Peninsula National Bank, the reincarnated version of a Los Angeles bank that failed last year, is set to triple in size by buying a troubled Orange County bank.
The deal will allow Don Griffith, a former chief financial officer of First Interstate Bancorp, and his cadre of bankers who are Peninsula Bank principals to build a sizable presence as a community bank in West Los Angeles.
Designed as Rescue MOve
Ventura County National Bancorp inked a deal earlier this week to sell its La Palma-based subsidiary, Frontier Bank, to Peninsula for $7 million. The price will probably be knocked down because the deal is structured so that Peninsula will be covered for any losses on certain assets.
Ventura County National Bancorp's main asset, the $240 million-asset Ventura County National Bank in Oxnard, is under orders to raise capital. Richard S. Cupp, chief executive of Ventura National, hopes that by selling Frontier, the sister bank will be saved.
"This is part of our strategy designed to deal with the regulatory pressures on us," Mr. Cupp said. "We need to build our capital base and we want to put all of our resources into Ventura County National Bank."
Ventura County bought Frontier Bank in 1989, but the purchase was never deemed successful Mr. Cupp was hired last year. to bring the company out of a decline sparked by the Frontier Bank purchase.
Mr. Cupp said the Frontier deal was in the letter of intent stage, but he was confident that it would get done by the end of the year. Ventura County National Bank has to raise its leverage ratio to 7% by Sept. 30 under its federal consent order. It's leverage ratio at Dec. 31 was 5.5%.
Mr. Cupp added that Ventura is in discussions with several other institutions about a merger of the rest of the company if that is what is needed to comply with the regulatory orders from the Office of the Comptroller of the Currency.
Peninsula's purchase of Frontier, meanwhile, would be an unlikely comeback for a group of bankers that ran the old Palos Verdes National Bank. That bank failed in May of last year. According to several sources, Mr. Griffith, who until the late 1980s was chief financial officer of First Interstate, had been a major stockholder and board member of Palos Verdes. He then formed Peninsula Bank to take over the deposits and some assets of the failed bank from the Federal Deposit Insurance Corp, He even hired Cathy Allen, who had been president of Palos Verdes, to be his chief executive officer.
Ms. Allen, reached at Peninsula, declined to comment, except to confirm that Peninsula was formed a year ago. Mr. Griffith could not be reached.
Peninsula has just $50 million in assets, but with the Frontier purchase it will balloon to $150 million in assets and have four offices.
According to a statement by Frontier, the deal is contingent on Peninsula raising another $7 million in capital. Peninsula's core capital ratio at the end of 1993 of 9.4%.