Investment in Laguna Bank OK’d by Board

Directors of Laguna Bank have signed a final agreement with a Chicago investment group that will give the investors 29% of the bank’s shares for $860,000 cash.

Only regulatory approvals are needed to complete the transaction, said Richard Stenton, the bank’s chairman.

The investment group is buying 119,900 shares of authorized but unissued stock at $7.17 a share. The group is headed by First Oak Brook Bancshares, an Oak Brook, Ill., multibank holding company, and includes three of First Oak Brook’s principal directors and officers.

The new capital will give Laguna Bank the ability to launch new operations.

Stenton said he expects that Laguna Bank will use First Oak Brook’s experience and services to expand its products to such fee-generating items as credit cards and cash management programs. Until now, Laguna Bank has been relying primarily on loan fees and interest for its revenues.

“You have got to have fee income because if you get only loan income, then you are going to have loan losses, too,” he said.

The bank also will open an office soon in the Saddleback Valley, probably Mission Viejo, Stenton said. It would be the bank’s first additional branch for the single-office operation.

“We expect that’s where our niche will be,” he said.

Stenton estimated that Laguna Bank’s assets at the end of the year totaled $30 million and that annual net income was $148,000. Complete financial results were not available.

“We think it’s a good investment for them, to help the bank grow,” said Richard Rieser, president of First Oak Brook and one of the main investors. “And we think the market area is really quite exceptional.”

State law does not allow banks from outside the 11 Western states to buy California banks until 1991. But Stenton and Rieser said the purchase of the new shares should not be interpreted as an indication that First Oak Brook would try to buy Laguna Bank in 1991.

Rieser said the purchase was “absolutely” an investment, at least for now. Only one First Oak Brook executive, its chairman, Eugene P. Heytow, will take a seat on Laguna Bank’s board, he said.

“In 1991, if they (First Oak Brook investors) want to buy all of the bank, they are going to have to buy on the open market,” Stenton said. “And you can be sure the majority shareholders would not leave minority holders out in the cold.” Stenton said the bank needed capital to fuel the growth necessary to remain competitive. But he said he doubted that the bank could raise the capital in a public offering because banks in general and small independent banks in particular have found it difficult to raise cash through stock offerings.

Stenton is the bank’s largest shareholder with about 24% of the stock. The deal would reduce his stake to about 17%, he said.

First Oak Brook ended 1987 with $297 million in assets and annual net income of $3 million, Rieser said.