West Coast Bancorp Boosting Its Equity

Out-of-state bankers continue to show an interest in California’s community banks. Among the more recent ventures pending are twin deals that West Coast Bancorp in Newport Beach has arranged with Hovde Financial Inc. in Washington.

West Coast has been using most of its cash to bolster its wholly owned operating subsidiary, Sunwest Bank in Tustin, and now needs to boost its own equity and pay off some debts.

In one deal, West Coast will sell 35 of the 100 shares of Sunwest to a Hovde affiliate, Western Acquisitions LLC, for $2.52 million, and the bank will pick up $1.08 million by selling 15 existing but unissued shares to Western. That will give the Hovde operation a 43% stake in Sunwest and four directors on the bank’s nine-member board.

No change in Sunwest management is anticipated, and West Coast is expected to continue to operate the bank, said Frank E. Smith, West Coast’s chief financial officer.

In the second deal, West Coast sold a portion of its 14% stake in Business & Professional Bank in Sacramento to Western for $93,000 and plans to sell the rest in two phases for an additional $336,000.

The two deals, which must be approved by federal regulators, will give West Coast a total of $2.95 million, which will be used to reduce holding company debts of $5.2 million, Smith said.

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James S. Granelli covers financial institutions and fraud issues for The Times. He can be reached at (714) 966-5810 and at [email protected].