ACQUISITIONS : Parent of Pacific First Bank OKs Purchase of Lending Subsidiary

Pacific First Financial Corp., the Seattle holding company managing Pacific First Bank in Costa Mesa, has tentatively agreed to acquire the California residential real estate construction lending unit of Old Stone Corp.

Under the letter of intent, the Seattle firm would pick up five Old Stone construction lending offices, including one in Irvine, and 30 employees.

The offices’ portfolio consists of $250 million in loans and $290 million in loan commitments.

The proposed acquisition, scheduled to be complete by the end of the year, is another step by Pacific First Financial and Royal Trustco Ltd. in Toronto to establish a major banking operation on the West Coast.

Royal Trust, which is awaiting regulatory and shareholder approval to buy Pacific First, purchased the failed Pacific Savings Bank in Costa Mesa on Oct. 13 from federal regulators and renamed it Pacific First Bank.

Royal Trust hired the Seattle firm to manage the Orange County thrift. The Canadian firm’s intent is to fold the Costa Mesa operation into the Seattle firm once that acquisition goes through and build its California presence.

Pacific First Financial already has nearly blanketed Washington and Oregon with about 85 savings and loan branches.

The holding company also owns a savings-and-loan office and a mortgage lending operation in Walnut Creek in Northern California and an income-property division in Irvine.

Pohlman, Pacific First’s chairman and chief executive, said the Old Stone California unit acquired was in a strategic market for the company.

“This operation will fit with our real estate and income property business development activities in dynamic California markets,� he said.

“This will add to our growing presence on the West Coast as a consumer- and mortgage-oriented financial institution.�

Under the tentative agreement with Old Stone, a Providence, R.I., thrift holding company, Pacific First would pick up Old Stone offices that handle acquisition, development and construction loans for residential projects.

Though not directly consumer-related, such loans are a needed link in “the whole mortgage service chain to become a major player,� said Michael K. Rogers, a Pacific First spokesman.

Old Stone lost $51.3 million for the third quarter ended Sept. 30.

The company decided to sell the construction lending division because it recently refocused its business strategy to concentrate on its nationwide retail outlets, including its 26 savings-and-loan branches in California.