The prospect of the sale of CommerceBancorp has investors bidding up the price of its stock.
The holding company for CommerceBank in Newport Beach saw its stock price jump 58% in Wall Street trading Tuesday, a day after the company announced that it reached a tentative agreement to be acquired by Michigan National Corp. for $25.5 million in cash and stock, or nearly $11 a share.
CommerceBancorp stock rose $2.75 a share to close at $7.50 a share on the NASDAQ system.
"I would have to believe that the sale news was the driving force behind the price hike," said Raymond E. Dellerba, president of CommerceBancorp. Dellerba said that CommerceBank's loan troubles peaked during the summer and that Michigan National executives are catching the business bank as it revives--barring any further downturns in the general economy.
Michigan National has been looking for a bank charter in California to give it an option when it comes time to change its California subsidiary, Beverly Hills Business Bank in Mission Viejo, from a savings and loan to a commercial bank.
With the acquisition of CommerceBank, Orange County's fourth-largest bank with $304 million in assets, the Farmington Hills, Mich., banking company could simply merge its thrift, with $1.1 billion in assets, into the bank rather than go through the more cumbersome procedure of converting it to a bank charter.
Michigan National, which has $11 billion in assets, isn't stopping with CommerceBank in its search for acquisitions in Southern California.
"Just because we're doing this deal doesn't mean this is the end of our efforts to acquire other institutions in Southern California," said Edward H. Sondker, president and chief executive of Beverly Hills Business Bank.
Michigan National has been asked by regulators to bid on failed thrifts and has looked at numerous opportunities throughout the Southland and especially in San Diego.
Through several name changes, Beverly Hills Business Bank is the descendant of failed Beverly Hills Savings & Loan, which Michigan National bought at the end of 1988 with federal assistance.