La Jolla Bank to Be Sold in Stock Swap
In one of the highest-priced acquisitions of a San Diego County bank in recent years, Security Pacific National Bank has agreed to buy the 12-branch La Jolla Bank & Trust in a stock swap worth up to $112 million, according to a letter of intent signed by both banks Wednesday.
Los Angeles-based Security Pacific Bancorp is to pay $15 worth of its stock for every share of La Jolla Bancorp stock tendered. That’s 2.94 times the $5.10 book value per share of La Jolla Bancorp as of Sept. 30, considerably more than the multiples of book value that local banks have fetched recently, said Irving Katz, director of research at Thomas Green/San Diego Securities.
Earlier this month, Wells Fargo agreed to acquire Torrey Pines Bank of Solana Beach at a multiple of 2.4 times book value, Katz said. The acquisition would be Security Pacific’s second in San Diego County this year. Earlier this month, the bank completed the purchase of Southwest Bank of Vista.
The total value of the tender for La Jolla Bancorp has not yet been determined because it is unclear how many of the stock options held by La Jolla Bancorp executives are exercisable, La Jolla Bancorp President Ed Sondker said. The $112-million price tag assumes the purchase of all 6,924,000 outstanding shares and that all 524,000 stock options are exercised and tendered.
Sondker said the Security Pacific offer was presented only this week but that La Jolla Bancorp’s board of directors quickly determined that it was an irresistible offer.
“If you look at recent acquisitions, this is one of the highest offers in the recent history of California banking transactions,” Sondker said. “So we are confident we are maximizing shareholder value.” Sondker, who has been with the bank since 1985, said he has not yet discussed his future with Security Pacific.
La Jolla Bancorp stock closed down $.125 at $10 a share in American Stock Exchange trading Wednesday. The bank’s leading shareholder as of Dec. 31, with an 11.9% stake, was Ernest Rady with 776,530 shares.
