Charter One Financial Inc. is negotiating to buy Albank Financial Corp. for about $1 billion, people close to both companies say. A deal could be announced as soon as today.

The acquisition would make Charter One the largest thrift in the eastern half of the country, hoisting it above Dime Bancorp of New York.

Officials at Charter One and Albank declined to comment.

Charter One of Cleveland had $19.8 billion of assets at yearend, compared with $21.8 billion for Dime, according to Sheshunoff Information Services.

Albank of Albany, N.Y., the nation's 24th-largest thrift, has $4.1 billion of assets and operates 109 branches in upstate New York, Massachusetts, and Vermont. The company operates Albank, a thrift, and also a commercial bank. Last year Albank acquired 35 branches from KeyCorp, with $541 million of deposits, and two from First Union Corp. Nonperforming assets were 1.25% in 1997, below the industry mean of 1.65%.

The acquisition would continue Charter One's push eastward that began last year when the thrift bought RCSB Financial Inc. of Rochester, N.Y., for $648 million.

It would also go a long way toward fulfilling the ambitions of Charter One chairman and chief executive Charles J. "Bud" Koch to build a thrift company that dominates the eastern United States much as Washington Mutual Inc., run by his friend and rival Kerry K. Killinger, dominates the West.

Charter One, which operates 220 branches in Ohio, Michigan, and western New York, has grown via numerous acquisitions since 1982 and is one of the country's top-performing thrifts. Reported earnings rose 21% in the first quarter from the same time a year earlier, despite a flat yield curve that has depressed earnings at many thrifts. Return on equity rose to 18.0% in the first quarter, from 16.5% a year earlier.

Albank's first-quarter earnings rose only 4% from the same time a year earlier, and return on equity declined to 10.9% from 11.7%.

Nevertheless, analyst Frank Barkocy of Josephthal & Co. said Albank's location and commercial banking business could appeal to a takeover-minded company.

Charter One has focused on building nontraditional thrift lending. The company launched a consumer finance unit last year and greatly expanded its auto lending business after acquiring RCSB.

Charter One shares fell $1.3125, or 3.7%, to $34.0625 in trading Friday. Albank shares closed unchanged at $51.50.

The action occurred as broader markets swung wildly on increasingly distressing news from Asia. On Friday, Japanese economic officials said their country had entered a recession in the first quarter and that further weakening of the yen was likely.

Some saw Asia's woes as a potential positive. "Asian uncertainties will clearly keep the Fed from raising interest rates for now," said Mitchell J. Held, market strategist with Salomon Smith Barney.

A late-afternoon rally failed to lift most bank stocks. The shares were among the hardest hit on the Asian news, which could impact results from their overseas operations and dampen profits at companies they lend to.

The Dow Jones industrial average, after losing 100 points earlier in the day, closed up 0.26%. The Standard & Poor's bank index lost 0.51%, the Nasdaq bank index dropped 0.35% and the S&P 500 added 0.39%.

Big banks were especially hard hit, with Chase Manhattan Corp. falling $1.50, to $138.5625; BankAmerica $1.6875, to $85.675; and J.P. Morgan & Co. 75 cents, to $121.625.

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