Security Pacific Agrees to Buy Ailing Oregon Bank
Security Pacific said Tuesday that it has agreed to buy Orbanco, parent of faltering Oregon Bank, in a deal valued at about $52 million.
Meanwhile, Security Pacific’s plans to acquire Nevada National Bancorporation for $31 million have been complicated by a problem involving two major holders of the Nevada bank’s stock. However, a Security Pacific spokeswoman said the hitch should not result in the cancellation of the purchase.
Both deals reflect Security Pacific’s desire to expand its retail banking operations in the Western United States as the region opens itself to interstate banking.
Security Pacific last month completed the $460-million purchase of Arizona Bank, Arizona’s third-largest bank, and also recently bought a piece of Westamerica Bancorp, parent of a small bank in Northern California.
BankAmerica in September canceled a previous agreement to buy Orbanco for $57 million after federal banking regulators raised concerns about BankAmerica’s weak capital position and about its ability to manage a cross-border acquisition at a time when it was struggling to manage serious internal problems.
49 Branches Statewide
Orbanco’s main unit, the Portland-based Oregon Bank, the state’s third-largest bank, has assets of $1.04 billion and 49 branches across the state. It lost $2.4 million last year, and it is thought that its losses have continued this year. It has not released financial results because the parent company is currently operating under liquidating accounting rules.
Security Pacific will exchange common and preferred shares worth about $17.50 for each of Orbanco’s 3 million outstanding shares, for an indicated value of $52.5 million.
However, a minimum value for the preferred stock has not yet been agreed on, and neither bank would estimate the ultimate value of the deal.
The price is also contingent on how much Orbanco can realize from the sale of bad loans that it acquired from a former subsidiary, Northwest Acceptance Corp., a commercial finance company.
The deal will be effective as soon as final agreement is reached and regulators and stockholders approve it. Orbanco President Francis J. O’Connor said Tuesday that company management will present the tentative agreement for initial approval to the Orbanco board of directors this week.
Nevada National, parent of Reno’s Nevada National Bank, said it was continuing to discuss a merger with Security Pacific despite the termination of an agreement related to the proposed combination.
Cancellation Reported
Nevada National Bank is the state’s third-largest bank, with $630 million in assets. The company has had problems with bad loans in real estate and other fields, which led to $3.6 million in net losses for the first nine months of the year.
William E. Martin, chairman of Nevada National, said the company has learned that two Nevada savings and loan associations have canceled their proposed sale of the 57% stake that they own in Nevada National to Transcontinental Enterprises, a Nevada company.
Security Pacific was to have bought those shares from Transcontinental as part of its acquisition of Nevada National.
“Discussions and negotiations are continuing with Nevada National, and we have no reason to believe we won’t come to a mutually agreeable arrangement. It won’t end the deal,” the Security Pacific spokeswoman said.
If approved by shareholders and regulators, the proposed merger would be effective after Jan. 1, 1989, when Nevada state law allows California bank holding companies to buy Nevada banks.
