Owners of Cal Fed Bancorp stock are getting a wild ride on their goodwill litigation certificates. And it could get wilder in the coming weeks.

Shareholders are reaping the benefits of a unique security that gives its owners 25% of any proceeds the Los Angeles-based thrift receives from its goodwill lawsuit against the federal government.

The certificates, which started trading on the Nasdaq in August 1995 at $4 per share, was trading at $13.25 Tuesday afternoon.

"It's been a hell of a money-maker for those who got the warrants," said Campbell Chaney, an analyst at Sandler O'Neill Partners.

The approaching court date of a similar suit brought by Glendale Federal Bank has been driving the recent surge, analysts said.

Attention is focused on Glendale's hearing in Washington at the U.S. Court of Federal Claims on Dec. 11, when a judge will rule which legal arguments will be allowed at a damages trial scheduled for Feb. 24. Cal Fed filed for summary judgment in its case and is awaiting a ruling by the judge.

"Everything is keying off what happens with Glendale," said Mr. Chaney. "If the court says Glendale was damaged in many ways, then these things are going to take off."

Glendale is seeking $1.8 billion in damages. Cal Fed will probably seek a little less, analysts said. But even a $1 billion reward for Cal Fed translates into $250 million for the thrift's shareholders, who received one certificate for every 10 shares of stock owned.

The goodwill lawsuits, filed by about 100 thrifts, stem from the savings and loan debacle of the late 1980s. At that time, the U.S. government encouraged healthy thrifts to buy faltering institutions by allowing purchasers to count the supervisory goodwill from the deals as capital that could be amortized over as much as a 40-year span.

With the enactment of the Financial Institutions Reform, Recovery. and Enforcement Act of 1989, however, the government reneged on that promise, forcing many thrifts to become undercapitalized. Most of the survivors are now suing for damages.

The $14.2 billion-asset Cal Fed is taking this novel approach of enhancing shareholder value a step further.

The thrift is being acquired by First Nationwide Bank in a cash deal expected to close next month. To ensure that its shareholders share in any future litigation reward, Cal Fed is issuing a second certificate, to be listed on Nasdaq upon completion of the merger. Again, shareholders will receive one warrant per 10 shares.

The new certificate will give its holders 60% of what's remaining from any reward once the 25% has been paid out to holders of the initial certificate and First Nationwide has received $125 million. The acquirer's shareholders are to get the other 40% of the surplus.

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