BANKING AND FINANCE : Founders National, Landmark Banks Solidify Merger Plan

From time to time over the last two years, executives at Landmark Bank in La Habra have talked with their counterparts at Founders National Bank in Brea about a possible merger. When they announced a tentative agreement in December, others in the industry didn’t give the deal much of a chance.

But the two groups finally reached a definitive agreement in the last week to merge Founders into Landmark for about $2.2 million in cash and $2.7 million in stock. Founders shareholders would wind up with about 15% of Landmark’s parent firm, Landmark Bancorp.

The deal is subject to approvals from shareholders, the Securities and Exchange Commission and state and federal banking regulators. Both banks expect the merger to be completed sometime during the third quarter this year.

The merged institution would give 12-year-old Landmark four branches and $229 million in assets, based on Dec. 31 figures, making it the eighth-largest bank based in Orange County.

“We like Brea,” said Craig Collette, Landmark’s president. “If we didn’t buy this bank, we’d still open a branch there. Brea-Yorba Linda is a growing area, and this merger gets us into that market.”

Founders, which opened 10 years ago, has been a profitable bank but has remained small. With $53 million in assets, it faces a tough time not only competing but also facing the constant upheavals in the banking and even the savings and loan industries.

“The deal was attractive enough that the board could not say no without taking it to shareholders,” said Robert D. Knogge, the bank’s president.

“In light of what’s happening in the S&L; and the banking industries, the board will recommend to shareholders to accept the deal.”

Founders directors control a majority of the stock, but less than the two-thirds required to approve the deal.

If the merger is approved, Knogge, 62, will join the board of Landmark Bancorp. He also will go into semiretirement.