First National Agrees to Buy Overland Bank

SAN DIEGO — First National Corp. has reached an agreement in principle to acquire Temecula-based Overland Bank for $5.4 million in stock and cash, First National Chairman Malin Burnham said Wednesday. The deal would push total assets of First National Corp., the parent company of First National Bank, to $500 million.

Overland’s two offices in San Bernardino County would give First National Corp. its first banking presence outside San Diego County. According to terms of the agreement, Overland would operate as a wholly owned subsidiary of First National Corp.

Overland, which has assets of $54 million, an office in Temecula and a loan production in Lake Elsinore, competes mainly with several regional banks in San Bernardino County, according to President and Chief Executive Allan R. McDonald. The acquisition by First National will give Overland the resources it needs to remain competitive with larger competitors, McDonald said.

The proposed acquisition “fits in with my understanding of First National’s expansion plans,” said Gerry Findley, publisher of a Brea-based banking industry newsletter. “Overland, while it recently stubbed its toe on some problem loans, is located in a rapidly growing area.”

Overland, a state-chartered bank founded in 1982, reported a $73,000 net profit for the first quarter ended March 31. It expects to report a $151,000 net profit for the first half of 1987. The bank reported a $30,000 net loss during 1987, when the bank wrote down several problem loans, McDonald said.

First National Bank President Michael West began talking to Overland’s board about two months ago, according to McDonald. Overland, however, “was not aggressively seeking a merger,” McDonald said.

Overland’s board found First National to be an attractive partner because both banks serve predominantly industrial and commercial customers, according to McDonald. Overland’s 5,000 customers are overwhelmingly small- to medium-sized businesses, including doctors, attorneys and CPAs. “We are not a strong consumer bank,” McDonald said.

The transaction must be approved by Overland Bank shareholders and regulatory agencies. The deal includes an as-yet undisclosed combination of cash and stock.

First National Bank, which was formed in 1981, has seven offices in San Diego County. It merged with National Bankshares of La Jolla and National Bank of Fairbanks Ranch in 1987. First National reported $247,000 in net income during the first quarter of 1988. First National Bank reported $380 million in assets on June 30.