California-based Downey Savings and Loan Association says it will selectively sell real estate assets to fund an expansion.
Recently at the center of takeover speculation because of its strong balance sheet and aging management. Downey officials on Wednesday said they would attempt to remain independent by expanding the 53-office franchise within the state.
The $3.5 billion-asset company also said it would seek a successor for chief executive officer Robert L. Kemper, 65, who plans to retire in June.
However, Donald E. Royer, executive vice president at the Newport Beach, Calif., headquarters, said, "we're certainly not foreclosing any opportunities," including a possible sale of the company.
Variety of Options
Thrift executives said in an interview that they had studied a possible sale of up to $100 million of real estate assets held for investment by either a bulk sale, a spinoff, or the creation of a real estate investment trust.
However, Mr. Royer said the Downey board concluded that gradual asset sales would generate the best return for shareholders. "We want to look at individual [asset] sales over time, linked to the need for capital to grow the association," he said.
Since the board announced in June that it had retained Lehman Brothers to develop a new strategy. Downey's stock price has risen from about 90% of price-to-book value to about 114%. Shares were trading down $3.625 at $21,125 Wednesday afternoon.
Downey's move to sell assets selectively is unique. Many banks and thrifts are currently unloading problem assets in bulk sales to raise cash as quickly as possible. However, as one of the strongest independent thrifts in California. Downey has the benefit of a clean balance sheet and an equity capital ratio of 9.82%.
Downey last bought an institution in 1988 in the federally assisted acquisition of Butterfield Savings, a $250 million-asset thrift.
Meanwhile, the Downey board voted Tuesday to increase its dividend to 12 cents from 9 cents a share in the first quarter of 1994. Last year, the dividend rose 1 cent.