BYL Bancorp came in at No. 67 on this year’s fastest growing companies list, though we may not see it there next year.
A group of BYL investors, including New York-based JAM Partners and Gardnerville, Nev.-based Everest Partners, which combined own about 9% of BYL’s outstanding stock, are urging a sale of the bank. Together, the two investment groups are nominating two directors with an eye toward facilitating a sale. The group also is urging other shareholders to back a sale.
The agitation comes after BYL said it had talked with L.A.-based PBOC Holdings Inc., parent of the People’s Bank of California, about a possible acquisition. Last month, PBOC issued $10 million of preferred securities in a private offering managed by First Union Securities Inc.
In a letter to BYL’s board, Sy Jacobs, general partner of JAM Partners, said “the board has not earned the right to reject any reasonable offer” based on the company’s recent performance.
BYL qualifies as one of OC’s fastest-growing companies with a three-year gain in revenue of 21% to $29 million for the period ended June 30 this year. What has investors urging a sale is BYL’s profit performance. In the second quarter, the company saw earnings drop 37.4% to $427,000. The bank attributed the loss to writing down its 1999 interests in packaging small business loans and selling them on Wall Street.
BYL operates seven full-service banking centers, two divisional loan origination offices and mortgage loan origination offices in seven other states.
The holding company for the Bank of Yorba Linda had to spin off the most lucrative segment of its business, its commercial real estate and Small Business Administration lending group.
It formed a new company, CNL Commercial Finance, in a joint venture with Orlando, Fla.-based CNL Commercial Funding. BYL will retain a 25% stake in the venture. The new venture will take 38 BYL employees and will operate out of BYL’s existing offices in Mission Viejo.
The bank was forced to spin off the unit after federal regulators were unhappy with the way BYL packaged and sold the loans it made from that unit. The bank had a chance to keep the unit, but it would have had to come up with $8 million in capital reserves to set aside for $100 million in commercial real estate loans it had already packaged and sold on Wall Street. n
