Great American Gets Approval on Stock Offering for Capital Savings

SAN DIEGO â€”  Great American First Savings Bank has received regulatory approval to begin a subscription stock offering to members of Capital Savings Bank, a 40-branch, mutual savings and loan based in Olympia, Wash. Great American announced last January that it was acquiring Capital, which has an asset base of $675 million and is Washington’s fifth largest S&L.;

Assuming Capital’s appraised value comes in as expected at about $10.5 million, San Diego-based Great American will issue to subscribers about 600,000 new shares of its stock priced between $17 and $18 per share, Senior Vice President James A. Krzeminski said Thursday. As of July 31, Great American had 23.1 million shares outstanding.

The offering should be complete by the “first few days of October,� Great American Controller Ray Lancaster said Thursday. The merger will add 35 Capital branch offices in Washington and five in Montana to the 193-branch Great American network in California, Arizona and Colorado.

Great American currently has $13.7 billion in assets, seventh highest among publicly held S&Ls.;

Joseph Jolson, a partner and S&L; analyst with San Francisco-based Montgomery Securities, said the stock offering will probably not have a dilutive effect on Great American stock on a book value or earnings-per-share basis.

“But I don’t expect (the acquisition) to help earnings,� Jolson said. “They are buying a company that is a whisker away from being a problem institution. I think Great American can restructure Capital and make it into a profitable company, but they are not buying a real healthy, well-run mutual association.�

At the time that Great American first announced its intent to merge, Capital’s shareholder equity of $17.5 million was 2.4% of assets, below the 3% minimum set by federal regulators. Since January, Capital has closed two branches and reduced its asset base from $725 million.

Shares not purchased by Capital depositors, borrowers and employees in the subscription offering will be sold later in a public stock offering. Great American shares closed unchanged at $17.50 Thursday on the New York Stock Exchange.

For regulatory purposes, Capital will be merged with Great American’s Great American/Arizona subsidiary. Both are federally chartered S&Ls.; Great American’s California operation is a state-chartered institution. The merger is subject to approval of Capital members and federal regulators.