A suburban Chicago savings bank is strengthening its foothold in Southern California through a deal with one of the nation's largest thrifts.
Regency Savings Bank, a subsidiary of Oak Park, Ill.-based FBOP Corp., is buying the $380 million of deposits in six California Federal Bank branches in San Diego County, with. Coupled with its 1995 acquisition of International Savings Bank, the thrift's area deposits will now total $680 million.
"This looks like a good investment opportunity for us," said Bob Heskett, president of FBOP Corp. "The California market has been soft of late and we think it's getting stronger."
The deposits-only deal would give Regency, which is based in Naperville, Ill., more liquidity in the San Diego market.
And it allows $14.3 billion-asset Cal Fed to leave a market where it has been losing ground. Tight competition there has made Cal Fed's cost of funds higher than the company's average and officials believed that the local economy is likely to remain weak, said James F. Hurley, a Cal Fed executive vice president.
Selling the branches will enable Cal Fed to concentrate on its core markets to the north - including Los Angeles, Orange, and Riverside counties.
The sale is expected to close in April. Terms were not disclosed. But Campbell Chaney, a stock analyst with Rodman & Renshaw in San Francisco, estimated that FBOP paid a deposit premium of 3% to 3.5%, or $11.4 million to $13.3 million.
Mr. Hurley said Cal Fed, the nation's ninth-largest thrift, had not been seeking a buyer for the branches. But after Regency Savings approached it, Cal Fed executives were willing to sell because the price was attractive, and San Diego, in their opinion, was not.
"San Diego County was not an area where we planned to enlarge our presence," Mr. Hurley said. "That added to the fortuitousness of this transaction."
Mr. Hurley said that Cal Fed has no plans to sell other branches, and is in fact looking to buy some. Eighty-eight of Cal Fed's branches are in the Los Angeles area and 19 are in the San Francisco Bay area. The rest are in central California and Nevada.
Mr. Heskett said FBOP hasn't ruled out more acquisitions in San Diego, but the corporation isn't limiting itself to that area. FBOP also owns two other institutions in Illinois and three in Texas.
- Barton Crockett contributed to this report.