Two of the nation's largest thrifts are in serious merger talks and may announce a deal within the next several weeks, according to well-placed sources.

They said that Washington Mutual Bank, Seattle, has been negotiating for several months to acquire American Savings Bank, Irvine, Calif. - a deal that would create a $42 billion-asset company with a substantial presence in retail banking up and down the West Coast.

A deal also could open the floodgates for a long-predicted consolidation of the giant West Coast thrifts. Many experts have said these companies are ripe for mergers, but none has yet taken the lead.

The merger of Washington Mutual and American Savings is by no means certain. For one thing, Washington Mutual faces a formidable bargainer - Texas billionaire Robert M. Bass. His Keystone Inc. bought American from the government in 1988, after the institution had failed, for about $500 million.

Analysts said that Mr. Bass was unlikely to sell for anything less than $1.8 billion, or 1.5 times American's book value. And based on his stance in past negotiations, they said, he may demand up to two times book value. By contrast, western thrifts recently have been selling for closer to 1.3 times book value.

Spokesmen for Washington Mutual and American declined to comment on whether the thrifts were in negotiations.

But one source, who heads a hedge fund active in bank and thrift stocks, said he expects a deal within the next six weeks. He said that was based on information from "someone with direct knowledge of the deal."

In addition, a senior executive at a large California lender said he had been approached in the last few days by upper-level American Savings Bank employees looking for new jobs in the event of a transaction.

An acquisition of American would appear to be very much in line with the strategy of the $22.3 billion-asset Washington Mutual. Chairman Kerry Killinger has repeatedly said that the thrift is interested in buying an institution with assets of at least $10 billion in California. American has assets of $19.8 billion.

But Mr. Killinger has told analysts in recent weeks that "generally the asking prices for California institutions have been higher than we are willing to pay," according to spokesman Bill Ehrlich.

Meanwhile, Owen Blicksilver, a spokesman for Mr. Bass' group, said, "Keystone doesn't want to exit this business." That leaves open the possibility of a stock deal that would leave Keystone with a substantial stake in the combined company, experts said.

This would not be the first time Keystone has explored a sale of the thrift. American was reported to be on the auction block as long ago as 1994.

The combination of Washington Mutual and American would rank as the nation's third-largest thrift company, after $50 billion-asset Home Savings and $44 billion-asset Great Western Bank. Both of those institutions are based in California.

The combined thrifts would have a considerable market share in mortgages and other consumer businesses. In deposits, it would rank No. 6 in California, No. 2 in Washington, and No. 4 in Oregon.

If the deal goes through, other thrift transactions are almost sure to follow, analysts said. Washington Mutual itself would likely be on the prowl for other, smaller thrifts to fortify its position, said analyst R. Jay Tejera of Dain Bosworth.

Like other large thrifts, Washington Mutual has been hard-pressed to maintain a 15% return on equity - the minimum required by many investors. That's because the profitability of mortgage lending has been dwindling in the face of stiff competition from banks and mortgage companies.

In response, Washington Mutual and its peers have begun expanding in nonmortgage consumer loans, long the province of commercial banks.

Stephen Schroll, an analyst at Piper Jaffray & Co., said Washington Mutual has maxed out in the Northwest and must enter other markets to increase profits.

The thrift has established itself as a strong regional player in Washington and Oregon, where it is the largest residential mortgage lender. It also has targeted key markets in Utah, Montana, and Idaho.

California, with 13% of the nation's population and 20% of its financial assets, is "the key to a West Coast franchise" for Washington Mutual, said analyst Charlotte Chamberlain of Wedbush Morgan Securities, Los Angeles.

Moreover, Ms. Chamberlain and other analysts said, by bulking up in California, Washington Mutual would be a bigger catch for large banks, such as Norwest, NationsBank, or First Bank System, that have ambitions in the Golden State.

Ms. Chamberlain said the deal would likely push up prices for other California thrifts by removing one large thrift from the market.

American Savings is regarded as an extremely well-run thrift, which specializes in the bread-and-butter business of making home loans. By buying American, Washington Mutual would get an old-line thrift, but one with substantial market share in deposits and mortgage production.

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