Wells Fargo to Buy County Bank Holding Company : Acquisition: Citizens Bank of Costa Mesa and El Camino Bank in Anaheim--among Orange County’s older and more profitable institutions--will cease to exist under the $48-million deal.
Wells Fargo & Co., continuing its yearlong bank buying spree, has agreed to pay at least $48 million to buy an Anaheim bank holding company and its two units, Citizens Bank of Costa Mesa and El Camino Bank in Anaheim, officials for the two parties said Friday.
The purchase price of Citizens Holdings can go up to $50.5 million by the time banking regulators approve the deal and the transaction is concluded, possibly by December, under a provision that would reward the owners for continued good financial results.
With the sale, two of the county’s oldest and more profitable banks will cease to exist.
“These have been wonderful banks, and we’ve been successful in them,” said Robert Katz, chairman and chief executive of Citizens Holdings. “They have had very good management. While we had other suitors, we felt that Wells was the strongest and best choice for providing service to our customers and support to our people.”
Wells has agreed to offer jobs to all of about 200 employees at the banks. The banks have six branches, list combined assets of $264.6 million and earned an aggregate $4.7 million last year.
“The relationship with Wells places us with one of the best-managed banks in the West,” said Paige V. Simpson, chairman of Citizens Bank. “I think customers and employees will be well served. Really, it’s getting harder and harder for smaller banks to compete.”
Richard Helstrom, who was hired only last year as president at El Camino, said he has not given “a whole lot of thought” to what he’ll do next, but he will probably look for a top job in an independent bank.
The six branches--three at each bank--are “in very nice locations,” said Liam McGee, executive vice president and head of Wells Fargo Bank’s Southern California branch network. The offices will be added to Wells Fargo’s 39 other branches in the county.
San Francisco-based Wells, which only Tuesday agreed to buy ailing Great American Bank’s 130-branch system statewide, has been increasing its presence in Southern California. In the past year, the bank has bought two other Southern California banks, along with a Bakersfield operation and a Northern California institution. It paid $295.5 million in cash and stock for those banks, which had $1.6 billion in total assets.
“We’ve always been very clear that we want to be larger in Southern California, and these banks give us the opportunity to grow in promising markets,” McGee said.
The two county banks also give Wells a chance to expand its efforts to serve small businesses. For a major bank with $51.7 billion in assets, Wells Fargo has eschewed the centralized process that other major banks have followed in pursuing small commercial customers. Wells, McGee said, lets each branch handle its own small-business customers.
Both Citizens Bank and El Camino Bank have solid small-business operations, he said.
Wells was one of at least six bidders seeking Citizens Holdings. The others reportedly included the New York buyout firm of Kohlberg Kravis Roberts & Co. and a foreign-led investor group that offered more than Wells did.
“There are other factors to consider besides price,” Katz said, including Wells’ commitment to offer jobs to all employees.
Citizens Holdings was created by Australian industrialist Richard Pratt to acquire Citizens Bank in 1986 for $12 million. The firm, owned through seven tiers of companies by a trust for Pratt’s three children, was designed as a way for Pratt to diversify his investments.
At Simpson’s urging, Citizens Holdings embarked on an ambitious plan to acquire banks from Long Beach to San Diego and to let each operate under separate management. With a goal of $1 billion in assets, the company first bought El Camino in 1988 for $17.5 million and had deals pending for two more banks when federal regulators decided that each bank’s capital structure was too heavily laden with debt.
The collapse of the deals killed Simpson’s plan and led to Pratt’s decision to sell the banks.
“I think Pratt’s making a smart move,” said Gerry Findley, a banking consultant in Brea who helped put together the original deal. “If you can’t do anything more to expand, if the government’s got you hogtied, it’s a good time to get out.”
