Merger to Form Third Largest Independent Bank in San Diego

Shareholders of First National Corp., National Bankshares of La Jolla and National Bank of Fairbanks Ranch on Thursday voted to merge operations and create San Diego’s third-largest independent bank, with $360 million in assets.

Only San Diego Trust & Savings, with $1.3 billion in assets and $84.9 million in capital, and Southwest Bank, with $383 million in assets and $27.4 million in capital, are larger. The new bank, which will be known as First National Bank, would have reported $24 million in combined capital had it existed on March 31.

The deal is to be concluded by May 29, and First National’s seven branches will be open for business on June 1, bank officials said Thursday.

There were no surprises during the three shareholder meetings that were held on Thursday to approve the merger. Shareholders overwhelmingly approved what their individual boards of directors previously had touted as the first “merger of equals” in the West.

Bank industry analysts have predicted that a series of similar mergers will occur as banks position themselves to survive or be more attractive to out-of-state suitors when the first wave of interstate banking breaks in California on July 1.

In July, banks in 14 Western states will be allowed to cross state lines and make acquisitions. In 1991, banks elsewhere in the country will be able to acquire California banks.

A similar “merger of equals” proposed earlier this year in Orange County recently fell apart when National Bank of Southern California, El Camino Bank and Corporate National Bank were unable to complete their proposed deal.

The merger completed on Thursday leaves First National “well-positioned” for that coming wave of interstate banking, according to John G. Duffy, a vice president with Keefe, Bruyette & Woods, a New York-based investment firm that advised First National Bank before Thursday’s deal.

The new bank “. . . has the capital, market position and quality staff to expand our role as the leading locally controlled business bank,” according to First National Corp. Chairman Malin Burnham.

Burnham will continue to serve as chairman of First National Corp. Robert Richley will be chief executive of the holding company and former National Bankshares President Michael West will serve as First National Bank’s president.