Torrey Pines Bank Will Sell to Wells Fargo

As part of its strategy of expanding its statewide branch system through the acquisition of small regional banks, Wells Fargo signed a definitive agreement Monday to acquire the seven-branch Torrey Pines Bank, with headquarters in San Diego County, for $74.5 million.

The deal, which works out to $31 a share, or 2.7 times the book value per share of parent Torrey Pines Group, calls for at least 52% of shares to be exchanged for Wells Fargo stock and the balance to be tendered for cash. Torrey Pines’ largest shareholder, with 16% of shares outstanding, is Theodore Gildred who until recently was U.S. ambassador to Argentina.

Torrey Pines had total assets of $443.4 million as of June 30. Earnings for the first six months of the year were $2.36 million. Its branches are in Solana Beach, Fallbrook, Rancho Santa Fe, Vista, La Jolla and San Diego in San Diego County, and in Rancho California in Riverside County.

Torrey Pines has held fruitless merger talks with several would-be suitors in recent years, most recently with First National Bank of San Diego. The bank had been singled out by industry analysts as an attractive takeover target for out-of-state banks after interstate barriers fall in 1991.

“Torrey Pines held out for top dollar,” said Irving Katz, director of research at Thomas Green/San Diego Securities. “The bank has excellent earnings and branch system, and everything is going its way. They can pick and choose.”

The merger announcement did not affect Torrey Pines stock Monday as the deal was announced after the stock market had closed. Torrey Pines stock has been trading as high as $20 a share over the counter recently, Torrey Pines Group Chairman Nicholas Frazee said Monday. Frazee and other Frazee family members combined own about 11% of Torrey Pines stock, he said.

Bank President Edward George did not return several telephone calls to discuss his future with the bank. The acquisition is scheduled to close next spring.

The Torrey Pines deal would be Wells Fargo’s fourth acquisition of a regional California bank since March. In the latest deal, Wells Fargo announced plans last week to pay $160 million for Central Pacific Corp. of Bakersfield, parent of the 28-branch American National Bank.

Previously, Wells Fargo signed deals to acquire Bank of Paradise and Valley National Bank in Glendale.

Gerry Findley, editor of Findley Reports, a Brea-based banking industry newsletter, said Torrey Pines has been “playing a pretty aggressive game in expansion and building the bank.” The acquisition gives Wells Fargo a “strong presence in the retail market” in North San Diego County, “so it makes a lot of sense for them.”