Subprime lender First Alliance Corp. last week laid the foundation for an independent credit card venture when it agreed to acquire a small California thrift.

The Irvine, Calif., consumer finance company agreed to pay $10 million to $11 million in cash for Standard Pacific Savings, Newport Beach, a subsidiary of home builder Standard Pacific Corp. The agreement calls for final value to be $575,000 in excess of stockholder equity at the time of closing.

Standard Pacific Savings would be renamed First Alliance Bank and offer a credit card developed in conjunction with Fidelity Federal, a Los Angeles thrift.

The card represents an unusual twist on an increasingly common finance company strategy of offering credit cards as well as home equity loans; this card's balance would actually be secured by real estate.

The card would allow homeowners with blemished credit to secure gold MasterCards using the equity in their homes.

First Alliance plans to offer the cards exclusively through its new subsidiary within six months, but is scheduled to pilot the program with Fidelity Federal within a month.

First Alliance has asked Standard Pacific to sell all real estate loans before the deal closes. At the closing, scheduled for Sept. 30, it would have $120 million to $130 million of savings accounts.

Mark Mason, chief financial officer of First Alliance, would become the thrift's chief executive. Standard Pacific would also be rechartered, as a federal savings bank.

First Alliance's chief executive, Brian Chisick, said he could not project credit card originations but expects the card to be popular-partly part because interest would be tax deductible.

The thrift would also bring First Alliance other benefits, Mr. Chisick noted-for example, funding for the home equity loan business. Amid skepticism on Wall Street about subprime securities, subprime lenders have been looking for new sources of funding.

The thrift could also serve as a holding pen for loans until First Alliance amassed enough to securitize, Mr. Chisick said.

It would also give First Alliance a way to raise capital, he noted. "We could be a $1 billion institution."

The deal awaits approval of the Office of Thrift Supervision.

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