First PacTrust buys Beach Business Bank for $37.2 million
Beach Business Bank, a Manhattan Beach community bank best known for lending to physicians across the country, is being acquired in a $37.2-million deal by a San Diego County-based community bank.
The buyer, First PacTrust Bancorp, raised $28 million in fresh capital this summer and is expanding into Los Angeles and Orange counties. The Chula Vista-based parent of Pacific Trust Bank agreed in June to buy Cerritos-based Gateway Business Bank, a three-branch institution with a large home-lending arm, for $17 million.
Gregory A. Mitchell, First PacTrust’s chief executive, said he expects to continue acquiring community banks with less than $500 million in assets. Many of these small banks are continuing to wrestle with portfolios of stressed commercial mortgages, which makes it hard for them to do much new business and comply with tighter bank regulations, he said.
If plans stay on track, “by the end of five years we’ll be $5 billion or more in total assets,” said Mitchell, previously the chief executive of California National Bank.
As part of the deal, First PacTrust will repay the remaining $4.5 million that Beach owes to the federal government under the Troubled Asset Relief Program, or TARP, which aimed at providing extra resources to banks during the financial crisis. The U.S. Treasury invested $6 million in TARP funds into Beach, which recently repaid $1.5 million.
First PacTrust and Beach expect to close the deal early next year after shareholder and regulatory approval, and will maintain their separate bank brands. Beach Chief Executive Officer Robert M. Franko will remain and become president of First PacTrust.
Upon completing the Gateway and Beach acquisitions, First PacTrust would have about $1.3 billion in total assets with 18 branches in Los Angeles, Orange, San Diego and Riverside counties.
The deal adds up to $9.07 for each share of Beach Business Bank stock, which rose as high as $8.60 in over-the-counter trading Wednesday. The stock had once been valued in the $16 range in late 2006 and early 2007, before the financial crisis.
