American Merchant to Be Merged Into Eldorado Unit

Eldorado Bancorp bought 84% of American Merchant Bank for $3.2 million Thursday and, reversing its previously announced plans, said it will merge American Merchant into its wholly owned subsidiary, Eldorado Bank in Tustin.

The merger will create Orange County’s largest single bank with about $250 million in assets, said David Brown, a senior vice president and chief financial officer.

The holding company initially said publicly it would operate the Newport Beach bank as a separate entity with all of its employees.

Now, as many as 10 of American Merchant’s 44 employees could lose their jobs, though jobs at Eldorado Bancorp’s Laguna Hills headquarters should be available. The firm stopped filling its own vacancies some time ago to make room for American Merchant employees, Brown said.

Brown was unsure what position Richard Cordova, American Merchant’s president for the last year, would hold after the merger.

“It never made sense to operate American Merchant Bank as an independent entity,” said Gerry Findley, a Brea-based industry consultant who worked on the merger. He said prior announcements about separate operations were made “to accommodate the emotions of all the players involved.”

The company paid about $8.25 a share, well below the $10.61 a share that Martin List, a doctor-turned-developer, paid in late 1985 for ailing Orange City Bank. List soon changed the bank’s name to List American Bank. But a year later, List was bankrupt, and he enlisted two friends to buy his shares at the same price he paid.

But questions arose in bankruptcy court over whether the $10.61-per-share price was a fair value and whether the friends, Emmanuel Nicherie and his son, Daniel, were getting a bargain in a less than arms-length deal.

While trustees were overseeing the disposition of the shares, the bank’s name was changed to American Merchant.

Eldorado Bancorp said it will offer remaining shareholders the same $8.25 a share it paid or the chance to trade each share for a share of company stock, Brown said.

With American Merchant’s three branches, the merger will give Eldorado Bank a total of nine offices in Orange, Riverside and San Bernardino counties.