Deal for CommerceBancorp Collapses : Banks: Michigan National Corp. cites ‘multiple’ differences in calling off $25.5-million stock-and-cash acquisition.

Michigan National Corp., citing differences on “multiple issues,” has abruptly called off its proposed $25.5-million cash-and-stock acquisition of CommerceBancorp.

The giant bank holding company, which already owns Beverly Hills Business Bank, a Mission Viejo thrift, said Wednesday that the tentative accord reached three weeks ago was “very preliminary” and that executives want to look more deeply into CommerceBancorp’s financial condition.

“We’re still interested in locating a bank in Southern California,” said Edward H. Sondker, president and chief executive of Beverly Hills Business Bank. Michigan National is seeking a bank charter in the area because it eventually wants to merge its thrift into a bank. Sondker is leading that search.

Sondker said the decision to cancel the proposed deal was made after the two sides failed to reach agreement over “multiple issues.” He would not say how many issues were involved or what they were.

“I would have liked to have seen the deal go forward,” said Raymond E. Dellerba, CommerceBancorp’s president and chief executive. “I don’t know if the economy scared them away or what. They’re a very fine organization, like we are.”

The holding company for CommerceBank in Newport Beach had been one of Orange County’s bigger and better-run banks through most of the 1980s. But it sank into red ink last year as several business loans went bad and construction loans soured with the continuing recession in the real estate market.

Dellerba said the bank had to foreclose on a number of construction projects, raising the amount of troubled real estate it owned from $6.3 million in the first quarter this year to $17.1 million at the end of June. Recent and pending sales of some of those projects should reduce the amount “substantially,” he said. He would not provide a figure but said third-quarter results are to be released soon.

Michigan National “probably has a choice of anything it wants,” Dellerba said, and “probably doesn’t want to look at any foreclosed real estate.” He said his company, which earned $285,000 in the first six months this year, is solving its problems.

“I’ve got six more construction projects to sell, and we are not doing any other construction loan projects,” he said. “We’re now making commercial and industrial loans to individuals and high-profile professionals, and we’ve started a mortgage banking operation, which so far has funded 686 loans, primarily for affordable housing.”

Both Dellerba and Sondker also squelched rumors that regulators had arranged for Michigan National to start talks with CommerceBancorp a few months ago.

Sondker said he never spoke with regulators. His own searching led him to the Newport Beach bank, he said.

Most of CommerceBancorp’s directors reportedly want to sell, but its chairman, William E. Langston, a general contractor, wants to continue the operation as an independent bank. Dellerba would not comment about the board’s leanings.

Michigan National is Michigan’s third-largest banking concern. It has $11 billion in assets, including the $1.1-billion Mission Viejo thrift. CommerceBancorp has $304 million in assets.