Downtown L.A.'s Pacific Commerce Bank announced plans to buy fellow downtown lender ProAmérica Bank, a deal that marks a continued expansion for one bank and the end of a short, troubled run for the other.
Pacific Commerce, founded in Little Tokyo in 2002, plans to acquire ProAmérica for $29.8 million in cash and stock. The deal, which must be approved by regulators and bank shareholders, would be Pacific Commerce’s second recent acquisition. Earlier this year, it closed its purchase of small Chula Vista lender Vibra Bank.
By acquiring Vibra and now ProAmérica, Pacific Commerce would more than double in size in little more than a year, allowing it to expand its footprint and offer larger loans to a client base of small and medium-size businesses.
For ProAmérica, the acquisition would end what has been a tough slog.
The lender, focused on Latino customers, had big backers — including billionaire real estate magnate Ed Roski, who remains a member of the bank’s board, and former Chairwoman Maria Contreras-Sweet, who now heads the federal Small Business Administration — but it was founded at a bad time for the banking business.
It opened in late 2006, just two years before the financial crisis and subsequent recession. That unfortunate timing made it hard for the bank to grow large enough to remain a stand-alone entity, said Sal Varela, ProAmérica’s interim president and chief executive.
“We’ve been around eight or nine years, but four or five of those were extremely tough,” he said. “We’ve grown, but not at the speed we wanted.”
ProAmérica has assets of just $211 million — tiny by bank standards. Such a small balance sheet prevents it from offering loans larger than about $6 million, Varela said.
Combined, Pacific Commerce and ProAmérica would have assets of about $560 million, allowing it to make loans of between $10 million and $20 million, he said.
The acquisition is expected to close this spring.