Oklahoma lender MidFirst Bank is looking to make inroads in Southern California, announcing plans to acquire L.A.'s 1st Century Bank.
MidFirst, which is privately owned, will pay $116 million in cash for publicly traded 1st Century. The deal announced late Thursday must be approved by federal regulators and by the shareholders of both banks. It is expected to close in the second half of this year.
Founded in 2004 by lawyer Alan Rothenberg, 1st Century caters mostly to Westside businesses and business owners. It has a branch in Century City and offices in Beverly Hills and Santa Monica.
The bank has assets of $732 million – tiny by bank standards – as of the end of last year. In September, 1st Century announced plans to sell new stock shares, with the goal of using new equity to grow the bank into a $2 billion institution.
But Rothenberg said that after those plans were announced, MidFirst expressed interest in buying 1st Century.
"They're a private, well-capitalized bank that has whatever capital that we may need to continue our growth," he said.
MidFirst will pay $11.22 a share for 1st Century, a 36% premium to 1st Century's Thursday closing price of $8.23.
MidFirst is a much larger bank, with $11.6 billion in assets and more than 80 locations in Oklahoma, Arizona and Colorado. The bank has an office in Costa Mesa, but no other presence in Southern California.
MidFirst executives said in a statement that they plan to keep the 1st Century name, operating it as a division of MidFirst. Rothenberg will remain with the institution as chairman of the division, while 1st Century President Jason DiNapoli will continue in that role.
The deal is the most recent in a spate of bank mergers and acquisitions, fueled by continued low interest rates and increased regulatory costs, both of which have made it more financially difficult for small banks to go it alone.
Other recent deals include the planned merger of Koreatown lenders BBCN Bank and Wilshire Bank and the recently completed acquisition of Oxnard's County Commerce Bank by Citizen's Business Bank in Ontario.