Westlake Bancorp has agreed to acquire Brentwood Bank, a single-branch Los Angeles financial institution whose heavy loan losses forced it to seek a buyer. The merger would create a company with assets of $46 million.
Pending regulatory approval, Westlake will pay $250,000 above the bank's net worth, which probably would put the purchase price at about $1.45 million. The deal is expected to close in September.
The expected purchase price comes to $4.15 a share for publicly held Brentwood, but Westlake Bancorp will hold back $1 a share, or $350,000, for a year in case unforeseen loan losses emerge at the bank.
Brentwood shares have recently traded at a bid price of $3, according to Alexander Securities, which trades the stock.
Because of bad loans, Brentwood has seen its capital shrink from $3.5 million when it opened its doors five years ago to $1.1 million as of March 31, when assets were $21.1 million. As a result, it was under pressure from state regulators to get more capital.
Lost $720,000 in 1985
Brentwood lost $720,000 last year and $63,000 in the first quarter this year, but its president, Sanford H. Lubin, said the second quarter will be profitable.
Westlake Bancorp, whose main operating unit is Westlake Thrift & Loan, will change its name to Brentwood Bank if the deal goes through, said its president, Craig A. Carver. The headquarters will remain in Westlake Village.
Carver also said his institution's Westlake Village branch will remain Westlake Thrift & Loan, but its other branch, in Costa Mesa, will change its name to Brentwood Bank. The merged entity will also open a second branch in Westlake Village under the Brentwood name, assuming regulatory approval.
Westlake and Brentwood are both state chartered but their deposits are insured by the Federal Deposit Insurance Corp. As a result, Carver said, approval is needed from the FDIC, the state Department of Corporations and the state Department of Banking.
Caters to Professionals
Lubin said Brentwood Bank, most of whose shares are owned by a group of individuals who live or work in Brentwood, caters primarily to doctors, lawyers and other professionals, as well as small-business customers.
Carver said Westlake operates much like a small commercial bank, with a variety of depositors and a mixture of real estate, auto and leasing loans.
Founded in August, 1983, Westlake Bancorp is closely held by 31 investors and had net worth of $3.1 million on assets of $25 million as of March 31, according to Carver.
It earned $655,000 last year and $377,000 in the first quarter of this year.
Carver said Westlake had the money to make an acquisition and was attracted to Brentwood because it appears to have written off most of its bad loans and because it is in a good location.
Lubin, who said he was hired at Brentwood in January to restore profit and find a buyer, will leave the bank when the deal with Westlake is consummated. Carver will be chief executive of the merged entity. THE MERGER PARTNERS
All figures as of March 31
Brentwood Bank Westlake Bancorp (parent of Westlake Thrift & Loan) assets $21,137,000 $24,847,000 net worth $1,132,000 $3,109,000 1st qtr. profit (loss) ($63,000) $377,000 employees 15 23 shares outstanding 350,000 privately held office locations Brentwood Westlake Village Costa Mesa