Sale of Capistrano Bank Shares Pending
Capistrano Bancorp said Friday that it has entered negotiations to sell 80% of its Capistrano National Bank subsidiary to an unidentified investor group for $4 million.
The deal would mean a reprieve for the financially troubled bank, which has been under scrutiny from federal regulators because of severe loan losses. It would mark the second time in less than two years that control of the 9-year-old bank has been shifted to outside investors to gain money to satisfy capital requirements.
This time, however, the holding company’s present shareholders would have only a 20% interest in the bank but would retain control of the parent company. The bank is the only asset of the holding company at this time. Normally, majority owners of a bank also control its holding company.
Capistrano National Bank has been operating for more than a year under an order from the Federal Deposit Insurance Corp. to raise a substantial amount of new capital to offset the loan losses. Industry sources say the bank failed last month to meet the FDIC’s deadline for infusing new funds but was granted an extension on the strength of the pending stock sale.
Bank President Meredith Russell said Friday that he was prohibited from elaborating on the three-paragraph written announcement of the stock sale because of the tentative nature of the deal.
Industry sources, however, said that the new bail-out would not cure all of Capistrano National’s financial woes and that even with the $4-million infusion, the bank’s capital-to-assets ratio still would be well below the minimum levels required by federal regulators.
The sources also said the new investors likely are a group of Los Angeles-area businessmen brought together by Rostem Pirasteh, Capistrano Bancorp director. Pirasteh, a former Iranian finance minister, last year engineered a $5-million bail-out of the bank by another, apparently unrelated, investor group. Pirasteh could not be reached Friday for comment.
Friday’s official announcement said directors of Capistrano Bancorp and Capistrano National Bank “have approved a proposal contemplating the sale” of nearly 3.9 million newly issued shares of bank stock to the unidentified investors at 90 cents each, or $3.5 million total. In addition, the announcement said that Capistrano Bancorp would sell the investors 259,840 shares of its stock in the bank for $500,000, or $1.92 a share.
Capistrano National Bank has not reported 1984 financial results but had posted a $76,000 profit for the first half of the year.
