VALLEY BANK CHAIN BOUGHT; CITY NATIONAL GETS AMERICAN PACIFIC STATE FOR $89 MILLION.

Byline: Deborah Adamson Daily News Staff Writer

American Pacific State Bank, a homegrown San Fernando Valley bank, is being purchased by the largest bank headquartered in Southern California.

In a deal announced Friday, Beverly Hills-based City National Corp., the parent of City National Bank, agreed to buy American Pacific for $89 million in cash. City National is paying $15.65 for each of American Pacific's 5.5 million shares. The acquisition is subject to shareholder and regulatory approval. It's expected to close in late September.

Frank Ures Jr., the founder and chief executive of American Pacific, said it wasn't his original intent to sell the bank. But two of his shareholders wanted to cash in on their investments, prompting the bank to search for a buyer. It found a partner in City National.

``It's going to be great marriage,'' Ures said. ``Our way of doing things is exactly alike. There's virtually no overlap'' in branches.

``We've been on a growth strategy in the Valley,'' said Russell Goldsmith, chairman and chief executive of City National. ``We see American Pacific State Bank augmenting and expanding that.''

The acquisition gives City National eight American Pacific offices in the Valley area: Sherman Oaks, Sun Valley, Woodland Hills, North Hollywood, Van Nuys, Granada Hills, Northridge and Valencia.

City National has more than 40 offices in Southern California, including branches in Encino, Woodland Hills, Studio City and two in Burbank.

City National will consolidate the banks' two branches in Woodland Hills but expects to retain most of American Pacific's 160 employees.

Ures will stay on as senior commercial banking executive in charge of business in the San Fernando and Santa Clarita valleys.

Both banks offer consumer products such as checking and savings accounts but they focus on serving the business market.

While big bank mergers have taken the spotlight in recent years, marriages between smaller banks have been going at the same rate, said John Stafford, spokesman for the California Bankers Association in San Francisco.

There were 23 bank mergers in California last year and most of them occurred between banks with $100 million to $500 million in assets, he said.

Last month, Orange County's largest bank, Western Bancorp, was bought by Minneapolis-based U.S. Bank.

``Size counts,'' Stafford said. ``Particularly when it comes to technology. The kind of services and speeds that technology allows banks to provide comes with a high price tag.''

In the last four years, City National has bought five other banks. With American Pacific State Bank, City National's assets come to $6.7 billion.

American Pacific has assets of $414 million. Founded in 1971 by Ures, the bank began with a storefront in Sun Valley. It was capitalized with $1 million.

From the beginning, American Pacific specialized in Small Business Administration loans. Indeed, at one point it was the sixth largest SBA lender in the country, Ures said. Today, SBA loans are still its specialty.