Western to Acquire Santa Monica Bank

In its fourth transaction in nine months, Western Bancorp said Thursday that 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.

“Growth through acquisition is a very traditional strategy for banks,” said industry analyst Charlotte Chamberlain of Jefferies & Co. in Los Angeles. She said the deal is good for Santa Monica Bank shareholders, who would receive about 2 1/2 times the bank’s book value.

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

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 investors’ preference. Western shares were unchanged Thursday, closing at $32 on Nasdaq.

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.

Once the merger is completed, Aubrey L. Austin, Santa Monica Bank’s president and chief executive, would 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.

Earlier this year, the holding company year acquired Newport Beach-based National Bank of Southern California and agreed to acquire Southern California Bank in Anaheim.

Western executives said Thursday that National Bank and Southern California Bank would be merged in October. Those combined institutions would operate as Southern California Bank.