Firm Plans to Invest in PNB Financial, Obtain More Than 50% of Its Stock

A new company headed by the chairman and a former director of PNB Financial Corp. in Newport Beach plans to inject $4.7 million into PNB’s capital base for new shares that would give the new firm just over 50% of PNB’s stock.

The cash infusion, if approved by regulators, will give the company sufficient capital to expand the banking operation of its subsidiary, Pacific National Bank, said Donald Solsby, the bank’s president. He said the bank would use the money to grow internally, to acquire another bank or both.

Terry M. Giles, PNB’s chairman, and William H. Millard, a former director, formed Merchant House to make the investment.

Separately, PNB reported net income of $410,000 for the year, a slight increase from $409,000 in earnings the previous year. Annual revenue rose 9% to $8.7 million last year from $8 million the previous year.

For the fourth quarter, the company posted net income of $305,000, a 79% increase over $170,000 in earnings for the last quarter of 1987. Quarterly revenue grew 30% to $2.6 million from $2 million in 1987’s final quarter.

PNB’s total assets climbed 30% to $104.8 million at the end of December from $80.4 million a year earlier. Total deposits rose 33% to $98.9 million at the end of the year from $74.2 million a year earlier, while the loan portfolio grew 17% to $51.4 million from $44.1 million.