Orange National Bank, seeking to establish a foothold in South County, announced Tuesday that it has signed a letter of intent to purchase a financially troubled two-branch bank in Laguna Beach for about $800,000.
The acquisition of Laguna Bank N.A. would allow the Orange-based institution to expand its banking operation into an area expected to grow strongly in the next few years, said Orange National chief executive Wayne F. Miller.
"We see this as a unique opportunity," Miller said Tuesday. "We want to bring our concept of community banking to South County. This was a way to get there."
Representatives from Laguna Bank were unavailable for comment.
The value of the buyout of Laguna Bank N.A.'s outstanding stock would be determined by a formula based on a variety of available assets measured against outstanding debts, Miller said. Final cash payment to Laguna Bank shareholders could be as low as $500,000, after debts are paid off.
"We could go out and build a new bank for more than it would cost to take over" Laguna Bank, Miller said.
The two banks have yet to sign a final purchase agreement, Miller said, but he hoped the deal would be completed by July.
This is the latest in a string of proposed acquisitions of Laguna Bank, which said it has $11 million in assets and two branches, in Laguna Beach and Laguna Hills. Within the past year, two merger deals have fallen through for the bank, which has posted losses for the past five years.
Last month, Laguna Bank did not complete a sale to a small group of Newport Beach and Laguna Beach investors. And in July, 1991--after a year of merger negotiations--Laguna Bank and Monarch Bank announced that their proposed union "would not now be in the best interest of either party."
Orange National Bank, with $165 million in assets and four branches in Orange, is a subsidiary of Orange National Bancorp.
The deal stills needs to pass muster with the Office of the Comptroller of the Currency, the regulator for both federally chartered banks, and the shareholders of Laguna Bank and Orange National Bancorp.