National Bank, Community First Amicably Call Off Plans for Merger
A proposed merger of Ventura County National Bank and Community First Bank, based in Bakersfield, has been canceled.
The deal had been announced Nov. 6. Had it not crumbled this week, assets of Ventura County National Bank would have more than doubled overnight, growing from $180 million to $380 million.
“It looked very hopeful,” said William McAleer, president and chief executive officer of National Bank, which opened in 1982 with assets of $3.5 million. “I think the advantages were tremendous. We were basically looking at adding 21 locations in a commercial environment to offer our wholesale services.”
Officials for Community First also saw the union as attractive.
“It looked optimistic,” said Fred McKenna, vice president of marketing for Community First Bank. “They are a wholesale bank, and we are a retail bank. The concept was to create a larger institution with a wider range of customers and services.”
But many of the features that attracted the two banks to each other seem to have been the merger’s undoing.
“They are geared up as a wholesale bank with very few accounts and large balances,” McKenna said. “We’re about the other end of the spectrum, with many, many accounts and smaller balances. Internally, we operate quite differently because of this. We found we wouldn’t be able to eliminate a lot of the duplication, and we didn’t see the savings to the bottom line as a result of this.”
Proposed bank mergers frequently are called off, banking analysts say.
“Many times, on the front end, it looks great,” said Gerry Findley, publisher of Findley Reports, a banking newsletter. “Then they get a close look, warts and all, and the marriage is off. You’ll find about two-thirds to three-fourths will fall out of bed before they get to the altar.”
The number of would-be mergers that dissolve has risen sharply since the Securities and Exchange Commission required publicly held banks to stop trading and to announce an intent to merge before they open up their books to each other, Findley said.
The regulation, which is intended to eliminate insider deals, also prevents any preliminary courting. “Back in the old days, they used to do their wooing in private,” Findley said. “Now it’s all in the open.”
Both Ventura County National and Community First are publicly held.
According to Henry Wheeler, president and chief executive officer of Pacific Bancorporation, the holding company for Community First Bank, the two institutions fell out over a basic philosophic disagreement.
“We are an agricultural lender, and they are not,” he said. “There was some concern that the agricultural business would have been curtailed because Ventura looks at it as a high-risk type of financing. It’s really been the farmers in the San Joaquin Valley that made this bank, and I feel we have to have some loyalty to them.”
McAleer, however, said the agricultural accounts were not a subject of dispute.
“I think agricultural products have their place in an agriculturally oriented economy,” he said. “I don’t think that was ever an issue.” McAleer said terms of the agreement prohibited him from commenting on the specifics that led to the dissolution of the proposed merger.
However, McAleer said, Ventura County National Bank will continue to look for an opportunity to merge with a bank in the San Joaquin Valley. “The growth opportunities are remarkable,” he said. “They have a tremendous labor force; they’ve shown the ability to bounce back, and there is a great willingness in the community to attract industry. We’re still interested and will continue to pursue it.”
McKenna said Community First, as well, was still open to the possibility of merger.
“We’re not out there actively seeking, but it is something we’ll keep our eye on,” he said. “We’re still interested in an opportunity to extend our services and geographic influence.”
Spokesmen for both banks said that the agreement to cancel the merger was mutual and amicable and that they will continue to participate in joint projects.
