The prospective merger of two of California's biggest thrifts is sure to increase the matchmaking tension among California's remaining crop of banks and thrifts, market watchers say.

"You'll have a triumvirate on the thrift side with H.F. Ahmanson, Washington Mutual, and now a bigger Golden State Bancorp," said analyst Thomas F. Theurkauf of Keefe, Bruyette & Woods Inc., New York.

"This will put pressure on the remaining independent players," Mr. Theurkauf said.

The urgency was ratcheted up several notches last week, when two of the bigger remaining players, First Nationwide Holdings-parent of California Federal Bank-and Golden State Bancorp-holding company of Glendale Federal Bank-agreed to merge.

The new entity-California Federal Bank at the branch level and Golden State Bancorp at the holding company level-would be California's fifth- largest depository institution, with $51 billion of assets and 400 branches. The operation would have a 6.4% share, or $28 billion, of deposits in the state.

Relentless market forces are dictating these consolidations, especially among thrifts, analysts say. Thrift operators aren't making much money in mortgage lending because this bread-and-butter business has become commoditized.

The upshot is that even the largest and best-known savings and loans are compelled to merge as a way of fostering growth. Indeed, Golden State Bancorp's deal is a sure sign of things to come, analysts said.

"It's a prelude to the final shot when all these institutions take a look at one another," said Thomas O'Donnell, an analyst at Salomon Smith Barney Inc., New York. "Just about every high-quality thrift is going to be included in the merger process, either as an acquirer or an acquiree."

The ball has already started rolling. Excluding the Golden State Bancorp deal, valued at $2.7 billion, California has seen $25.6 billion of bank merger activity since the 1996 acquisition of First Interstate by Wells Fargo & Co. The activity is almost equally divided between commercial banks and thrifts, said Bruce W. Harting, an analyst at Lehman Brothers Inc., New York.

The result: "a relative scarcity" of midsize targets with $4 billion to $20 billion of deposits, Mr. Harting said.

What is left? Thrifts like Bank Plus Corp., Bay View Capital Corp., and Downey Financial "will have to revisit their strategies" for being independent, Mr. Theurkauf said.

To be sure, a merger can be painful because of staff cuts and branch closings. But "at the end of the day, you have a bigger customer base and a more efficient banking company," Mr. Theurkauf said.

There will also be pressure on the state's scores of small and midsize commercial banks, but less so than for thrifts since these operations have already adapted to big-bank competition, analysts say.

"These guys know enough not to go toe-to-toe with Wells Fargo and BankAmerica," Mr. Theurkauf said. To forge their own way, the smaller banks "have developed their own very viable niche strategies."

Indeed, the state abounds with specialty marketers, including City National Corp., Beverly Hills, which features high-end retail and private banking, and Imperial Bancorp, Los Angeles, a force in middle-market services.

In addition to in-state mergers, California's banks and thrifts are increasingly prime targets for outside institutions looking to gain entry to the Golden State.

As an example, City National has made great strides at improving operations. The moves make the bank consistently profitable and may also position it as an attractive takeover target to an out-of-state bank, said analyst Robert B. Albertson of Goldman, Sachs & Co., New York.

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