One of the odder merger stories in banking is over: Peoples Bank of California in Los Angeles has terminated its $39 million agreement to buy $279 million-asset Bank of Yorba Linda.
The fairly quiet conclusion followed a series of odd twists and turns both banks encountered in the months after the agreement was announced in November. Peoples Bank was itself acquired Monday by FBOP Corp. in Oak Park, Ill., and Bank of Yorba Linda had to restate earnings in March because of a mortgage fraud scheme.
Officially, the deals cancellation stemmed from a failure to get approval from the Office of Thrift Supervision, though it was unclear how seriously Peoples pursued the merger after its agreement with FBOP was struck.
Robert C. Ucciferri, chief executive officer of Bank of Yorba Linda, said he received word of the termination late Wednesday in a letter from PBOC Holdings Inc., the corporate parent of Peoples. The letter cited the fact that the OTS had not approved the deal by a May 1 deadline, he said.
OTS spokeswoman Ella Allen said Peoples did not file its application to buy Bank of Yorba Linda until nearly two months after the deal was announced.
Further delays ensued, she said, when Peoples was unable to satisfy regulators requests for additional information.
On Thursday, a spokeswoman for $3.3 billion-asset Peoples Bank of California referred questions to Leona Gleason, a spokeswoman for the privately held FBOP. Ms. Gleason did not return numerous phone calls seeking comment.
FBOP, with assets of $5.4 billion, paid about $200 million for $3.3 billion-asset Peoples. It plans to merge the bank into another of its California subsidiaries, $889.5 million-asset California National Bank, in a conversion that is expected to be completed July 9.
FBOP owns banks in Illinois and Texas as well as California.
In March, Bank of Yorba Linda was forced to restate its fourth-quarter earnings because of a mortgage fraud scheme that the bank said had ensnared it and as many as 20 other lenders. Its restated results reflected a loss of $603,000, instead of a $78,000 profit. The bank reported a first-quarter profit of $627,000.
Mr. Ucciferri said he reported the fraud to Peoples almost immediately after it was discovered. He said Peoples officials told him that they did not consider the incident materially adverse, and that it would not prevent its acquisition of Bank of Yorba Linda.
Still, he said communication between his bank and Peoples has been poor ever since Peoples announced its sale to FBOP in December.
He added that discussions with FBOP stopped completely in December after FBOP paid a visit to the bank to review its operations.
That fact has irritated Bank of Yorba Lindas shareholders.
Theyve been beating on us trying to find out the status, Mr. Ucciferri said.
When it announced its agreement to buy Bank of Yorba Linda, Peoples said the deal would accelerate its transformation from a thrift to a commercial bank.
A fitting footnote to the news came in the stock market, where the upheaval caused by the deals collapse did not spook investors. In unusually heavy trading, shares of Bank of Yorba Lindas holding company, BYL Bancorp, were trading at $12.55 late Thursday, up 8% from Wednesdays close.