The parent company of L.A.’s Royal Business Bank announced Tuesday that it has signed a definitive agreement to acquire the parent of TomatoBank. Assuming the transaction is completed as expected in the first quarter next year, what may be L.A.’s most interesting bank name will disappear thereafter.
TomatoBank, which operates six full-service branches in Los Angeles and Orange County, primarily serves Asian-American communities, the same demographic focus of Royal Business Bank. In fact, that was a motive for the merger, explained David Morris, chief financial officer of Royal Business Bank.
“It just made sense — we’re in the same marketplace — for us to combine and become a bigger institution to increase share value for our shareholders,” he said. “There’s approximately 20 Chinese-American banks in L.A. So there’s 20 of us competing for the same customers, so there’s a lot of competition besides the BofAs and Wells Fargo.”
The transaction price is expected to be $83.2 million. According to Morris, that comes out to about 1.38 times TomatoBank’s book value, which is close to the average price of similarly sized banks. Under the terms of the agreement, TomatoBank shareholders will receive approximately $15 a share in cash, with the final price disclosed the week before the deal closes.
Royal Bank’s holding company, RBB Bancorp, will seek approval from the Federal Reserve, the California Department of Business Oversight, and the Federal Deposit Insurance Corp. The acquisition would increase the total assets of Royal to approximately $1.5 billion.
TFC Holding Co., TomatoBank’s parent, reported assets of about $488 million, deposits of $421 million and shareholders’ equity of $60.5 million as of Sept. 30.
All TomatoBank branches will eventually be converted to Royal Business Bank.
According to Wikipedia, TomatoBank was founded in 2000 and at first went by several different names including TomatoBank, but customers liked that name best. The bank’s former chairman and chief executive, Stephen Liu, was quoted in 2006 explaining that the name is recognizable and hard to forget. What’s more, he said, “If there can be an Apple Computer – why not a TomatoBank?”
