Citizens Thrift Agrees to Swap Stock in Deal
The fast-growing Dallas company that operates FirstPlus finance company jumped into the California market Wednesday by agreeing to acquire Citizens Thrift & Loan in a stock swap valued at $25 million to $30 million.
RAC Financial Group Inc., which uses professional football star Dan Marino as its national spokesman, said it plans to expand the Citizens operation throughout California and in nearby states.
The deal must be approved by regulators and by shareholders of Citizens’ parent company, Western International Bancorp in Newport Beach.
“We are extremely excited about this acquisition,” said Eric C. Green, RAC’s chief financial officer. “Citizens has solid growth in areas we’re not in and it has good management.”
RAC will retain all 125 Citizens employees and add more, Green said, though it will change the name to FirstPlus.
Citizens, which operates four Orange County branches and two in Northern California, has opened loan offices in Phoenix, Las Vegas and Seattle and plans to open one soon in Kansas City.
A thrift and loan is a hybrid between a bank and a finance company that typically makes consumer and home equity loans. It is often confused with a savings and loan, which is sometimes called a thrift.
Citizens has been well-financed and profitable since it opened its doors in 1980. It expects to post net income of more than $3 million for last year, said James T. Capretz, chairman of Citizens and Western.
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Capretz looks at the sale of his institution as a reward to shareholders, who have received some cash and stock dividends and a stock split over the years. An original investor who paid $1,000 for 100 shares would get $7,339 back--a return that averages nearly 40% a year.
RAC will operate Citizens as a separate, regulated subsidiary. As a FirstPlus thrift, it will continue to make home equity and debt consolidation loans that have been specialties of both Citizens and RAC.
The Dallas company had been purchasing loans from Citizens for the last two years, but had not been involved directly in making loans on the West Coast. It was that working relationship that attracted RAC, Green said.
“Look for them to have a strong presence here,” Capretz said. “They have had incredible growth in the last year or two.”
RAC leaped from $2.4 million in revenue in its 1994 fiscal year to $33.9 million in 1995. After going public early last year, it vaulted to $198.1 million in revenue for the year ended Sept. 30.
The growth has come from internal growth as well as acquisitions. FirstPlus, for instance, has been one of a few aggressive companies nationwide to start offering homeowners loans that exceed the value of their homes by 25%.
RAC and privately held Western International released information about the acquisition after the stock market closed Wednesday. RAC’s stock, which split 2-for-1 in December, closed Wednesday at $33.50 a share, up $1.75 a share in Nasdaq trading.
