Investors Banking Corp. is leveraging its bet on the Southern California market with another acquisition in Los Angeles.
Investors' Los Angeles subsidiary, BKLA Bancorp, is buying World Trade Bank, merging two banks that lost money in 1994 in the hope that size and the improving economy will bolster both.
Investors, based in Salem, Ore., already owns the successful $63 million-asset Colonial Bank in Grants Pass, Ore. It bought BKLA, owner of Bank of Los Angeles, in March. The BKLA transaction was inked at an economic low point for community banks in Southern California. Dozens of small banks in Los Angeles County, including Bank of Los Angeles and World Trade, lost millions in 1993 and 1994.
But veteran Oregon banker M.J. Burford, who represents Investors and is chief executive of BKLA, thinks the time is right to get into the Los Angeles market as the recovery begins.
"We're confident that the market here has bottomed out," he said in an interview Tuesday. "We're actively looking for other candidates to acquire."
Mr. Burford's Investors Bancorp is the type of institution analysts say will be a big player in community banking as the battered region's economy recovers. So far, these large investors, most of them from out of state, have been the only source of new capital for community banks in the region. And, as the World Trade deal shows, they are eager to build on their first forays.
"We'd like to be between $250 million and $300 million in assets," Mr. Burford said. After the World Trade deal, BKLA will have $130 million in assets.
Though both institutions lost money in 1994, mostly from soured real estate loans, BKLA was recapitalized by Investors in March and began to break even in the first quarter. World Trade, according to its latest call report, also just broke even in the first quarter.
"Both of these banks are small, and it's hard to make money here if you're small," Mr. Burford said. "We've take steps to reduce costs, and for both institutions loan problems are behind them."
"The customers of both banks will enjoy the benefits that result from the merger," said William T. Hughes, chief executive of World Trade. "(Bank of Los Angeles is) a bank large enough to meet the growing needs of our community through increased lending capacity and additional financial services, and small enough to provide personal service."