Magazine article American Banker

California Thrifts Surge on Ahmanson-Coast News

Magazine article American Banker

California Thrifts Surge on Ahmanson-Coast News

Article excerpt

California thrift stocks soared Monday on news of H.F. Ahmanson's deal to buy Coast Savings Financial Inc.

Investors poured so much money into California thrifts that valuations of some stocks were up as much as 3.5% in afternoon trading.

The biggest gainers included Golden State Bancorp, Glendale, which rose 75 cents, to $32.75; and Golden West Financial Corp., Oakland, up $2.375, to $92.81.

PFF Bancorp, Pomona, and Provident Financial Holdings, Riverside, two smaller California thrifts, also saw their shares surge on a day when bank stocks rallied as a result of an exuberant bond market.

The Standard & Poor's bank index rose 1.5%, while the Dow Jones industrial average jumped 0.77%. The Nasdaq bank index increased 0.91%, and the S&P 500 was up 0.79%.

The Ahmanson-Coast deal, market experts say, creates scarcity value among the remaining California thrifts.

"A bank wanting to be a player in California or wanting a branch network in California is going to have to consider buying a thrift," asserted Kevin Pilot, who invests in California thrifts through his firm, Phoenix Capital Management, Carlsbad, Calif.

"It's just a matter of 'Do you buy it now so you can get fair value, or later when it gets more expensive?'" he asked, challenging the conventional wisdom that banks will not buy thrifts.

Mr. Pilot added that he expects a major East Coast bank like Chase Manhattan Corp. to eventually make a run for Washington Mutual Inc. …

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