City National Corp. of Beverly Hills said Wednesday that it would enter Northern California by purchasing Pacific Bank in San Francisco for $153 million in cash and stock.

City National, Southern California's largest independent banking company, with $6.7 billion of assets, said the deal would strengthen its private banking and international trade lending operations. The enlarged company would have nearly 60 branches stretching from San Diego to San Francisco.

"This is the right opportunity in the right place at the right time with the right partner," said Russell Goldsmith, City National's chairman and chief executive officer.

Heavy trading in Pacific's stock last week sparked rumors within the investment community that the $728 million-asset bank was in play. Volume exceeded twice its weekly average, and the stock jumped above $20, or more than 12%.

Late Wednesday, shares of Pacific stock were trading at $25, up 23% over Tuesday's closing price. City National's shares were down 50 cents, to $30.8125.

Under the terms of the agreement, Pacific shareholders would receive $29 for each share owned and could choose to be paid with cash, stock, or a combination of both. The deal, expected to close in the first quarter, is valued at 2.2 times Pacific's book value and 19.9 times its trailing 12-month earnings.

Pacific, which operates 12 branches in San Francisco, Los Angeles, and Hong Kong, had rejected several offers a year ago because its controlling shareholder, Cheong Swee Kheong, insisted on cash rather than stock. The Singapore resident later sold her stake, clearing the way for management to pursue a sale.

Officials at Pacific said that since both banks cater to high-net-worth individuals and operate international trade and trust departments, the deal would benefit Pacific's customer base.

"This will help our customers grow," said John P. Halicky, executive vice president and chief financial officer at Pacific. "We have many similarities to City National but perform those functions on a much smaller scale."

City National said the transaction would add 5% to 6% to its cash earnings next year. The bank predicts cost savings of 30%, mainly through back-office consolidation.

Pacific's president and chief executive officer, Michael Tun Zan, would join City National as its senior executive in Northern California and head the bank's yet-to-be formed San Francisco board of advisers.

Analysts said the transaction was fairly priced and would give City National a toehold in the booming Bay area. They predicted City National would recruit experienced business development officers from larger banks in the market, such as Bank of America Corp. and Wells Fargo & Co., much like it has around Los Angeles over the past 18 months.

"It's an attractive acquisition," said Joseph K. Morford 3d, a bank analyst at Dain Rauscher Wessels in San Francisco. "I expect City National to expand its footprint with more deals and by opening new branches."

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