Magazine article American Banker

UnionBanCal's Shopping Spree Bags It a Thrift

Magazine article American Banker

UnionBanCal's Shopping Spree Bags It a Thrift

Article excerpt

UnionBanCal Corp. is not slowing up as it nears the stretch run of a program to shore up profits by acquiring retail banking companies and fee businesses.

On Tuesday, less than a week after its insurance unit announced an acquisition, the parent of San Francisco's Union Bank of California said it had agreed to buy Monterey Bay Bancorp of Watsonville, Calif., for $96.5 million in cash and stock.

UnionBanCal's three-year plan has netted it several small retail banks and insurance agencies. The idea was to offset a profit hit from nonperforming commercial loans and to diversify revenue.

"A critical part of that strategy was the expansion of our distribution system, and we set out to do that by both acquisitions and de novo branch openings," Richard C. Hartnack, UnionBanCal's vice chairman and head of community banking and investment services, said in an interview Tuesday.

When no acquisition candidates are available in the California markets it has earmarked for expansion, UnionBanCal will start branches. It plans to have opened 15 when the three-year plan ends this year, Mr. Hartnack said.

He said it will continue to shop for small and midsize banks that would "fit our holes" and that would not "give us huge overlap headaches."

Monterey Bay is a $610 million-asset thrift with eight branches in an area 80 to 100 miles south of San Francisco in Watsonville, Gilroy, Monterey, Salinas, Pruneville, Capitola, and Felton.

Gary Townsend, an analyst with Friedman, Billings, Ramsey, said that Felton, south of Santa Cruz, is "agricultural but well heeled."

UnionBanCal, which is mostly owned by the $700 billion-asset Bank of Tokyo-Mitsubishi Ltd., has 265 branches, six in Oregon and Washington and the rest in California. It will pay equal amounts of cash and stock for Monterey Bay, which is valued in the deal at $26.32 per share, or 31% more than its closing stock price Monday. …

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