Shareholders of struggling Coronado First Bank overwhelmingly approved the sale of the bank to downtown San Diego-based Embarcadero Bank for $9 million on Aug. 23 in a stock and cash deal that seemed to be on the rocks several weeks ago.
The selling bank’s shareholders balked at approving the deal in June, forcing Embarcadero to sweeten the deal with $300,000 in cash. Embarcadero also agreed to exclude Coronado First CEO Bruce Ives or any of its directors as part of the newly merged bank.
Todd Anson, a dissident shareholder who opposed the original deal, said the new deal is a significant improvement over Embarcadero Bank’s original offer that would have severely diluted existing shareholders.
The transaction now depends on the tangible book value of the two banks at Sept. 30 but would be $6.18 per share, or about $9 million, based on the second quarter financial results. The deal needs approval from federal and state bank regulators.
When first proposed in March, the arrangement made sense. Coronado First Bank has never made a profit in its six years and was carrying higher amounts of problem loans. Embarcadero had excess capital but had difficulty making loans. By combining, the bank that will be about $150 million in assets has a better chance of growing and making a profit, most local bankers said.
Under the new arrangement, Coronado First elected four new directors to a new 11-member board. They are Pete Davis, Dan Payne, Whitney Benzian and David Engleman. The bank will be headed by Embarcadero CEO Maria Kunac.
Anson, a former CFB director and commercial real estate developer, said Coronado First’s shareholders were fed up with the complacency of its senior management and board.
The new Coronado First will remain based in Coronado, with an office in Little Italy. Embarcadero will close its single office.