Union Bank to Buy 4th-Largest Arizona Bank
Los Angeles-based Union Bank announced Thursday that it had reached a definitive agreement to acquire United Bancorp of Arizona, the state’s fourth-largest banking company, for $335 million in cash.
Union Bank thus becomes the newest player in the Arizona banking sweepstakes, which opened in April when Arizona lawmakers passed one of the most liberal interstate banking laws in the nation, allowing unrestricted cross-border acquisitions such as the Union-United deal.
Three weeks ago, Security Pacific said it was buying Arizona Bank, that state’s third-largest bank, for $480 million.
Arizona is seen as prime pickings for big out-of-state banks because of the permissive new law and the state’s favorable growth prospects. Analysts predict that more acquisitions of Arizona banks will occur soon.
Close October, 1986
The Union Bank deal, which requires the approval of state and federal regulators as well as the companies’ shareholders, is expected to close Oct. 1, 1986, when the new law takes effect.
“We’ve been looking at Arizona for a long time,” Union Bank Chairman John F. Harrigan said. “United Bank is an extraordinarily good fit for us. They have a common culture and common market interest.”
He said the $33-per-share purchase price represents a relatively high 2.7 times United Bank’s current book value, but he said that, by the time the deal closes next October, the ratio will be about 2.2 times book because of appreciation in the acquired bank’s stock price and asset value.
Union Bank, the sixth-largest California bank with $8.2 billion in assets, focuses on lending to small and mid-size firms and does little business with individuals. United Bank of Arizona, with assets of $1.9 billion, also concentrates its lending to businesses rather than consumers, but it does offer consumer banking through 40 Arizona branches.
The agreement also includes the sale to Union Bank of H. S. Pickrell, a mortgage banking subsidiary of United Bank with a mortgage loan servicing portfolio of nearly $1 billion.
Union Bank is wholly owned by Standard Chartered PLC, a London-based bank holding company.
