Just a few weeks after retaining an investment banker to explore its future as an independent company, San Francisco's First Republic Bancorp has taken a step toward removing a potential merger hindrance by paying off corporate debt.

The company announced plans Feb. 28 to redeem its subordinated debt almost five years before it was due to be called.

The $2.4 billion-asset thrift has set March 31 as the redemption date, and will pay 102.5% of the face value of the bonds, plus interest collected through March 30.

The investment, which carried a yield of 7.25%, is also convertible to common stock at a price of $13.67 per share.

The announcement came just two weeks after the jumbo-mortgage specialist hired San Francisco's Montgomery Securities to help it examine options for the future, including a possible sale.

Deborah Beylus, an analyst at J.W. Charles Securities Inc. in Boca Raton, Fla., said the move by First Republic doesn't necessarily mean the thrift is definitely planning to sell. But it would remove an obstacle to straightforward discussions-just in case.

"The more difficult the capital structure, the more difficult it is to talk with an acquirer," she said. "They don't need the capital, so why not?"

However, First Republic chief financial officer Willis H. Newton Jr. said the thrift's decision to redeem the bonds was not related to its hiring of Montgomery. He noted that since last November more than half of the debt had already been voluntarily redeemed by the debt holders, and the thrift's current stock price of $23 made full redemption sensible.

Although thrift officials have said their hiring of Montgomery was not prompted by any offer, some published reports have suggested that Seattle- based Washington Mutual Inc. was talking with First Republic.

Washington Mutual has previously indicated that it wants to expand in California, and has announced a white-knight merger agreement with Chatsworth-based Great Western Financial Corp. Great Western is battling a hostile bid from larger rival H.F. Ahmanson & Co., Irwindale, Calif.

First Republic officials declined to comment on the reports. "If we do get to the point where there's something to announce, we'll announce it," Mr. Newton said. "There's no further news at this time."

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