California bank stocks barely budged Thursday on news of a bidding war in their territory-probably because the likelihood of a takeover is already built in to many of them.

The stocks generally rose with the rest of the market as Washington Mutual entered the bidding for Great Western Financial.

Coast Savings Financial Inc., which had been in merger talks with Washington Mutual before Great Western came into play, added 12.5 cents to $47. Shares of Glendale Federal rose 50 cents, to $26.75. WestAmerica shares rose 25 cents, to $67, but First Republic shares closed unchanged at $24.

Analyst Todd Pitsinger of Friedman, Billings, Ramsay & Co. said takeover rumors had already lifted the stocks, so an actual merger announcement affected them little.

Observers said the shares have been helped by improved credit quality, which means the local institutions could command higher premiums as they are bought out.

"Investors have focused on California banks since early January," said Bruce Simmons, head trader at Sandler O' Neill.

Since the year began, shares of WestAmerica have risen 16%, Glendale Savings Bank 15%, and Downey Financial Corp. 23%, as investors respond to the tightening of the California market.

First Republic is up 20% in the last few weeks, and First Federal is up more than 40% since October.

Investors continue to focus on the bigger California banks, reasoning that it's no longer enough for a buyer merely to find an entry into the California market.

"Now that Washington Mutual is increasing its asset size, they can be looking at larger banks," said analyst Ray Cabillot of Piper Jaffrey.

He also said that the acquisition increases Washington Mutual's stake in the mortgage market, making it necessary for other banks to be bigger in order to compete.

Elsewhere Thursday, shares of big banks, and stocks in general, gave back some of Wednesday's gains.

The S&P Bank index fell 0.42%, while the Dow fell 0.02%. The Nasdaq index of small bank stocks rose 0.24%.

"We're caught in a trading range," said analyst Tom Finucane of John Hancock Funds. "Everybody's putting together a good first quarter, so it's 'steady as she goes.' "

Mr. Finucane added that the market has been "a little choppy" due to concerns about a rate hike, but that such fears were overblown where bank stocks are concerned.

"The banks are a lot more balanced than investors give them credit for," he said, pointing out that when interest rates were raised 300 basis points in 1994, margins went down only two or three basis points.

"People don't realize that they are fundamentally fairly well balanced with income streams that aren't horrifically at risk," Mr. Finucane said.

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