Golden State Bancorp, the parent company of Glendale Federal Bank, announced an agreement Monday to buy Cenfed Financial Corp. of Pasadena, Calif., for $210 million in stock.

For a relatively inexpensive 1.76 times Cenfed's book value, the Glendale Federal organization would add $2.3 billion of assets and $1.54 billion of deposits in its home Southern California territory.

Cenfed Financial, the parent of Cenfed Bank, would also bring 18 branches in Los Angeles, Orange, Riverside, and San Bernardino counties into Glendale's 175-branch network. The deal is expected to close in the first quarter of 1998.

"It's a very nice strategic and cultural fit," said Richard A. Fink, vice chairman of Golden State Bancorp.

Glendale, with $16.2 billion of assets, has been intent on transforming itself from a thrift to a commercial bank. Cenfed had been following the same strategy but with less success, analysts said.

The low price of Cenfed was just too good to pass up, Mr. Fink said.

Golden State agreed to a tax-free exchange of 1.2 of its shares for each of Cenfed's. Based on Friday's closing, the price was $34.43 a share.

"It's a very good price," said David Winton, an analyst at Keefe Bruyette & Woods.

Glenfed's share price fell 50 cents Monday to $28.1875, and Cenfed's was off 62.5 cents to $33.375.

While Glendale Federal has been working diligently to build core deposits and diversify beyond its residential mortgage base, it also benefited from customer dissatisfaction resulting from the integration of Wells Fargo & Co. and First Interstate Bancorp, analysts said.

It aimed an advertising blitz at disenchanted Wells Fargo depositors and since the spring has been opening new transaction accounts at the rate of 10,000 a month, analysts said.

Cenfed stands to benefit from Glendale's broader product line and a corporate culture that has placed a greater emphasis on cross-selling, analysts said.

"Glendale Federal will bring a highly effective, energized marketing focus and an expanded product line to the former Cenfed Bank offices," said Stephen J. Trafton, chairman and chief executive officer of Golden State.

"Glenfed is the kind of bank Cenfed has aspired to be. This deal allows Cenfed to piggyback on Glenfed's momentum," said Mr. Winton.

Market watchers said they expect Golden State to make more moves.

"It shows they are on the prowl for sensible, attractive deals," said Smith Barney analyst Thomas O'Donnell. "I think they will continue to use their high stock price to make more acquisitions."

The combined Glenfed-Cenfed would have $18.5 billion of assets. Glendale would also have a presence in towns such as Cypress, Chino Hills, Marina Del Rey, and Placentia for the first time.

The deal would boost Golden State deposits by 16%, to $10.9 billion, and make the thrift California's fourth-largest servicer of Small Business Administration loans. Cenfed's SBA portfolio is $125 million.

Golden State executives set the cost savings goal at 50% of Cenfed's operating expenses, or $16 million, and said they would achieve it by closing seven branches and eliminating an unspecified number of jobs. It plans to take a $30 million pretax charge in the first quarter next year.

Cenfed's senior management won't be spared the ax. Cenfed's president and chief executive officer, D. Tad Lowrey, would sit on the boards of Golden State and Glendale Federal, but he has not been assigned an executive role after the merger.

Analysts said some Glenfed shareholders could be upset that the acquisition, which will result in the issuance of new shares, would dilute the windfall from Glendale Federal's breach-of-contract lawsuit against the federal government related to supervisory goodwill.

That lawsuit, which has been joined by nearly 100 other thrifts across the nation, is in the U.S. Court of Federal Claims in Washington. A decision is expected some time next year.

Analysts estimated the settlement could range between $550 million and $2 billion, which translates into $8 to $10 per share.

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