In a move to strengthen its West Coast presence, Mellon Bank Corp. said Monday it plans to acquire $1.1 billion-asset 1st Business Bank, based in Los Angeles, for an undisclosed amount of stock.
1st Business, founded in 1981, lends to small and midsize businesses in southern California.
An investment banker not involved in the transaction estimated the deal could be worth $250 million, based on three times 1st Business' book value of $82 million.
The privately held bank said it earned $11.3 million in 1996, a 23% increase over the previous year.
Pittsburgh-based Mellon said the acquisition would complement the business equipment finance unit it bought from Ford's USL Capital Corp. in San Francisco last year.
It also said the purchase would provide a toehold for future growth in banking operations on the West Coast.
In January, the company established a Los Angeles headquarters for 13 western states where Mellon sells a number of its commercial, consumer, and asset-management products, including its Dreyfus and Boston Co. business lines.
"This is a growth opportunity," said Keith P. Russell, Mellon vice chairman for the West Coast. That's quite a different story than usual for California, where everything is based on consolidation and cost savings, he added.
The Los Angeles bank, which has offices in Orange County, the San Fernando Valley, the South Bay, and West Los Angeles, will operate as Mellon 1st Business Bank. All 200 employees of the bank will keep their jobs, Mellon said. The deal is expected to close in the third quarter.
1st Business Bank has 1,700 business customers in manufacturing, wholesale trade, and service industries.
The bank's customers have annual revenues between $5 million and $300 million.
