In its second announced merger with a North County bank this summer, La Jolla Bancorp, holding company of La Jolla Bank and Trust Co., announced Tuesday that it has signed a definitive agreement to acquire Bank of Del Mar in a stock swap valued at $4 million.
Coupled with La Jolla Bancorp's pending acquisition of Hidden Valley National Bank of Escondido announced in July, the merger with Bank of Del Mar will increase La Jolla Bancorp's asset size to $389 million, third largest among independent banks in the county after San Diego Trust & Savings and First National Bank.
La Jolla Bancorp, whose main subsidiary is currently an 11-branch bank with $315 million in assets, is making the acquisitions to increase its presence in the growing, affluent North County marketplace, said Senior Vice President Robert Roy.
La Jolla Bancorp also announced in July plans to acquire H.D. McNee Realty Advisers, a real estate investment firm, in a move designed to give it entree into the mortgage banking business, Roy said.
The acquisition of Bank of Del Mar, a single-branch institution with $24 million in assets and $2.3 million in shareholder equity, is contingent on approval by regulators and by Bank of Del Mar shareholders. Founded in 1984, Bank of Del Mar posted a $118,000 loss in fiscal 1986 and a $36,000 profit for the first six months of 1987. Roy said the bank's loss last year was "not unusual" for young banks.
"The new banking organization will be attractive to our customers because of its size and ability to deliver some kinds of products we don't have, such as trust and mortgage banking services," said Stephen Voelker, Bank of Del Mar president.
Voelker said it is "unclear at this time " whether he will remain at the bank once the merger is completed.
La Jolla Bancorp will issue 1.5 of its shares, or 486,375 shares in all, for each of the 324,250 shares outstanding of Bank of Del Mar stock. Given La Jolla Bancorp's closing stock price Tuesday of $8.25 in American Stock Exchange trading, the deal could be worth slightly more than $4 million.
Still pending regulatory approval is La Jolla Bancorp's acquisition of Hidden Valley National Bank of Escondido, also a single-branch bank with assets of $50.6 million and shareholder equity of $3.2 million as of June 30. The merger will also be accomplished through a stock swap valued at about $5.5 million.
Hidden Valley National Bank posted net income last year of $375,000 and a profit of $159,000 over the first six months of 1987.
Once both mergers are completed as expected by first quarter 1988, La Jolla Bancorp will have shareholder equity of $28.8 million or 7.4% of its assets, Roy said.