The bank of the stars in glitzy Beverly Hills intends to buy a nearby bank for $82 million in cash.
The $2.8 billion-asset City National Corp. agreed last week to acquire First Los Angeles Bank from an Italian holding company for a cheap 1.1 times book value. The price was so low - the market average has been around 1.7 times book - because First Los Angeles has been suffering of late, analysts said.
"To see healthy banks acquire failing banks is a great vote of confidence for the local economy, which is just what this area needs," said Charlotte A. Chamberlain, analyst at Wedbush Morgan Securities in Los Angeles. "This looks like a great move for City National. It's a hand-in- glove deal."
The $882 million-asset First Los Angeles, owned by San Paulo Bank Holding Co. in Turin, targets the same high-net-worth customers in the entertainment industry that City National serves, making the customer mix a natural fit for the Beverly Hills bank.
"We've been looking for some time for acquisitions that fit into our mold," said Bram Goldsmith, chairman and chief executive of City National. "There's sensational synergism here. We should achieve a hell of a lot of economies of scale."
Mr. Goldsmith said he expects to lay off about 50% of First Los Angeles' staff and shutter four branches when the deal closes, which should be by the end of the year, pending shareholder and regulatory approval.
City National has capital to spend as a result of a recapitilization in the fall of 1993 that raised $81 million, much more than anticipated. It had sought to put some of that to use last winter by buying deposits of the failed Guardian Bancorp, but lost out in the bidding.
First Los Angeles would be City National's first acquisition since the early 1990s, when federal regulators imposed a supervisory agreement on the company. The company shrank from more than $5 billion of assets in 1990 to a low point of $2.2 billion.
Acquiring First Los Angeles would raise the asset level to $3.4 billion.