Monarch Bank Group to Buy L.A. Operation

The parent company of tiny Monarch Bank, backed by well-heeled out-of-state investors, said Thursday that it has agreed to pay $60 million to $65 million to acquire a Los Angeles bank more than five times its size.

Monarch Bancorp agreed to pay $17.25 a share to $17.50 a share for Western Bank, a five-branch operation based in the Westwood area of Los Angeles. The price is considered a favorable one compared to other recent acquisitions.

The company will operate the two banks as separate subsidiaries with both retaining their bank names and their employees.

Monarch Bank held only $70.1 million in loans and other assets at the end of December and earned $685,000 last year. Western held $397 million in assets and earned $4.3 million.

“From a pragmatic standpoint, it’s a merger,” said E. Lynn Caswell, Monarch Bancorp’s president. Because Western is the larger operation, he said, its president, Hugh S. Smith Jr. will become chairman and chief executive of the holding company, which will not have a president.

Caswell will remain chairman and president of Monarch Bank, and Joseph Digange will become president of Western.

“They have substantial investors,” Smith said, “and this looks like a good deal for our investors.”

Monarch Bancorp, which launched an expansion drive two years ago, raised $10.2 million from investors in Illinois, Pennsylvania and New York last year. Some of those investors have pledged to join new investors in raising about $45 million more within two months to finance the transaction, Caswell said.

“One of reasons we like this deal is because it preserves an independent bank,” Smith said. “Also, our new shareholders intend to expand it. Their plans are to put even more money into it. The group is really interested in California banking.”

The group of investors includes Belle Plaine Financial in Chicago and Keefe Managers in New York.

The acquisition, which both sides hope to complete this year, would make Monarch Bancorp one of Orange County’s largest bank holding companies. But whether the company’s headquarters remain in Laguna Niguel is uncertain, Caswell said.