A group of shareholders at BYL Bancorp is urging the Orange, Calif., company to merge with the thrift company PBOC Holdings Inc. of Los Angeles.

BYL, the parent of Bank of Yorba Linda, disclosed in a Securities and Exchange Commission filing last month that it has been in talks with $3.5 billion-asset PBOC. And though $322 million-asset BYL later issued a news release saying that the disclosure had been made inadvertently, the shareholder group, which owns 9% of BYL's stock, has responded with a letter to BYL chairman Rhoads Martin Jr. demanding that a deal be struck.

"Given the poor performance of the company over the last few years, the board has not earned the right to reject any reasonable offer," wrote Sy Jacobs, general partner of New York-based JAM Partners, who heads the shareholder group.

Robert Ucciferri, president and chief executive officer of BYL, and Rudolf P. Guenzel, PBOC's chief executive officer, said they could not comment on talks between the two holding companies. In the Aug. 18 press release BYL said there was "no assurance that BYL would have any further discussions or enter into any agreements with PBOC or any other entity."

BYL's stock has soared more than 20% in recent weeks on word of the potential merger. The stock, which was at $9 in mid-August, closed at $11 in heavy trading last Friday. It was trading at $10.875 midday Tuesday, still below its 52-week high of $12.13 and a far cry from its $23 price in mid-1998.

Mr. Jacobs would not comment further on his letter to Mr. Martin and BYL's board. But John Kline, an analyst at Sandler O'Neill & Partners in New York, agreed with him that BYL would be wise to sell.

"The company has had some pretty rough times and the stock has done poorly, so there's been a bit of frustration among shareholders that management is really not running the company in the best interest of the shareholders," Mr. Kline said.

In February BYL sold its automobile loan and residential mortgage loan divisions, and it had a first-quarter loss of $260,000. Then, the Federal Deposit Insurance Corp. regulators dropped a bomb, saying it had found that BYL did not have adequate Tier 1 capital to support its residual assets - a portion of a $100 million securitized loan package that the company had retained on its books. Consequently, BYL transferred the residual assets to a new subsidiary, CNL Commercial Finance Inc., and ceased securitizing new loans.

BYL's first-half net income dropped to $167,000, or 7 cents a share, from $1.14 million, or 45 cents a share, in the first half of 1999.

Still, it could be a good match for PBOC, which has been moving more in the direction of commercial lending. PBOC recently bought $157 million-asset Bank of Hollywood, a commercial bank, and commercial loans made up 83% of PBOC's originations in the first half.

"I think BYL would be attractive to somebody, because it actually has got some good expertise in commercial and SBA lending, some very nice branch locations, and good, solid commercial bank deposits," Mr. Kline said.

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