City Holding Co. of Charleston, W. Va., is calling off its search for a buyer for its two California bank subsidiaries and would consolidate them instead.
The $2.7 billion-asset parent of City National Bank of West Virginia announced in July that it wanted to leave California in order to concentrate on its hometown bank, which has been dogged by credit quality problems in the past year.
But "market conditions have made this task more difficult and time-consuming than originally anticipated," Robert A. Henson, acting chief executive officer and chief financial officer, said Monday in a news release.
Therefore, City Holding said, it will consolidate Del Amo Savings Bank in Torrance and Frontier State Bank in Redondo Beach under one state charter.
The merger, which is expected to occur in August, would create a bank with $200 million of assets and create operating efficiencies, the company said.
City Holding also said it had sold the servicing rights on $1.1 billion worth of mortgage loans to Ocwen Financial Corp. in West Palm Beach, Fla., for a profit of less than $100,000. While the servicing division was "marginally profitable," maintaining the portfolio did not fit in with its long-term strategic plan, City Holding said.
