Pacific Business Bank, flush with capital and some assertive new owners, plans to expand its presence south of Los Angeles with its purchase of Santa Fe National Bank in Norwalk.

Though the deal will bring the Carson-based bank to only $70 million of assets, the bank's capital base makes further expansion likely. The group of Chinese-Americans that bought the bank in January with the help of Taiwanese investors has since pumped in $7 million in new capital - for a total of $10.7 million. The new money, bank executives said, brings Pacific Business' equity to assets ratio to 15% - one of the strongest at a U.S. community bank.

Pacific Business "believes California is rebounding from the current recession and ties with the Pacific Rim are growing stronger each day," said Benjamin Lin, president and chief executive, explaining that the bank intends to pursue trade financing business in the Los Angeles area.

The deal is further evidence of the pressure on dozens of small Southern California community banks to merge as they recover from the region's deep recession, especially because loan demand is flat at best. Investment by Asians, one of the few bountiful sources of capital for the state's battered small banks, has been a prime factor in some of the deals. Last week, a small Irvine-based bank said it plans to be bought by a Korean bank.

"It's been like shopping at Wal-Mart," said Wade Francis of Unicon Financial Services, an investment banking boutique that helped Pacific Business find merger candidates. "There's a lot of good stuff for not a lot of money."

Mr. Francis predicted the pace of consolidation among the region's community banks will accelerate.

"A lot of these banks were formed in the 1980s with the plan to sell out in a few years for a profit," he said. "With the recession, that didn't happen. So now, they're more than ready."

Santa Fe, like Pacific Business, has had its share of problems with asset quality. It lost $68,000 in 1994, but has since become profitable, though nonperformers still exceed 3% of total assets, according to Sheshunoff Information Services.

Mr. Francis said Pacific Business was most interested in building its franchise value. Santa Fe will give the currently one-branch Pacific Business three new branches southwest of Los Angeles.

The deal will be in cash. No price was disclosed.

"This acquisition represents an excellent opportunity for our shareholders," said Edward Lund, chief executive of Santa Fe, who will remain with the bank after the acquisition.

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