BANKING/FINANCE : Acquisition of Laguna Bank Hinges on Shareholders, U.S. Regulators

Laguna Bank, which had a merger deal fall through last summer, is now looking forward to being acquired by a small group of Newport Beach and Laguna Beach investors for an amount that will probably be less than $1 million.

The small Laguna Beach bank, which hasn’t posted an annual profit in five years, has signed a definitive agreement with an investor group consisting of three to five South County business executives, said Steven R. Rabago, the bank’s chairman.

“For original investors, there will be a significant loss of money,” Rabago said. “But the bank will survive. We’ve got people with money ready, willing and able to make the investment. They’re familiar with the financial industry--they’re in commercial finance--and they have a plan ready to go forward.”

Rabago would not reveal the names of the investors, but one is believed to be Louis Carabini, president of Monex International Ltd., a Newport Beach precious-metals investment company. Carabini could not be reached for comment, but employees there confirmed his involvement with Laguna Bank.

The deal needs only the approval of shareholders and regulators. Richard Cordova, who became the bank’s president last year, said he and 14 employees are expected to remain under the new ownership.

The investors are forming a holding company called Mercantile Bancorp, and they submitted an application to the Federal Reserve Bank of San Francisco to acquire control of the bank. That application was sent back as incomplete, an agency spokeswoman said.

But Rabago said the investor group is answering questions posed by the agency and will resubmit the application soon.

The bank’s problems began in late 1987, just as a group of Chicago investors agreed to invest more than $1 million in the bank. But loan losses had reduced their investment by mid-1989 to a little more than $600,000, Rabago said.

Even with additional financing, the two-bank branch continued to report losses and sought a marriage with Monarch Bank. But the deal fell apart last summer as regulators still declined to accept Monarch’s application.