Control of South Coast Bank to Be Sold : Sale of New Stock Would Give Group 80% of Firm for $2 Million

An Arizona investor group has agreed to purchase about 2.8 million new shares of stock in South Coast Bank of Costa Mesa, pumping $2 million in new capital into the ailing bank.

In a statement Friday, South Coast President Carl Tinder said the stock purchase will give the investor group about 80% of South Coast’s shares. Tinder said the buyers planned to form a bank holding company to own the new South Coast shares. Tinder provided no other information, but a source close to the bank said that the investor group, headed by independent investment banker Robert C. Ernst, is from Phoenix.

South Coast officials last year had been negotiating the sale of at least 51% of the bank’s stock to a Minneapolis businessman, Robert Keyes. But that deal was canceled in October with no explanation.

FDIC Deadline The new buy-out agreement, which still is subject to approval by state and federal regulators, reportedly came just two months before expiration of South Coast’s deadline from the Federal Deposit Insurance Corp. to raise new capital or face being closed for insolvency.

Tinder could not be reached for comment Friday, but banking industry sources said that the 9-year-old bank, which has been losing money steadily for the past 15 quarters, had been given until March 31 to increase its capital under an order issued last year by the FDIC.

The bank lost $592,000 in 1982 and $1.25 million in 1983. Final figures for 1984 have not yet been released, but in reports filed with the state Banking Department through Sept. 31, South Coast has reported losses in excess of $740,000. A knowledgeable banking industry source said the bank continued losing money in the final quarter of 1984 but would not divulge the figures.