California Federal Bank has issued certificates giving shareholders a 25% interest in the outcome of its lawsuit against the government over regulatory goodwill.

The move, amid heavy buying of the stock of several thrifts with similar claims, amounts to a recognition that shareholders expect thrifts to prevail in their battle over accounting rules for the purchase of failed thrifts in the 1980s.

"We created this security to allow the market to determine the value of litigation prior to its resolution," James Hurley, an executive vice president with the thrift, which is seeking damages for the exclusion of $485.5 million of goodwill.

Mr. Hurley cautioned against reading too much into the price of the certificates, which has been volatile in initial trading. But as of midday Friday, the certificates were trading at $4.125, which would indicate that the market expected a recovery of about $84.2 million.

About 70 similar lawsuits are pending as a result of the exclusions. The former Federal Home Loan Bank Board promised to allow the surviving institutions to include goodwill in capital and amortize it over 40 years. But passage of the Financial Institutions Reform, Recovery and Enforcement Act eliminated this supervisory goodwill, causing some thrifts to fail and others to recapitalize.

CalFed's move underscored a thrift buying frenzy that has been under way for more than a month.

For instance, Glendale (Calif.) Federal Bank has seen its stock price rise from $12.50 a share on June 30 to $14.625 a share at the close of trading Monday. Coast Savings Financial has seen a similar rise, from $20.625 a share to $24.325 since midyear.

To be sure, other factors may be causing the run-up in thrift stocks. Jim Marks, of Hancock Institutional Equity Services, San Francisco, said consolidation in the thrift industry has gobbled up about 30% of the thrifts that had market capitalization in excess of $40 million in mid- 1993.

"Continuing high levels of takeover activity have been the most salient factor in the thrift universe, and will continue to be," he said. "You've got a very rapid pace of consolidation in the thrift industry ... much faster than the pace in commercial banking."

Wayne Bopp, a thrift analyst with Stifel, Nicolaus & Co. in St. Louis, pointed out that thrift stocks have been helped by the possibility of a resolution soon to issues involving the thrift and bank insurance funds.

Still, one likely explanation for the run-up is the belief that the appeals court deciding a pivotal case involving Glenfed and two failed thrifts will announce its decision soon.

Indeed, the rally been largely limited to those thrifts with goodwill claims, including Glenfed, CalFed, Long Island Bancorp, and Coast Savings Financial, said Joe Jolson, thrift analyst at Montgomery Securities.

Some cynics believe the court has delayed the decision this long in hopes of discouraging additional lawsuits.

"Obviously, a decision is long overdue, so people are looking for an explanation," Mr. Jolson said.

The delay has not stopped other thrifts from entering the fray, though. On Monday, Citifed Bancorp of Dayton, Ohio, sued the government in federal court alleging breach of contract over the goodwill issue.

Mr. Hurley said the certificates indicated only a rough guess about what the settlement might be worth.

"This price is more speculative than it would be in the presence of a judgment by the court," he cautioned. "The price is more a measurement of the probability of an award."

In other news, bank stocks traded higher in tandem with the overall market. The Standard & Poor's index of major banks rose 0.57%, while the broader S&P rose 0.20%.

Hancock Institutional's Gerard Cassidy initiated coverage of PNC Bank Corp. with a "buy." Shares of PNC finished up 37.5 cents at $25 in heavy volume of 2.1 million shares. Midlantic Corp., which PNC agreed to buy last month, closed up $1 at $48.50.

The analyst said PNC's pending acquisitions of Midlantic and Chemical Banking Corp.'s southern New Jersey branch system should add revenue and earnings momentum to the bank.

Mr. Cassidy predicted the stock would return 30% in the next 12 months, including price appreciation to $30 a share as well as dividends. Earnings per share should increase 17% from $2.40 this year to $2.80 next year, he predicted - each 3 cents more than the consensus estimate.

Citicorp shares rose $1.125 on Monday, to $65, and Wells Fargo & Co. rose $1.875 to $181.625. Cullen Frost Bankers Inc. rose $1.375 to $45.75, a new 52-week high.

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