Merger To Join Bank And Thrift Cal Fed, First Nationwide Deal Latest In Industry Consolidation Drive

First Nationwide Holdings Inc., the parent company of First Nationwide Bank, announced Monday it has agreed to acquire Cal Fed Bancorp Inc. for $1.2 billion in cash.

The deal, the latest example of consolidation in the banking system, would create the fourth-largest thrift in the United States and the third-largest in California as ranked by assets at the end of 1995.

The plan is subject to regulatory approval and approval by Cal Fed Bancorp Inc.’s shareholders. The proposed merger is expected to close during the first quarter of 1997.

The company would have headquarters in San Francisco, assets of approximately $30 billion and approximately 235 retail branches.

“This is a tremendous step forward for us in keeping with our long-standing corporate strategy to increase our California franchise,” said Gerald J. Ford, chairman and chief executive of First Nationwide. “California represents a large and growing market for banking.”

Each Cal Fed Bancorp stockholder would receive a cash payment of $23.50 per common share under the terms of the agreement. That adds up to a total cash consideration of $1.2 billion.

Cal Fed shareholders would also get a new security representing the right to participate in any cash proceeds recovered in California Federal Bank’s pending breach-of-contract lawsuit against the federal government.

First Nationwide Bank is based in San Francisco and has approximately $17 billion in assets and 117 retail branches in three states - California, Florida and Texas.

Maryland-based First Nationwide Mortgage Corporation, the bank’s mortgage subsidiary, originates mortgage loans, primarily on a wholesale basis, in 44 states.

California Federal Bank has approximately $14 billion in assets. The bank provides retail and business banking services through 118 savings branches and 7 lending offices in California and Nevada.

First Nationwide Bank is an indirect subsidiary of MacAndrews and Forbes Holdings, a private holding company controlled by financier Ronald Perelman with interests in consumer products, publishing and entertainment, in addition to financial services.