CalFed Holds Discussions About Merging

LOS ANGELES -- CalFed Inc. said it has been holding merger talks with other financial institutions.

CalFed chairman Jerry St. Dennis confirmed a report in Thursday's Los Angeles Times that talks have been held, but he declined to name the other institutions involved.

Los Angeles-based CalFed has $19.1 billion in assets and 190 branches. Assets are down from $24.5 billion at yearend 1990.

Government Assistance

Analysts say CalFed's prospects for a merger without government assistance are slim, "I'd be surprised to see a merger in the classic sense," said Lawrence R. Vitale, an analyst at Kemper Securities Group.

"Any conclusions [regarding a possible merger] are premature," mr. St. Dennis said in a statement.

Other money-losing thrifts have recently tried to find capital sources or a merger partner, with no success. Among them is HomeFed Corp., an ailing San Diego thrift. "Healthy institutions don't want to take on somebody else's problems," said Mr. Vitale.

CalFed, which currently has $220 million in excess core capital, lost $55.5 million in the first nine months of this year. Nonperforming assets equal 5.15% of total assets. On Wednesday, the thrift said regulators desire an additional $375 million in equity capital, an order CalFed opposes.

Potential acquirers among the large thrifts have said they would insist on government protection against problem assets in any such transaction.

In a separate announcement Thursday, CalFed said it sold an investment management subsidiary. (See article on page 3.)

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