Imperial to Sell Trust Unit to Union Bank

In the latest step in a long-delayed restructuring, Imperial Bancorp said Friday that it agreed to sell its trust services subsidiary to Union Bank of California for $14 million.

The deal would add Imperial’s $10-billion trust portfolio--including many retirement plans for small businesses and trade unions--to Union Bank’s existing trust division, bringing Union’s total portfolio to more than $100 billion, according to Piet Westerbeek, trust director at Union Bank.

For Inglewood-based Imperial, the sale is part of an ongoing drive to refocus on core operations by shedding certain holdings, including a 24% stake in its specialty finance spinoff, Imperial Credit Industries Inc.

Analysts said the sale of the trust company, called Imperial Trust Co., would have only a minor effect on Imperial’s business. The trust unit earned $1.2 million last year, compared with Imperial Bancorp’s net income of $43.7 million.

One analyst suggested that the deal could signal an effort by Imperial to “clean house” before offering itself for sale.

“All the objectionable pieces are being unloaded,” said Charlotte Chamberlain, financial services analyst at Jefferies & Co. in Los Angeles. “It’s like spiffing up your house before putting it on the market.”

With $6 billion in assets, Imperial is the largest bank based in Southern California and a frequent target of acquisition speculation.

Imperial Bancorp executives said they are not looking for a buyer. “The bank is not for sale,” said Norman P. Creighton, chief executive of Imperial Bank.

Creighton said the company decided to sell the trust operation, which handled about 4,000 accounts, because it is too small and profit margins have been slipping.

Though he said Imperial Bancorp would remain independent, Creighton did reaffirm the bank’s desire to sell 8.9 million shares in Torrance-based Imperial Credit, an auto and mortgage lender that specializes in loans to high-risk borrowers.

For nearly two years, federal banking regulators have been pushing Imperial Bancorp to divest the stock because they view Imperial Credit’s business as too risky.

Last fall, a plan to spin off the Imperial Credit stock--which was to be combined with the trust division and an entertainment lending unit into a publicly traded company--fell apart when Imperial Credit’s stock slumped amid the market turmoil.

Then last month, Imperial Bancorp announced a new deal to sell the stock to New York-based Leucadia National Corp. for $82 million. A month later, the sale was terminated.

Creighton predicted that a buyer for the stock will be found shortly.

The sale of Imperial Trust is expected to be completed by Friday, pending regulatory approval. San Francisco-based Union Bank said it plans to offer jobs to 15 of the trust’s 50 employees.

Imperial Bancorp shares rose 50 cents to close at $17.50 on the New York Stock Exchange.