Top California Thrifts Stuck in Holding Pattern

After a six-month surge, stocks of the nation's three largest thrift institutions - all in California - have lingered in a narrow trading range for the past month.

"Having made such a big move, the Big Three are in a bit of a holding pattern right now, awaiting further signals on the economy," said Bruce W. Harting, thrift analyst for Salomon Brothers Inc., New York.

Revelations of unexpectedly serious real estate and commercial loan problems at two California banks, Wells Fargo and Security Pacific, did not dislodge the thrifts from their own trading pattern. Not that the thrifts are immune, say analysts, but their stock prices already are discounted to reflect the woes now befalling bankers.

Shares of H.F. Ahmanson & Co., Los Angeles - parent of the nation's large thrift, Home Savings - finished July exactly as they began it, at $18.12. They were unchanged in Thursday afternoon trading.

Great Western Financial Corp., Beverly Hills, gained 4.2%, mostly in the last three days of the month. It was unchanged at $18.50 on Thursday.

Golden West Financial Corp., Oakland, parent of World Savings, showed more life. It gained 10%, much of it during the last two days of the month, as the stock jumped $2. But in Thursday's market it was down 50 cents to $38.50.

Despite economic uncertainties in the state where they operate, thrift analysts like these stocks. "Shares of Great Western and Ahmanson have the potential to appreciate about 20% to 25% in the next 12 to 18 months," said Nancy G. Spady of Shearson Lehman Brothers, in a recent report.

Both thrifts should sell at $21 to $22 to reach "fair value based on the companies' sustainable returns on equity," she said.

But Golden West, which had an excellent second quarter, is at about the fair-value range she set for the stock.

Golden West was described as "running on nearly all cylinders," by Gary Gordon, thrift analyst at PaineWebber Inc.

Only the industrywide problem of slow asset growth prevented a perfect second quarter, when it earned 97 cents a share and posted returns of 1.06% on assets and 19% on equity.

"Ahmanson is well positioned to generate solid earnings over the next four quarters, even if mortgage demand stays weak," said David S. Hochstim, thrift analyst at Bear, Stearns & Co.

OTS Satisfied with Reserves

The Office of Thrift Supervision examined the thrift during the quarter, and Ahmanson officials said no added reserves were requested.

Thus, analysts said, the $57.4 million second-quarter loss provision, larger than the $42.4 million first-quarter provision, was a management decision.

At Great Western, Ms. Spady noted, "exceptionally strong net interest income exceeded even our revised estimates."


Major bank equities were mixed on sluggish volume in Thursday's stock market.

Citicorp, the nation's largest bank, was off 25 cents to $14.25 on late-afternoon volume of just over 500,000 shares.

The biggest gainer was Core-States Financial Corp., Philadelphia, up 87.5 cents to $43.125. The biggest drop was at Norwest Corp., Minneapolis, off 87.5 cents to $30.125.

PHOTO : Going Nowhere

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