Royal Bank of Canada’s planned purchase of downtown lender City National Bank is a big deal by almost any measure.

The Toronto finance giant is snatching up L.A.’s biggest bank and paying $5.4 billion for it, making it one of the biggest bank deals since the financial crisis.

Still, both the value of the deal and the size of the acquired bank pale in comparison with some of the bank transactions the city has seen in the past.

San Francisco’s BankAmerica Corp., now Bank of America, acquired Security Pacific Bank in downtown Los Angeles in 1992 in a deal worth about $5 billion then – which would be $8.4 billion in today’s dollars. The acquisition joined what were then the two largest banks in the Western United States. At the time of the sale, Security Pacific had assets of $50.5 billion – $85.2 billion today, much more than City National – and it remains the largest L.A. bank in assets ever to be acquired, if expressed in today’s dollars.

But the Security Pacific acquisition isn’t even L.A.’s biggest bank transaction by deal value.

In 1997, Seattle thrift Washington Mutual bought Great Western Bank in Chatsworth in a $6.7 billion transaction – $9.9 billion today – that nearly doubled the Washington state institution’s assets. A year later, WaMu returned to scoop up Irwindale’s H.F. Ahmanson, the parent company of Home Savings of America, in a stock deal worth more than $10 billion, or $14.5 billion in 2015 dollars.

In L.A.’s biggest-ever bank deal, San Francisco finance giant Wells Fargo & Co. bought downtown’s First Interstate Bank for $11.6 billion in 1996, which is equal to $17.5 billion today.

While all of these transactions – like the City National deal – came at times when there was a lot of bank merger activity, there is one key difference between the 1990s and now: the existence of stricter postcrisis bank regulations that have raised compliance costs and limited some of the banks’ more profitable business lines, said Richard Levenson, chief executive of San Diego investment bank Western Capital Corp.

“Today’s consolidation, up and down the food chain, is driven by the regulatory environment,” he said. “A lot of the late-’90s consolidation probably came out of the economic environment.”

Big spenders

Another important distinction between last week’s deal and some of the big bank transactions of the 1990s is the price acquiring banks were willing to pay.

First Interstate had $24.1 billion in assets when Wells Fargo bought it for $11.6 billion.

Compare that with City National, which had more assets – $32.6 billion – but sold for less – $5.4 billion.

Ed Czajka, chief financial officer of downtown L.A.’s Preferred Bank, said looser regulations and higher interest rates in the late ’90s made banks more profitable, which in turn made prospective purchasers more likely to pay a significant premium above book value, which is a bank’s assets minus liabilities. Price to book is a common ratio used to judge the value of bank deals.

RBC paid about 1.9 times City National’s fourth-quarter stated book value, which was relatively high compared with this year’s other bank deals. But it’s peanuts compared with First Interstate, which went for nearly three times book, and Home Savings, which sold for 3.8 times. Security Pacific sold for 1.2 times book value, but the bank was in a distressed state when acquired.

“Bank stock valuations were quite a bit higher then when you look at multiples of book value and multiples of earnings,” Czajka said. “Banks have to hold more capital now, so you don’t see the price-to-book premium.”

Czajka also mentioned that the transactions of the time were driven by a hot economy that boosted the banking industry and spurred growth-focused acquisitions. Regulations weren’t really a factor. That’s very different from today’s deals.

For example, Levenson said although the price tag of the City National purchase is modest by historical standards, given some of the challenges of being an independent bank today, management must have felt it was the best deal for shareholders.

“They clearly have determined that it would better enhance shareholder value by selling the bank – that the shareholders would be better off in the long run with the combined organization,” he said.

While Czajka doesn’t think today’s bargain bank prices will last forever, neither does he believe prices will again reach the sky-high levels seen two decades ago.

“I think you’ll see bank earnings start to accelerate when rates rise, but I don’t think we’ll see it like it was in the late-’90s heyday,” he said.