First Interstate Bancorp, Washington Mutual Savings Bank, and Norwest Corp. have made offers for Pacific First Bank, the Seattle-based thrift put up for sale by its Canadian owner, sources familiar with the bidding said.

While terms of the offers could not be learned, Pacific First's Toronto-based parent, Royal Trustco Ltd., was demanding roughly $450 million despite the Seattle thrift's substantial asset-quality problems, the sources said. They doubted any of the bids met the asking price.

Not Bidding

First Bank System Inc., Minneapolis, U.S. Bancorp, Portland, Ore., and KeyCorp, Albany, N.Y., reviewed bid documents for Pacific First, but didn't submit offers by an Oct. 7 deadline set by Merrill Lynch & Co., Royal Trustco's investment bank, the sources said.

None of the companies would comment.

Pacific First, with $6.9 billion in assets, has 126 branches and eight mortgage offices in Washington State, Oregon, and California.

The thrift recently signed a letter of intent to swap its 10 California branches for 14 Washington branches of Great Western Bank.

Royal Trustco asked bidders to submit bids for the entire operation, rather than portions, sources said. After the Great Western exchange, Pacific First would have 60 branches in Washington and 70 in Oregon.

Split-Up Held Possible

But analysts speculated Seattle-based Washington Mutual and First Interstate, Los Angeles, might end up dividing Pacific First's operations.

Although they put in separate bids, Washington Mutual has said it wants to expand in Oregon., while First Interstate recently announced its interest in Washington.

Sources said the main obstacle to a sale are Pacific First's heavy load of problem loans and foreclosed property, including a large portfolio of California construction credits.

Nonperforming assets totaled $349.7 million at the end of June, but total risky loans are considerably higher.

Royal Trustco has offered to keep as much as $425 million in problem assets in order to protect a buyer. But sources said the figure may not be enough to satisfy potential acquirers.

"They are not even close to giving sufficient credit quality protection." said an individual familiar with Royal Trustco's proposed terms.

On price, sources said Royal Trustco has asked for the adjusted book value of Pacific First's equity, plus a premium of at least 4% of the thrift's $4.4 billion in deposits. That translates into roughly $450 million.

In handicapping the three bidders, analysts said Washington Mutual and First Interstate have an advantage, especially if they join forces. The two already have operations in Washington and Oregon and will be able to factor post-merger cost savings into their bids.

Minneapolis-based Norwest has the strongest financial resources and Pacific First would provide it an entry vehicle into the Northwest, a region it has long coveted.

But analysts doubted Norwest would be willing to pay a steep price for a troubled thrift, even if represented the best expansion opportunity in the region.

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