SAN FRANCISCO -- Signaling that its acquisition machinERY Is again in gear, First Interstate Bancorp on Tuesday said it will buy Cal Rep Bancorp of Bakersfield, Calif., for $68 million in stock.

The transaction, if approved, would be the Los Angeles-based company's first unassisted acquisition in four years.

Cal Rep, the holding company for California Republic Bank, has assets of $569.5 million and 12 branches in the southern end of California's Central Valley region. The deal would make First Interstate, now a bit player in the Bakersfield area, its second-largest bank by market share.

Strategy of Dominance

The acquisition is consistent with 'the company's strategy of acquiring a dominant position in local banking markets.

As First Interstate has repaired its capital and credit quality over the past two years, it has purchased branches and deposits of failed institutions from the federal government.

In one deal earlier this year, it bought five thrift branch the Central Valley.

A spokesman said that First Interstate's last acquisition of a whole bank occurred in 1989.

The company, the nation's 12th-largest bank, with $49 billion of assets, said last year that it would become an active acquirer again. It identified Southern California, Texas, and Washington as priorities.

Edward Carson, First Interstate's chairman and chief executive, said in Baltimore Tuesday that the company will continue to explore expansion opportunities, particularly in its home markets, Reuters reported.

|Something of the Past'

He added that he is comfortable with analysts' consensus estimate that the bank will earn $5.65 a share in 1993, up from $3.23 last year. "Problem loans are no longer a problem with us," he said.

The purchase, which calls for an exchange of First Interstate stock equal to $68 million at the deal's closing, sets the price at 1.56 times Cal Rep's book value -- substantially below the premiums commanded by California banks before the current slump.

Multiples of two times book value for California banks are something of the past," Cal Rep chairman James S. Camp said.

He added that First Boston Corp., which represented Cal Rep, received overtures from several California banks.

Recovering from Credit Woes

Like First Interstate, Cal Rep is recovering from credit problems. The Bakersfield company entered into a memorandum of understanding with federal and state bank regulators in April 1992, requiring it to reduce problem loans and raise capital. The bank is in compliance with the memorandum's terms.

Nonperforming assets, mainly bad real estate loans, peaked at 3.7% of total assets at yearend 1991. Nonperformers were at 2.69% on March 31.

Cal Rep netted $3.6 million in 1992, equaling a return on assets of 0.61%. Its first-quarter 1993 net income of $1.3 million boosted its ROA to 0.94%.

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