Early first quarter M&A data fail to support talk of rebound.

Los Angeles investment bankers have been predicting a rebound in merger activity for some time, but the numbers indicate it hasn't arrived yet.

Through the first two months of 2004, only 61 deals worth about $900 million involving Los Angeles companies have been announced, according to data from FactSet/Mergerstat.

The data reflect deals announced through March 1 and exclude Comcast Corp.'s unsolicited $54 billion offer for Walt Disney Co., which was rejected by Disney's board in February. The partial results from the first quarter show a pace of dealmaking about on par with the 90 deals announced with Los Angeles-based buyers or sellers in the fourth quarter of 2003. However, deal size is somewhat smaller, tracking toward a total that would be about half of the $2.5 billion logged in the fourth quarter of 2003.

The figures appeal" to be in keeping with the low levels of activity over the past several years, interrupted by a Disney-like blockbuster here and there. While the stock market's rebound helped lift M&A activity off of its deepest lows last year, there is still uncertainty about whether the tepid two-year-old economic recovery is sustainable.

Bankers blamed some of the slowness on seasonal factors. "The first quarter is typically not the strongest," said Scott Dunfrund, director of corporate finance at Los Angeles-based Houlihan Lokey Howard & Zukin. "A lot of deals are done by the fiscal year end, generally speaking."

Even so, activity is down nearly one-third from the 87 deals announced in-the first two months of 2003.

Bankers remain resolute that activity will be on the upswing. "We are actually at or near full capacity," said Stephen Perry, managing director of Janes Capital Partners in Newport Beach.

It's a similar refrain with other local bankers, who expect M&A activity to build throughout 2004.

"I think that's due in part to a much improved financing market," said Dunfrund. He noted that commercial banks, which turned off the spigots alter being burned by a number of large merger-related loans in recent years, have become more aggressive in lending into deals. This allows financial buyers, such as private equity firms, to leverage their offers with debt.

"It's certainly one of the factors we're seeing as a reason for the pickup. As lenders are willing to go ahead and lend more of a particular purchase price, the buyer can then afford to pay more."

Bankers insist they're seeing their backlogs grow. Dennis McCarthy, managing director in Los Angeles for Seidler Cos., said he believes that since stocks are up off of their lows, sellers believe they will get a reasonable price for their companies. "This is a very high level of company interest," he said.

There have been some notable deals announced thus far this year, including Irvine-based Commercial Capital Bancorp's $438 million purchase of El Segundo-based Hawthorne Financial Corp. Together, the thrifts will have about $2.4 billion in companywide deposits and $4.4 billion in assets. The deal, which must be approved by regulators and shareholders, is expected to close this summer.

In January, Los Angeles-based AP Henderson Group, one of the largest independent petroleum refiners, bought Tustin-based Slide View Corp., a computer technology research firm, for $10 million. Also that month, Thousand Oaks-based Amgen Inc. bought Massachusetts-based ViaCell Inc. for $20 million.

Los Angeles sellers have been active too. Santa Monica-based Entravision Communications Corp. sold three radio stations serving the Chicago area for a total of $29 million.

Over the past year, dealmaking activity has risen, although Los Angeles didn't participate to the extent of neighboring Orange County.

According to figures from FactSet/Merger-stat, there were 440 deals involving Los Angeles County companies for the 12 months ended March 1, a 16 percent increase over the like year-earlier period. That compares with a 42 percent increase registered in Orange County, where 297 deals got made in the like year-earlier 12-month period.