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B of A Cancels $57-Million Deal to Buy Oregon Bank

September 25, 1986|JOHN M. BRODER | Times Staff Writer

BankAmerica's plan to buy an ailing Oregon bank has fallen through due to the big San Francisco bank's earnings and capital problems.

BankAmerica and Orbanco Corp., parent of Oregon Bank, announced the cancellation of the $57-million cash deal Wednesday.

"BankAmerica has higher priority demands on its resources at the present time, and Orbanco would like to find a buyer for the Oregon Bank sooner than mid-1987, which is when our purchase agreement was scheduled to expire," Samuel H. Armacost, BankAmerica president and chief executive, said in a statement.

Still Intend to Sell

"This is an amicable parting with BankAmerica," Francis J. O'Connor, Orbanco's president and chief executive, said in a statement. "We still intend to sell the Oregon Bank, and we have asked our investment bankers to find another purchaser."

Orbanco's board of directors approved the termination of the agreement on Monday. BankAmerica's effort to buy Oregon Bank, announced in April, 1985, ran into problems with the Federal Reserve Board, which regulates bank holding companies.

After BankAmerica posted second-quarter losses of $640 million, Fed overseers asked for additional data justifying the interstate expansion.

Received 2 Extensions

BankAmerica asked for, and received, two extensions to prepare the material that the Fed wanted. However, several Fed concerns were still unresolved this week, according to bank officials.

A BankAmerica spokesman said the bank needs to conserve its capital to meet regulatory minimums and does not feel that it is in a position to expand geographically when heavy losses are forcing it to sell assets to raise capital.

The two companies originally intended to close the deal shortly after an Oregon law allowing interstate bank acquisitions took effect July 1.

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