Insurer Plans to Sell Brea Bank
Prudential, Britain’s largest insurer, hired Lehman Bros. Holdings Inc. to sell for as much as $400 million a California bank it bought five years ago, people familiar with the situation said Monday.
Jackson Federal Bank, based in Brea, had $1.7 billion of assets as of Sept. 30, according to federal regulators. In the last four years, 26 U.S. banks of similar size have sold for an average of 0.18 times total assets, according to Bloomberg data. That would value Jackson at $306 million. Prudential bought the bank in 1998 for $5.6 million.
The sale by London-based Prudential is part of a restructuring that includes selling other assets and cutting its dividend for the first time since World War I to dedicate more capital to its life insurance and pension business.
“It is good news and will allow them to pay down some debt,” Dylan Ball, an analyst at Credit Suisse First Boston, said. “It will help them pursue their strategy of acquiring bolt-on life insurance operations in the U.S.” Ball has an “outperform” rating on Prudential stock.
Jackson Federal Chief Financial Officer John Bogler didn’t return a telephone call seeking comment. Prudential spokeswoman Clare Staley declined to comment. The company has no connection to Prudential Financial Inc., the third-largest U.S. life insurer.
Jackson has about 24 branches and commercial loan offices in Southern California. Possible buyers may include San Francisco-based Wells Fargo & Co.; Seattle-based Washington Mutual Inc.; and BNP Paribas, which has more than 350 branches at its BancWest Corp. unit, according to the people familiar with the situation who spoke on condition they not be named.
Prudential is trying to sell the unit as U.S. banks are being bought at an increasing pace. Last year, a total of $168.7 billion of banking mergers were announced worldwide, according to data compiled by Bloomberg.
So far this year, $58.8 billion in bank deals have been announced, including J.P. Morgan Chase & Co.’s plan to purchase Bank One Corp. for $55 billion.
