SAN FRANCISCO - ITT Corp.'s recently announced plan to sell its finance unit have set the stage for the dismantling of ITT Federal Bank, the country's 42d-largest thrift.
In one of many transactions related to the spinoff, Irvine, Calif.-based ITT Federal Bank's three branches and about $150 million of its deposits are to be acquired by First Nationwide Bank, a $14.7 billion-asset thrift based in Dallas, for an undisclosed sum.
The ITT Federal deal marks the first acquisition of branches by First Nationwide since it was acquired from Ford Motor Co. in September by Texas banker Gerald J. Ford and financier Ronald O. Perelman.
Although only three branches are being acquired, the purchase marks a modest, though strategically important step toward expansion in California. The branches are all in the affluent Orange County area.
First Nationwide has only two branches in the county currently. The thrift has 156 branches, with 49 in California and the rest in Ohio, New York, Florida, Michigan, New Jersey, and Texas.
Meanwhile, the loan portfolio of $4.3 billion-asset ITT Federal Bank is being sold to other investors in a series of bulk sales, said an individual familiar with the matter.
About 40 employees of the three branches are expected to retain their positions, although that is not stipulated in the deal, the source said. It is not clear what will happen with the senior executives and support staff who work in ITT Federal's headquarters.
John D. Broderick, chairman of ITT Federal Bank, declined to comment on the deal, which is expected to close in August.
He did say, however, that ITT Federal had started preparing for the sale earlier this year, when it closed its five wholesale lending offices in California, Seattle, Austin, Tex., and Boston.
Mr. Broderick said that nearly all of ITT Federal's assets are one-to- four-family mortgage loans. About half the loans were acquired from other institutions; the rest were originated. He also said the quality of the loan portfolio is good, with few nonperformers.
In March, First Nationwide bought a Frederick, Md.-based loan servicing center of a failed thrift from the Resolution Trust Corp.
The First Nationwide deal, announced Friday, is part of a broad restructuring by ITT out of finance and into the hotel and gaming industry.