Bank Finds White Knight

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Beverly Hills Bancorp Inc., the struggling Calabasas parent of First Bank of Beverly Hills, announced Tuesday that it has reached a merger agreement with an investment asset manager that will return it to financial health.


Orchard First Source Asset Management LLC, a debt investor headquartered in Rolling Meadows, Ill., has agreed to merge its wholly owned subsidiary, OFS Lending, into First Bank of Beverly Hills. Under the terms of the deal, OFS will receive 80 percent of the bank’s outstanding shares based on the relative values of the two companies as of Dec. 31, adjusted for additional loan reserves, write-downs or charge-offs.


Following the merger, First Bank of Beverly Hills plans to convert from a wholesale bank, which primarily provides services to other banks, into a more traditional bank. In the process, the bank will attempt to diversify its loan portfolio, which in recent years has become heavily weighted toward condominium construction loans. Those loans soured after the housing bust and collapse of the credit markets began hammering builders.


First Bank of Beverly Hills, which has $1.5 billion in assets, lost more than $80 million in fourth quarter of 2008, falling below the “well-capitalized” level. On Feb. 13, the bank received a cease-and-desist order from the Federal Deposit Insurance Corp. ordering the bank to raise $70 million or sell itself.


The transaction is expected to close in the second or third quarter.

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