Calif. Bank, on 3d Try, May Buy One of Closest Rivals - 100 Miles Away

Southern California's remote Imperial Valley doesn't offer many expansion opportunities for Valley Independent Bank.

So the bank's fixation with acquiring an institution in the neighboring Coachella Valley is understandable.

Valley Independent, of El Centro, is making its third bid to acquire La Quinta-based Bank of the Desert, and it appears the $250 million institution will be successful this time with its $4.2 million offer.

In a telephone interview, Rhoda Casto, president of $43 million-asset Bank of the Desert, said, "I expect that the deal will be completed."

Such a deal would enable Valley Independent to enhance its market share in the Coachella Valley to the north. Valley Independent already has two branches in the region.

Valley Independent is the only bank with headquarters in vast Imperial County, which borders Arizona to the east and Mexico to the south.

Bank of the Desert, one of its nearest competitors, is nearly 100 miles away.

Majority owner H. Lauren Lewis, who controls 85% of the shares, has said he wants to sell the La Quinta bank for health reasons.

Valley Independent made a $3.2 million offer last summer, but the deal was never consummated.

"The owner knows us and likes us, but he was personally attached to the bank," said Dennis Kern, Valley Independent's chief executive.

Mr. Kern said that his bank's acquisition ambitions will be confined to the Coachella Valley for the next two to three years. But beyond that time frame, Mr. Kern is talking about crossing the state border.

"We'd like to look into expanding into Arizona if possible. Yuma is a heavily banked area, but I'm not sure it's well banked," Mr. Kern added. "It's on the border, like we are, and it's almost identical to the Imperial Valley. The same population, less agriculture, but similar crops. The risks as we know it are almost identical."

Currently, Bank of the Desert has branches in La Quinta, Thousand Palms, and Indio and has received regulatory approval to open a fourth branch - in Palm Desert.

Mr. Kern said Valley Independent would make a decision on whether to open the Palm Desert office upon completion of the deal.

Earlier this year, Valley Independent announced plans to purchase California Commerce Bank's Calexico branch, further consolidating market share in Imperial County.

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