Ailing Laguna Bank Sold : Acquisition: Orange National Bank said it paid more than $225,000 to acquire two South County branches.

Orange National Bank said Tuesday that it has completed its acquisition of long-suffering Laguna Bank by paying more than $225,000 to take over its two branches in the bustling South County market.

The Laguna Beach institution becomes the fourth community bank based in South County to bow out of that competitive area in the last 10 months. Two banks failed and a third was acquired by Eldorado Bank in Tustin.

For Orange National, though, the market is new and the opportunity exciting.

The bank, which had confined its four offices to the city of Orange, wanted to expand to South County and decided that the acquisition of a bank or several bank branches would be the quickest way to get into the market, said Wayne F. Miller, Orange National’s president and chief executive.

Miller said Orange National, which had $165 million in assets at the end of March, will acquire about $10 million in Laguna Bank assets, most of which is in cash and government securities. The troubled bank had only $2.7 million in loans, and those are the good loans left remaining after prior owners cleaned up the bank’s portfolio.

Under the deal, stockholders for the Laguna Beach institution will receive about 25 cents a share. The price is more than 70% less than the original $800,000 offer made in March.

Part of the reason for the lower price is that Laguna Bank was conducting little business at its Laguna Beach and Laguna Hills branches. The tiny bank was selling assets, writing-down loan values and watching its capital drop to little more than 3% of assets, half of what federal regulators require.

It could only make loans of up to $70,000 and by August had reduced its staff to 11 employees for both branches.

Orange National hired nine of the employees after closing the deal Friday, letting go the top two officers--Richard Cordova, the president, and Anna Lewis, the cashier.

The acquisition ended more than five years of financial woes for Laguna Bank and numerous attempts to infuse capital or sell the institution.

It acquired capital from a Chicago area investment group in the late 1980s, but it was too little money too late.

Its owners tried to sell the bank several times. Suitors included Monarch Bank in Laguna Niguel but that deal fell through a year ago. Early this year, a small group of Newport Beach and Laguna Beach investors considered bailing the bank out of its troubles, but the group withdrew.