First Interstate Will Buy Bank of A. Levy : Merger: The purchase for $86.5 million will create Ventura County’s second largest financial institution.
The 112-year-old Bank of A. Levy, Ventura County’s largest locally owned bank, is being sold to Los Angeles-based First Interstate Bancorp, officials announced Tuesday.
First Interstate, which has aggressively bought smaller banks in the past 1 1/2 years, will pay $86.5 million in stock for Levy Bancorp, Bank of A. Levy’s parent company.
Ventura-based Bank of A. Levy has 17 branches throughout the county, some of which may close along with some of First Interstate’s eight local branches, officials said.
First Interstate said it wants to boost its presence in Ventura County, projecting a county growth rate of 3.2% through the 1990s and an average household income about 10% higher than the state’s average.
“This acquisition . . . offers us an outstanding opportunity to expand our position in one of the state’s fastest-growing markets,” First Interstate Chief Executive Bruce G. Willison said.
Bank of A. Levy’s president, Marshall Milligan, a great-grandson of founder Achille Levy, said the decision to sell was spurred by a trend toward consolidation in the banking industry.
“We felt we should be involved sooner rather than later,” Milligan said. “If we were going to sell, we wanted to do so at a time when there were a number of healthy buyers available.”
He also cited increasing difficulties of competing with vast corporate banks. “We see the trend in the industry not favoring smaller banks,” he said.
The sale was a bittersweet closing to the bank’s long history, he said.
“It’s very much a case of mixed emotions,” Milligan said. “This is the final chapter in a long story full of history and tradition, so we’re sad to see it end. Yet we believe the transaction makes good sense for all the shareholders.”
The bank was founded by Levy, a French immigrant and dry-goods merchant. About 61% of Bank of A. Levy stock is held by his descendants.
The announcement was met with cries of dismay from community leaders and longtime customers who consider the financial institution as much a part of Ventura County as the strawberry fields of the Oxnard Plain.
“In some ways, the Bank of A. Levy could be deemed the founder of Oxnard,” Oxnard Mayor Manuel Lopez said. “It really financed a lot of the early development. The bank was the lifeblood of the city.”
The merger of the two banks, expected to be completed during the first quarter of 1995, leaves 276 employees of Bank of A. Levy in limbo.
“As you can imagine, with any merger, there are some duplicative jobs,” said David Garcia, a vice president at First Interstate. “We expect that some job reductions will occur at both banks.”
The deal marks First Interstate’s second purchase in Ventura County this year. In January, it completed the $23-million acquisition of First State Bank of the Oaks, a five-branch bank headquartered in Thousand Oaks. All but one of Bank of the Oaks’ branches have since closed.
The merger will make First Interstate the second-largest financial institution in Ventura County, behind Bank of America.
Ventura County National Bank will become the largest locally owned bank. But last month, its owners announced negotiations for a possible sale.
Bank of A. Levy, with assets of $625 million, has recently begun to emerge from two years of financial troubles that culminated in July, 1993, when the bank signed an administrative order with the Federal Deposit Insurance Corp. The order required the bank to improve its loan portfolio and get FDIC approval for any new directors or senior officers.
But in the first and second quarters of 1994, Bank of A. Levy showed its first profits in nearly two years.
“We could not have put together a sale a year ago,” Milligan said. “The window of opportunity just opened within the last six months.”
First Interstate paid a premium price for the bank, 1.84 times its book value of $47 million, officials of both banks said.
“I regard it as a very favorable price,” Milligan said. “It is the second-highest price paid in California in two years for a bank.”
Negotiations for the sale began about two weeks ago, he said, adding that Bank of A. Levy solicited the purchase.
Under the sale agreement, Milligan, 43, will not be hired by First Interstate and is prohibited from working at any bank in Ventura or Santa Barbara counties for three years.
Milligan said the bank’s goal of providing a personal and local touch in banking had become increasingly complicated. While some customers prize that local identity, they also demand faster, more efficient services that are more easily provided by large competitors.
“There is a significant segment of the population that likes the local identity and local feel of an independent bank,” Milligan said. “Unfortunately, they often aren’t willing to pay for that service.”
But for Thousand Oaks customer Michael Surwin, service is the reason he has been banking at Bank of A. Levy for 10 years. He said he was disappointed to learn of the sale, predicting that service will not be the same with a large bank.
“I won’t stay with First Interstate,” Surwin said. “I’m really upset with all these mergers.”
Suzanne Sonntag of Ventura saw the acquisition as inevitable. “Merging and buying and selling is part of our society today,” she said. “It’s progress in its own way.”
Times staff writers Carlos V. Lozano and David W. Myers and correspondent Jeff McDonald contributed to this story.
* RELATED STORY: B1
How the Banks Compare
Bank of A. Levy First Interstate Bank Founded 1882, in Port Hueneme 1903, in Los Angeles Branches 17 (all in Ventura County) 1,093 (eight in Ventura County) Employees* 276 28,000 (114 in Ventura County) Assets** $625 million $53.3 billion Deposits $575 million $46.8 billion Loans $297 million $28.7 billion Profits*** $3.2 million $392.3 million
** As of June 30, 1994
*** First six months 1994