Washington Mutual Inc. and California Federal Savings Bank are seen as the leading contenders to buy Aames Financial Corp., as takeover talk continues to center on the Los Angeles subprime lender.

Sources said Aames-which previously was rumored to be in talks with NationsBank Corp.-has retained Donaldson, Lufkin & Jenrette as a merger adviser. An investment banker at DLJ said that Aames is a client but would not comment on the acquisition rumors.

Aames, which analysts say could fetch between $720 million and $835 million, or about $26 to $30 a share, has fanned the rumors by twice delaying its earnings report. Some interpret that as meaning that talks are in progress. Aames has not responded to phone calls seeking comment.

Washington Mutual is seen as a possible suitor even though it is still digesting Great Western Financial Corp., the big Southern California thrift that it acquired in July.

On Wednesday, Washington Mutual spokesman Bill Ehrlich declined to comment on the rumors but indicated that his company is interested in building its subprime business.

The Seattle thrift gained a toehold when it acquired finance company Aristar Corp. through its purchase of Great Western, based in Chatsworth.

"Typically when we acquire a company of any nature, we are looking to grow that business. It would augment our consumer banking business and (provide) higher margins," Mr. Ehrlich said.

Analysts said Aames and Aristar have little geographic overlap and that a purchase of Aames would provide Aristar with more home equity products to offer.

"Having Aames would give Washington Mutual a fairly extensive retail branch base. It would be a nice fit," said E. Reilly Tierney, an analyst with Fox-Pitt Kelton.

CalFed can't be ruled out either, analysts said. A spokeswoman declined to comment Wednesday. In an interview with American Banker in June, CalFed chief executive officer Carl B. Webb said his company is interested in entering the subprime market.

The initial scuttlebutt about an Aames sale began to surface shortly after Cary Thompson succeeded Gary Judis, a chief executive officer who favored independence for the company, in May.

Mr. Thompson, formerly Aames' chief operating officer, left his job as an investment banker with Natwest Securities late last year to join Aames.

NationsBank had been mentioned in June as the most likely buyer, but investment bankers said the Charlotte, N.C., bank's interest in Aames has waned because of concerns about its own consumer finance business.

The new takeover rumors were fueled by Aames' failure to report its fourth-quarter and fiscal 1997 earnings on time. Aames now plans an announcement for Wednesday. .

Art Bender, an analyst with Sutro & Co., said industry observers are reminded that CalFed delayed reporting its earnings before finally announcing its deal with First Nationwide. Analysts said the only other reason to delay a report would be bad news, but they said they did not anticipate problems with Aames' results.

One analyst said he is holding back a research report on the company because it seems so likely that Aames will be bought.

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