Shares of Washington Mutual Inc. slid 3.75%, to $39.625, Thursday after an influential analyst said he failed to see cost savings from the Seattle thrift's acquisition of Great Western Financial Corp.

Jonathan Gray of Sanford C. Bernstein & Co. said second-quarter results showed "not a penny" of operational savings from the $8 billion deal that closed in July 1997.

That prompted Mr. Gray to shave his estimate of cost reductions to $250 million. He had previously forecast $305 million, which was below Washington Mutual's own projection of $340 million.

Mr. Gray also cut his rating on the stock to "market perform" from "outperform."

The selloff, during a market rally, was a rare stumble for the largest thrift company, which is known as Wamu. Under chairman Kerry K. Killinger, it has grown aggressively from its Pacific Northwest base to an almost uninterrupted chorus of cheers from Wall Street.

Its pending acquisition of H.F. Ahmanson & Co., Irwindale, Calif., would bring Washington Mutual up to $157.2 billion of assets. On the list of largest U.S. bank holding companies, it would rank eighth.

Mr. Gray stressed that he has a generally positive view of Wamu's management, which established its merger credentials with a successful acquisition in 1996 of American Savings, also California-based.

"I don't think the stock is in dire jeopardy, even on our earnings numbers," Mr. Gray said, adding that he expects the shares to trade in the $40 to $45 range.

But he said Washington Mutual's approach to mergers, which emphasizes building revenues in addition to cost savings, can be costly.

For example, he said, it appeared that Washington Mutual had retained many more managers from Chatsworth, Calif.-based Great Western than would usually be the case in a merger of this size.

He added that he was "not satisfied" when he queried Washington Mutual managers about "hard numbers and dates" for cost savings.

Mr. Gray is not the only analyst to feel that Washington Mutual faces significant challenges.

"It's going to be tough for them" because the interest rate environment can squeeze the bread-and-butter business of mortgage lending, said David Winton, thrift analyst at Keefe, Bruyette & Woods Inc.

Going into the acquisitions, Washington Mutual had expected to keep increasing income by stepping up mortgage originations, he said. But low interest rates are putting a damper on the strategy and on resulting income.

"It has been our feeling that the consensus" earnings estimate was too high," Mr. Winton said.

Washington Mutual will deliver but not as quickly as management initially expected, Mr. Winton said.

Thursday's decline for Washington Mutual occurred while other leading financial institutions were posting gains. Chase Manhattan Corp. rose $2.0625, to $74.625; Citicorp, $4.6875, to $169.625; and NationsBank Corp., $2, to $81.375.

The Standard & Poor's bank index was up 1.55%, the Dow Jones industrial average 1.26%, and the S&P 500 1.58%.

But the Nasdaq bank index shed 0.43% as Brenton Banks lost 25 cents, to $21.25, and Silicon Valley Bancshares, $1.375, to $31.125.

Analysts said bank stocks were reflecting broad market trends. Large- capitalization, high-profile issues are gaining, but most of the pack is less robust or even falling back.

"Overall, there is no breadth," said Sean Ryan, banking analyst at Bear, Stearns & Co. "It's the megacaps that are doing well overall.

"With all the talk about consolidation, there are still many, many banks out there," and the smaller ones may well be missed by investors, Mr. Ryan said.

In a rally, "people initially tend toward more liquid, less volatile securities," said Joseph Stieven, banking analyst at Stifel Nicolaus & Co. As a result, regional and community banks "tend to lag on the upside and the downside."

This only heightens opportunities for buying among the smaller groups, analysts said.

Mr. Stieven is recommending Southwest Bank of Oklahoma and TCF Financial Corp. as undervalued, high-performance institutions.

John Moore of Interstate Johnson Lane likes Eagle Bancshares, which is not only holding its own but expanding in the competitive Atlanta market. The company is improving key measures of efficiency, earnings, and operations but trading at just 14 times earnings estimates for 1999. The peer group average is 18 times.

Eagle, whose shares closed at $26.25, up $1, could well hit $31 within 12 months, Mr. Moore said.

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