Founders National Bank, Los Angeles' only black-owned commercial bank, has completed a merger with two East Coast African American-run banks, creating the third-largest black-owned financial institution in the U.S., executives said Tuesday.
The move also creates the first African American-owned bank to offer services from coast to coast, and, according to one executive, marks the first merger of two cross-country "community banks."
Plans for the deal were first reported in October, and regulatory and shareholder approvals were completed this week.
The deal merges Founders, Boston Bank of Commerce and Peoples Bank of Commerce, of Miami, to create a national "community bank," with assets of more than $265 million, according to Kevin Cohee, chairman and chief executive of the merged bank. That's more than double Founders' $110 million in assets.
The new bank probably will be headquartered in Los Angeles, and each bank will retain its original name, with Founders changing slightly to Founders Bank of Commerce, Cohee said.
The yet-to-be established holding company for the new bank will be called Unity Financial Services, he said.
The deal was structured as a stock swap with shareholders getting 3.67 shares of Boston stock for every Founders share.
Since plans for the merger were announced, company executives have been crafting a vision for the new institution.
The increased heft of the merged bank will allow the company to boost its loan portfolio, offering loans of as much as $4 million on its own--double the amount it could handle before--or "in the tens of millions, for deals handled through our network of banking relationships," Cohee said.
Ultimately, executives said, they hope to provide increased access to capital for businesses in underserved markets throughout the U.S.
Officials with the merged bank, particularly entertainment executive Jheryl Busby, have made no secret of their desire to expand the banking chain beyond the three markets.
Even at $265 million, the new institution is small compared with the nation's largest independent African American-run bank, Harlem-based Carver Federal Savings Bank, which has $421 million in assets.
But the merged bank now stands as the largest Carver shareholder, Cohee said. Last year, Cohee and his wife, Teri Williams, won a heated battle to gain seats on the Carver board of directors.
He would not say whether Carver is a merger candidate, and Carver officials could not be reached for comment.
"Carver is an opportunity that has presented itself but there is a lot of work to be done," said Kenneth Lombard, vice president of the merged bank and president of the business development company launched by Lakers-star-turned-businessman Earvin "Magic" Johnson. "We're not in a position to say if Carver will be next."