Coast Federal Bank and Cenfed Bank said they have agreed to a swap of some branches and deposits, a move that both banks said would increase market share.
In the transaction, announced last week and expected to close next month, Los Angeles-based Coast Federal will purchase approximately $158 million in deposits from Cenfed branches in the suburbs of Glendora, Seal Beach, and Laguna Hills.
Cenfed, based in the Los Angeles suburb of Pasadena, will buy approximately $226 million in deposits from Coast Federal branches in Hemet, Sun City, and Riverside. Cenfed said it also would assume the current lease on the Riverside branch.
"This is an opportunity to get more efficient," said Coast Federal chief executive Ray Martin. "You pick up one of theirs, they pick up one of yours, and you consolidate into an existing brick-and-mortar. It's efficient."
Coast Federal has done several branch and deposit swaps over the past few years with its competitors, allowing it to increase average total deposits in each of its branches from $48 million to close to $72 million, according to Mr. Martin.
Although Coast Federal is often mentioned as a takeover candidate, Mr. Martin dismissed the suggestion that the transaction was anything more than a strategic measure to better position Coast in the competitive California market.
Cenfed president and chief executive D. Tad Lowrey said the deal would enable Cenfed to boost market share in its Riverside County branches. "With two fewer branches following the consummation of the exchange, the average retail deposit base per branch will increase by 17%, to $73 million, thereby improving our economies of scale."
Coast Federal Bank, with $8 billion in assets and 92 offices in California, is a subsidiary of Coast Savings Financial. Cenfed Bank is a subsidiary of Cenfed Financial Corp.