Ex-Director Offers $89 Million for 1st Business Bank : Millionaire John E. Anderson Bids 3 Times Book Value to Expand His Private Holdings
Millionaire businessman John E. Anderson offered Tuesday to buy 1st Business Bank of Los Angeles for about $89 million in cash in a transaction that would turn the publicly held bank into a private concern.
Anderson, a former director of the bank, offered $27 a share in cash for all outstanding stock. The stock is priced at about $21.50 on the over-the-counter market.
The purchase price would be three times the book value of the bank--essentially assets minus liabilities. It would represent one of the highest premiums paid for a California bank in recent years.
Anderson is a Los Angeles lawyer and entrepreneur who already owns two thrifts as part of a private empire that includes more than 20 companies. The companies are owned through his Topa Equities, which is headquartered in Century City.
The proposed acquisition was announced by Robert W. Kummer Jr., chairman and chief executive of the bank. Kummer said the bank’s board reviewed the proposal Tuesday and plans to meet again next Tuesday to consider it further.
The board will likely make a recommendation to shareholders on whether to accept the offer. The shareholders will then vote on the proposal.
Highly Costly Conversion
Anderson’s secretary said he was out of town and unavailable for comment.
Analysts said it is not unusual for very small banks to be privately owned. But they said this transaction would be one of California banking’s most costly conversions from public to private ownership.
1st Business Bank was founded in 1981 and has grown into one of the most profitable and successful small banks in the state, according to industry analysts. At the end of September, it had assets of $413 million and its earnings for the third quarter were 32% higher than during the same quarter a year earlier.
The bank has specialized in the lucrative so-called middle market, providing lending and financial services to small and medium-sized businesses. Its profits have increased at an annual rate of more than 20% in each of the past six years, and its loan losses in 1987 were a mere $68,000.
“It is a superb bank with superb management,” said Gerry Findley, an industry analyst. “And that is a pretty choice price.”
Alan Lane Opley, a broker at Crowell Weedon in Los Angeles who handles the bank’s stock, said the stock is so coveted now that he has a waiting list of buyers for 50,000 to 60,000 shares and no sellers. Officers and directors of the bank own more than 25% of the stock.
Besides its downtown headquarters, the bank has a branch in Los Angeles, Irvine and Torrance.
Anderson was a founding director and shareholder in 1st Business Bank. He resigned from the board last year when he acquired Bel-Air Savings & Loan in Brentwood. Federal regulations prohibit people from serving as directors of a bank and savings and loan in the same area, but do not prohibit cross ownership.
In addition to Bel-Air Savings, Anderson owns Topa Thrift & Loan in Beverly Hills, a small, state-regulated institution. His privately held empire generates revenue estimated at $350 million a year. Last year, he donated $15 million to the UCLA Graduate School of Management and it was renamed in his honor.
