Just over a year after finally breaking even, a Southern California community bank has a second buyout deal in its drive to push past $300 million of assets.
BKLA Bancorp, parent of Bank of Los Angeles, last week agreed to pay $8 million in stock for American West Bank of Encino, a business-oriented community bank. That's an estimated 1.5 times book value.
BKLA has $124 million of assets and three offices; and American West has $65 million and two offices.
Maurice Burford, chairman and chief executive of BKLA, said he wants it to grow to $300 million and $500 million.
"That size in Southern California makes sense, where $100 million doesn't," he said.
The bank hit the acquisition trail last year, buying World Trade Bank, Beverly Hills.
"It costs a lot of money to do business here," Mr. Burford said, "So we need to get to that size range to maximize shareholder value, and maintain our community bank size and look."
"It's an excellent strategy," said Jerry Jones, managing director of Duff & Phelps in Los Angeles. "Most community banks should follow BKLA's lead and continue to acquire to attain asset size and economies of scale."
Under an unusual plan, Mr. Burford would relinquish day-to-day control of his company to American West's president and chief executive, John J. Feldman, who would become president of BKLA. Mr. Burford would maintain an office at the bank.
Mr. Burford explained that he intends to focus on the bank's growth through acquisitions. That was his original plan when he took the helm in 1995 as part of an investor group. "It was never my intent to run the thing on a daily basis," he said. "My intent was to do the merger-and-acquisition stuff."