First PacTrust Bancorp Inc. last week announced that it will buy a bank in the L.A. market.
Sound familiar?
The bank holding company in Irvine has been expanding aggressively into Los Angeles County through branch openings and local acquisitions, including last week’s $50 million deal for Private Bank of California in Century City.
And the purchase, First PacTrust’s third in just over a year, likely won’t be its last.
“First PacTrust has an acquisitive strategy,” said Jacquelynne Chimera, an analyst with Keefe Bruyette & Woods Inc. in San Francisco. “They’re looking for specific opportunities within Southern California. They’re looking to expand their presence within … L.A. County.”
After recent deals to take on Beach Business Bank in Manhattan Beach and Gateway Business Bank in Cerritos, First PacTrust agreed Aug. 22 to buy seven-year-old Private Bank, which caters to small businesses and high-net-worth individuals. The deal, expected to close in the second quarter of 2013, will bring First PacTrust’s branch network to 22 and boost its assets to $2.2 billion.
Private Bank’s stock surged on news of the acquisition, placing the publicly traded bank among the week’s biggest gainers on the LABJ Stock Index (see page 40). Shares gained more than 21 percent, closing Aug. 22 at $12.40.
The acquisition is the latest step in a dramatic transformation for First PacTrust, which was previously a small thrift focused mostly on mortgage lending in the San Diego area. Last year, the institution brought in industry veteran Greg Mitchell as chief executive and set about a plan to become a business bank serving all of Southern California.
It quickly reached deals to acquire both Beach and Gateway, banks with established relationships in the business community. Shortly thereafter, First PacTrust moved its headquarters from Chula Vista to Irvine, which gave it better access to the robust L.A. market.
“It’s been going through a transition from a legacy thriftlike balance sheet … to more of a commercially oriented bank,” said Kevin Reynolds, an analyst with Wunderlich Securities Inc. in Memphis, Tenn. “The transition that they articulated when this management team came on board in early 2011 is very much on track.”
Los Angeles is a familiar market for Mitchell, who was previously chief executive of L.A.’s California National Bank, which had nearly 70 branches across the state. CalNational, as it was known, struggled with capital shortfalls and was closed by regulators in 2009. Mitchell was not available for comment.
Analysts expect First PacTrust to sign additional deals, but the bank’s growth strategy is not purely acquisitive.
In January, the institution opened its first Los Angeles County branch with a location in Century City.
“They’re looking to grow both organically and through acquisition,” Chimera said. “And they’ve clearly been having some success.”
