California Oaks State Bank, which received $3.3 million in TARP aid early last year, is being acquired by California United Bank in a deal valued at $17.3 million.
The deal is expected to close in the fourth quarter, California Oaks officials said in a statement.
John Nerland, president and chief executive of California Oaks, told BailoutSleuth that the deal is subject to the bank returning the taxpayer money it received through the Troubled Asset Relief Program. "We have not applied for payback as of yet, but it on the list of things to do."
California United Bank has four branches in Los Angeles County. The move will help it expand westward to Ventura County, where California Oaks' two branches are located.
Half the acqusition will be paid in cash, with the remainder to be paid in California United common stock.
"The combination is expected to create one of the largest banks headquartered in the San Fernando Valley and presents significant prospects for our communities and shareholders," California United's president and CEO, David Rainer, said in a statement.
Earlier this year, California Oaks announced plans to sell up to 8 million shares of common stock at a target price of $12.50 per share.
It had planned to use some of that money to help it exit TARP, increase its asset portfolio, and acquire the assets of failed banks. Those amibitous plans were unusual because they came as the bank was suffering losses and heavy nonperforming loans.
But on Aug. 5, California Oaks announced that it was shelving those plans. Bank offiicials said the offering was put on hold because they could not find enough investors willing to abide by a requirement that at least a third of the newly issued stock be held for at least three years.
California Oaks is barely profitable. It recently announced that it had net income of $8,456 in the first half of 2010, compared to $64,384 in the first half of 2009.
Still, the bank is growing. Its total assets of $136.7 million are up 7.7 percent from a year ago, and total deposits of $114 million are up 23 percent from a year ago.