First Interstate to Buy 2 Banks in N. California
In a move to improve its position in Northern California, First Interstate Bank of California said Thursday that it will buy two small banks in Sacramento and the east San Francisco Bay Area for $42 million.
Los Angeles-based First Interstate, the state’s fourth-largest bank, will pay cash for the outstanding stock of Alex Brown Financial Group, a holding company that operates the Bank of Alex Brown in Sacramento and Meridian National Bank in Concord.
The price amounts to slightly less than 1.5 times the holding company’s $29-million book value--its assets minus liabilities and intangibles.
Bank of Alex Brown, with assets of $315 million, is the largest independent bank in the Sacramento area and operates 14 branches in and around the capital. Meridian has assets of $103 million and an office in Concord and another in Oakland.
Performance Noted
First Interstate has assets of $20 billion and 319 branches in California. It is a principal subsidiary of First Interstate Bancorp, the nation’s ninth-largest banking company.
“Both Bank of Alex Brown and Meridian National Bank have established an outstanding record of performance in the Northern California market, and we look forward to building on that base,” said Alan Thompson, a First Interstate executive vice president and manager of the Central Valley division.
First Interstate’s acquisition of the two banks is contingent on approval by regulators and by stockholders of Alex Brown Financial Group.
About 60% of First Interstate’s branches are in Southern California, and the bank has been trying to increase its market share in the northern part of the state. Earlier this year, First Interstate bought two smaller banks in Northern California, Bank of Contra Costa and Point West Bank.
Acquisitions and mergers among California banks are expected to pick up over the next two years in anticipation of full interstate banking in 1991. Interstate banking will mean that big Eastern and Midwestern banks now excluded from the state will be able to open banks here or acquire existing institutions.
