Western Bancorp Will Acquire Another Rival

NEWPORT BEACH — In its fourth transaction in nine months, Western Bancorp said Thursday it will acquire Santa Monica Bank for $198.2 million, or $28 a share.

Newport Beach-based Western agreed to pay a 14% premium over Santa Monica Bank’s recent trading price, triggering a surge in the stock. Santa Monica shares rose $2.50 to close at $27 on the American Stock Exchange.

Western’s aggressive merger and acquisition policy reflects the current climate in banking. Consolidation is sweeping the industry as banks buy up rivals to cut costs and increase their base of customers.

“Growth through acquisition is a very traditional strategy for banks,” said industry analyst Charlotte Chamberlain of Jefferies & Co. Inc. in Los Angeles.

She said the deal is good for Santa Monica Bank shareholders, who will receive about 2 1/2 times the bank’s book value.

Western will merge its Los Angeles County-based subsidiary, Western Bank, with the Santa Monica institution, forming a single $1.1-billion bank with 13 branches throughout the west side of Los Angeles. It will operate as Santa Monica Bank.

The merger is expected to be completed early next year.

Western agreed to pay stock or a combination of cash and stock for Santa Monica Bank, depending on the preference of Santa Monica investors. Western shares were unchanged Thursday, closing at $32 on the Nasdaq market.

Matthew P. Wagner, president of Western Bancorp., said the holding company’s strategy is to cut costs through economies in purchasing supplies, equipment and legal and insurance services and in trimming so-called “back office” administrative and support positions.

That should come as good news to the companies’ tellers and loan officers--often among the first to get the ax in a bank merger.

“Our philosophy isn’t to strip away the people who deal directly with our customers,” he said.

Once the merger is completed, Aubrey L. Austin, Santa Monica Bank’s president and chief executive, will become chairman, president and chief executive of the merged Santa Monica Bank and a director of Western Bancorp.

Western grew out of the $65 million merger last October of Monarch Bank of Laguna Niguel and Western Bank of Westwood.

Monarch earlier this year acquired Newport Beach-based National Bank of Southern California and agreed to acquire Southern California Bank.

The holding company--then called Monarch Bancorp--moved its corporate headquarters from Laguna Niguel to National Bank’s Newport Beach office and changed its name to Western Bancorp a few weeks later.

Western officials said Thursday that National Bank and Southern California Bank will be merged in October. Those combined institutions will operate as Southern California Bank, with about $1 billion in assets and 21 branches, most of them in Orange County.

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Bank Merger

Newport Beach-based Western Bancorp will merge its Western Bank subsidiary with Santa Monica Bank. Details on the two banks:

WESTERN BANK

Headquarters: Westwood

Business: Commercial bank

President/CEO: Matthew P. Wagner

Branches: 5

Assets: $420 million

SANTA MONICA BANK

Headquarters: Santa Monica

President/CEO: Aubrey L. Austin

Business: Commercial banking and trusts

Purchase price: $198.2 million

Assets: $672 million

After merger: $1.1 billion

Branches: 8

After merger: 13

Exchange: American Stock Exchange

Thursday’s close: $27

MERGER MAP

October 1, 1996

* Monarch Bancorp of Laguna Niguel acquires Western Bank of Westwood.

June 18, 1997

* Monarch Bancorp acquires National Bank of Southern California while awaiting approval of its acquisition of Southern California Bank.

* Monarch Bancorp changes its name to Western Bancorp

July 31

* Western Bancorp acquires Santa Monica Bank and merges it with Western Bank.

Sources: Bloomberg News, Western Bancorp, Times reports; Researched by JANICE L. JONES / Los Angeles Times