City Holding Co. has agreed to pay $11.9 million for a Southern California thrift, which would be its first acquisition outside its West Virginia home.
The Charleston-based banking company, which has $1.5 billion of assets, would pay 1.55 times book value for Del Amo Savings Bank, Torrance. The deal is expected to close in the first quarter. "With our technology, we don't feel that distance is a hindrance to doing business anywhere in the United States," said Steven J. Day, president and chief executive officer of City Holding.
Mr. Day said City Holding wanted a California savings institution to help fund its fledgling mortgage lending business in the Golden State. The company has acquired loan servicing and origination offices in Irvine and Costa Mesa in the last year.
"If you want to be in mortgage banking, you've got to be in a hotbed, and that's Southern California," Mr. Day said. He added that the Del Amo acquisition would provide an additional funding source for the bank's loan offices-one that, unlike City Holding's West Virginia banks, would not close at 3 p.m. California time each day. "This gives us a competitive advantage to funding on the West Coast."
Peter F. McAndrews, an attorney representing Del Amo, said shareholders are likely to approve the deal because City Holding's stock is far more liquid than Del Amo's.