Home Federal Financial Corp.
The bank has also been active in the seller's market. Within the past 18 months, First Nationwide has sold off more than $4 billion worth of deposits and branches in the Illinois, Michigan, Ohio, New Jersey, and New York markets.
Formerly a subsidiary of Ford Motor Co., First Nationwide was purchased in 1993 by a Plano, Tex., investment group led by banker Gerald J. Ford and financier Ronald D. Perelman.
