Banc of California is expanding its reach in its home market through the acquisition of Pacific Mercantile Bancorp, the parent of Pacific Mercantile Bank, for nearly $235m.
The all-stock deal, valuing each share at $9.77, will involve the merger of Pacific Mercantile into Banc of California.
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The consolidation will lead to the formation of a $9.5bn bank with a presence in Southern California.
Under the agreement, Pacific Mercantile common stockholders will get 0.5 shares of Banc of California common stock for each share held.
Upon deal completion in the third quarter of 2021, current Banc of California stockholders will own around 81% of the outstanding shares in the merged business while Pacific Mercantile shareholders will own around 19%.
Pacific Mercantile president and CEO Brad Dinsmore said: “Banc of California is a great merger partner for Pacific Mercantile given our shared focus on business and relationship banking.
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By GlobalData“Like Pacific Mercantile, Banc of California has become an attractive choice for small- and middle-market operating companies with a strong emphasis on service and solutions.”
At the end of last year, Costa Mesa, California-based Pacific Mercantile Bancorp had $1.6bn in total assets, $1.2bn in gross loans, and $1.4bn in total deposits. Pacific Mercantile, with $229.7m in Paycheck Protection loans outstanding at the end of the same period, has seven banking offices, including three full service branches, across Southern California.
Banc of California had around $7.9bn in assets at the end of December 2020 and 36 offices including 29 full-service branches across Southern California.
The bank anticipates that the deal will be 12.9% accretive to EPS in 2022.
The deal currently awaits clearance from regulators and shareholders. It has already secured the nod of the two companies’ boards.
Banc of California president and CEO Jared Wolff calls the acquired entity a “strong strategic fit”.
Wolff noted: “Their size, business focus, and deposit profile perfectly align with our existing operations, and will accelerate our growth and operating scale in key markets.
“Our similar market footprint, corporate cultures, and commitment to helping our clients succeed should lead to a smooth and successful transaction and integration.”
