SAN FRANCISCO -- In its biggest purchase since it returned to the acquisition market 18 months ago, First Interstate Bancorp has agreed to buy privately-held Sacramento Savings Bank for $331 million in cash.
The price equals approximately 1.6 times Sacramento Savings' book value at the end of December.
Sacramento Savings, the oldest and largest thrift headquartered in California's Central Valley region, has 45 branches, 24 mortgage lending offices, and $3 billion of assets.
A Lackluster Record
A wholly owned subsidiary of Alleghany Corp., a New York-based conglomerate with real estate, insurance, mining and manufacturing interests, the thrift is conservatively managed with a steady but lackluster profit record.
In 1993, it earned $16.5 million, for a return on assets of 0.56%.
As part of the transaction, Allegheny will keep approximately $132 million of the thrift's problem real estate assets.
For Los Angeles-based First Interstate, the deal is consistent with its acquisition strategy of boosting market share in major metropolitan areas of the West.
Population Center Targeted
When the purchase closes toward the end of 1994, the company will rank as the secondlargest deposit taker in Sacramento, the Central Valley's biggest market.
First Interstate's goal is to be among the top three banks in market share in the West's largest population centers.
In addition, First Interstate has targeted the Central Valley -- California's major farming region - for expansion, completing one bank and one thrift acquisition them in the last 18 months. Sacramento Savings has a presence in 13 counties, almost all in the valley.
The acquisition will also boost First Interstate's mortgage operations, expanding its origination capacity in California by 40%, the company said.