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California

UnionBanCal to Buy Jackson Federal Bank

The Bay Area company would pay $305 million in cash and stock for the Brea-based lender.

July 03, 2004|Dawn Wotapka | Times Staff Writer

Aiming to strengthen its presence in the growing Southern California market, UnionBanCal Corp., the parent of Union Bank of California, announced plans Friday to acquire Brea-based Jackson Federal Bank for $305 million.

Jackson Federal, with $1.9 billion in assets, has 14 branches in Los Angeles, Orange and San Bernardino counties, including L.A., Glendale, Santa Monica and Fullerton.

A subsidiary of British insurer Prudential, Jackson Federal focuses on lending to apartment and commercial real estate developers -- making it appealing to San Francisco-based UnionBanCal.

The niche "happens to be one we have not focused a lot of attention on," said Ron Kendrick, head of Union Bank of California's community banking group.

The deal calls for UnionBanCal to pay $167.8 million in cash and $137.3 million in stock. It is expected to be completed by mid-fall, with bank signs changing a few months after that. Overlapping branches in Glendale, Barstow, Apple Valley and Big Bear Lake would be closed, Kendrick said. It's not clear exactly how many of Jackson Federal's 250 employees could be laid off, although Kendrick said it would be less than half.

UnionBanCal, with assets of $46.1 billion and more than 300 branches -- almost all in California -- is controlled by Bank of Tokyo Mitsubishi.

Gary B. Townsend, an analyst with Friedman, Billings, Ramsey & Co., said the Jackson Federal purchase made sense for UnionBanCal.

As it strives to remain competitive in an industry filled with banking behemoths, UnionBanCal has gobbled four smaller California banks -- including First Western Bank and Monterey Bay Bank -- since mid-2002. Measured by deposits, Union Bank of California ranks fourth among banks and thrifts in California, trailing Bank of America Corp., Wells Fargo & Co. and Washington Mutual Inc.

Shares of UnionBanCal fell 6 cents to $56.85 on Friday. Prudential's U.S.-traded shares rose 5 cents to $17.23. Both trade on the New York Stock Exchange.

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