Highlights of the Announced Transaction:
-
Strengthens Pacific Premier’s competitive position as one of the
premier commercial banks headquartered in Southern California with
$3.4 billion in total assets on a pro forma basis
-
Combination with a traditional business banking franchise with
total assets of $734 million as of August 31, 2015 (unaudited) and
high quality core deposit base
-
Enhances Pacific Premier’s geographic footprint with both market
expansion and branch overlap
-
Opportunity to add relationship bankers with extensive
experience in Southern California
-
Compelling economics for Pacific Premier’s shareholders,
including opportunity for meaningful synergies
Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”, “Pacific
Premier”, “we”, “us” or “our”), the holding company of Pacific Premier
Bank (“Pacific Premier Bank”), announced that it has entered into a
definitive agreement to acquire Security California Bancorp (OTCQB:
SCAF) (“Security”), the holding company of Security Bank of California,
a Riverside, California based state-chartered bank (“Security Bank”)
with $733.6 million in total assets, $470.4 million in gross loans and
$653.7 million in total deposits at August 31, 2015 (unaudited).
Security Bank has six branches located in Riverside County, San
Bernardino County and Orange County and a loan production office located
in Los Angeles County. This transaction will strengthen Pacific Premier
Bank’s competitive position as one of the premier banks headquartered in
Southern California.
The Company expects that the transaction will result in modest EPS
accretion in 2016 and EPS accretion of approximately 5.0% in 2017. The
Company expects tangible book value dilution of approximately 2.3% at
close to be earned-back within 2.7 years. The Company anticipates there
will be significant cost savings and synergies due to the anticipated
consolidation of three of Pacific Premier Bank’s branch locations in
Tustin, Riverside and Palm Desert with Security Bank branches in the
same markets, as well as the reduction of typical back office expenses.
Steven R. Gardner, President and Chief Executive Officer of the Company
commented, “This is an attractive opportunity for us to acquire a
traditional business banking franchise which focuses on small and middle
market businesses in Southern California. Security Bank is a high
quality business bank, with a strong credit culture and attractive
low-cost core deposit base. We believe this combination will be additive
to Pacific Premier’s franchise value and will provide us with meaningful
operational scale, enhanced balance sheet liquidity and business banking
expertise in our core markets.”
Mr. Gardner continued, “We view this as an exciting opportunity for our
combined shareholders, customers and employees. Security Bank’s existing
customers will continue to receive the same excellent customer service
and products without disruption. Additionally, we expect the pro forma
financial impact will produce stronger profitability and returns for the
combined shareholder base.”
“This was a logical combination which we believe creates one of the most
attractive commercial banks in Southern California,” said James A.
Robinson, Chairman and Chief Executive Officer of Security. “Our
customers will become part of a $3.4 billion banking franchise which can
offer larger lending limits and an expanded array of products and
services. Security’s shareholders will be able to exchange their shares
for Pacific Premier common stock which is listed on NASDAQ and which we
believe is well-positioned for continued growth and earnings expansion.”
“We are excited to join the Pacific Premier team and we recognize the
significant franchise value for this combined company,” said Ernest W.
Hwang, President of Security. “Small and middle market businesses are
the core of the Southern California economy and we believe this combined
company will be well positioned to serve the needs of these customers.”
Security California Bancorp Details
As of August 31, 2015, Security’s core deposit base consisted of 43.3%
non-interest bearing demand deposits and 81.8% non-CDs. Security had a
total cost of deposits of 0.32% for the month-ended August 31, 2015.
Security’s diversified loan portfolio includes C&I loans of 29.0%, owner
occupied commercial real estate loans of 32.2% and non-owner occupied
commercial real estate loans of 15.5%, as of August 31, 2015.
On a pro forma combined basis, with the proposed acquisition of
Security, Pacific Premier would have total assets of $3.4 billion, total
loans outstanding of $2.6 billion and total deposits of $2.8 billion,
based on Pacific Premier’s financial information as of June 30, 2015 and
Security’s financial information as of August 31, 2015 (unaudited).
Pacific Premier Bank will be the 8th largest commercial bank
in Southern California (Los Angeles, Orange, San Diego, Riverside and
San Bernardino counties), excluding pending merger targets and
ethnic-focused banking institutions.
Transaction Details
Under the terms of the definitive agreement, upon consummation of the
acquisition, holders of Security common stock will have the right to
receive 0.9629 shares of Pacific Premier common stock for each share of
Security common stock they own. Based on a $20.32 closing price of
Pacific Premier’s common stock on September 30, 2015, the aggregate
merger consideration is approximately $118.9 million or $19.57 per share
of Security common stock. Holders of Security’s stock options will
receive cash consideration of approximately $766 thousand in the
aggregate for the in-the-money value. The exchange ratio reflecting the
number of shares of Pacific Premier’s common stock to be issued in
exchange for each share of Security common stock is fixed so long as
Pacific Premier’s stock price remains between $16.550 and $22.391, as
measured by the 20-day average closing price up to and including the
fifth trading day prior to closing of the transaction. The value of the
stock consideration will fluctuate based on the value of Pacific
Premier’s common stock. In the event the average closing price of
Pacific Premier’s common stock is outside this price range, then the
exchange ratio will be adjusted to reflect the increase or decrease in
the average closing price of Pacific Premier’s common stock that is
outside of this range.
Giving effect to the transaction, and based upon an exchange ratio of
0.9629, existing Pacific Premier shareholders will own approximately
78.7% of the outstanding shares of the combined company and Security
shareholders are expected to own approximately 21.3%.
Upon completion of the transaction, 2 individuals designated by
Security, and agreed to by Pacific Premier, will join Pacific Premier’s
Board of Directors. Pacific Premier plans to keep all of Security’s
relationship bankers and the majority of executive officers, including
Ernest W. Hwang and Jamie Robinson.
The transaction is expected to close early in the first quarter of 2016,
subject to satisfaction of customary closing conditions, including
regulatory approvals and approval of Security’s shareholders, as well as
the Company’s shareholders. The directors and executive officers of
Security have entered into agreements with the Company and Security
pursuant to which they have committed to vote their shares of Security
common stock in favor of the acquisition. For additional information
about the proposed acquisition of Security, you should carefully read
the definitive agreement that we filed with the Securities and Exchange
Commission (“SEC”) today.
D.A. Davidson & Co. acted as financial advisor to the Company in the
transaction and delivered a fairness opinion to the Board of Directors
of the Company. Holland & Knight LLP served as legal counsel to the
Company. Panoramic Capital Advisors acted as consultant to Security
California Bancorp and Oppenheimer & Co. Inc. delivered a fairness
opinion to the Board of Directors of Security California Bancorp. Stuart
Moore and Varner & Brandt served as legal counsel to Security California
Bancorp.
Conference Call, Webcast and Investor Presentation
The Company will host a conference call at 8:00 a.m. PT / 11:00 a.m. ET
on October 1, 2015 to discuss the merger announcement. Analysts and
investors may participate in the question-and-answer session. The
conference call can be accessed by telephone at (866) 290-5977 and ask
to join the “Pacific Premier Bancorp” conference call. Additionally a
telephone replay will be made available through October 8, 2015 at (877)
344-7529, access code 10073594. The conference call will be webcast
live on the Investor Relations section of the Company’s website. An
archived version of the webcast will made be available in the same
location shortly after the live call has ended.
A presentation to be discussed on the conference call will be available
on the “Presentations”
page of the Company’s investor relations website at 6:00 a.m. ET on
October 1, 2015.
About Pacific Premier Bancorp, Inc.
Pacific Premier Bancorp, Inc. is the holding company for Pacific Premier
Bank, one of the largest community banks headquartered in Southern
California. Pacific Premier Bank is a business bank primarily focused on
serving small and middle market business in the counties of Los Angeles,
Orange, Riverside, San Bernardino and San Diego, California. Pacific
Premier Bank offers a diverse range of lending products including
commercial, commercial real estate, construction, residential warehouse
and SBA loans, as well as specialty banking products for homeowners
associations and franchise lending nationwide. Pacific Premier Bank
serves its customers through its 16 full-service depository branches in
Southern California located in the cities of Corona, Encinitas,
Huntington Beach, Irvine, Los Alamitos, Newport Beach, Palm Desert, Palm
Springs, Riverside, San Bernardino, San Diego, Seal Beach and Tustin.
About Security California Bancorp
Security California Bancorp is the parent of Security Bank of California
and is traded on the OTC Markets under the symbol SCAF. Through its full
service offices in Riverside, San Bernardino, Redlands, Orange, Palm
Desert and Murrieta, Security Bank of California is a full service
community bank, focusing on providing banking services for businesses,
their owners and families, and successful individuals. Security Bank of
California also has a loan production office in Irwindale, California.
FORWARD-LOOKING COMMENTS
This press release may contain forward-looking statements regarding the
Company, Security and the proposed acquisition. These statements involve
certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Such
risks and uncertainties include, but are not limited to, the following
factors: the expected cost savings, synergies and other financial
benefits from the acquisition might not be realized within the expected
time frames or at all; governmental approval of the acquisition may not
be obtained or adverse regulatory conditions may be imposed in
connection with governmental approvals of the acquisition; conditions to
the closing of the acquisition may not be satisfied; the shareholders of
Security may fail to approve the consummation of the acquisition; and
the shareholders of the Company may not approve the issuance of shares
of the Company common stock for the acquisition. Annualized, pro forma,
projected and estimated numbers in this press release are used for
illustrative purposes only, are not forecasts and may not reflect actual
results.
The Company and Security undertake no obligation to revise or publicly
release any revision or update to these forward-looking statements to
reflect events or circumstances that occur after the date on which such
statements were made.
NOTICE TO SHAREHOLDERS
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. In connection with the proposed acquisition
transaction, a registration statement on Form S-4 will be filed with the
SEC by the Company. The registration statement will contain a joint
proxy statement/prospectus to be distributed to the shareholders of
Security and the Company in connection with their vote on the
acquisition. SHAREHOLDERS OF SECURITY AND THE COMPANY ARE ENCOURAGED TO
READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL
BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final joint
proxy statement/prospectus will be mailed to shareholders of Security
and the Company. Investors and security holders will be able to obtain
the documents free of charge at the SEC's website, www.sec.gov.
In addition, documents filed with the SEC by the Company will be
available free of charge by (1) accessing the Company’s website at www.ppbi.com
under the “Investor Relations” link and then under the heading “SEC
Filings,” (2) writing the Company at 17901 Von Karman Avenue, Suite
1200, Irvine, CA 92614, Attention: Investor Relations or (3) writing
Security at 3403 Tenth Street, Suite 830, Riverside, CA 92501,
Attention: Corporate Secretary.
The directors, executive officers and certain other members of
management and employees of the Company may be deemed to be participants
in the solicitation of proxies in respect of the proposed acquisition.
Information about the directors and executive officers of the Company is
included in the proxy statement for its 2015 annual meeting of the
Company shareholders, which was filed with the SEC on April 27, 2015.
The directors, executive officers and certain other members of
management and employees of Security may also be deemed to be
participants in the solicitation of proxies in favor of the acquisition
from the shareholders of Security. Information about the directors and
executive officers of Security will be included in the joint proxy
statement/prospectus for the acquisition. Additional information
regarding the interests of those participants and other persons who may
be deemed participants in the transaction may be obtained by reading the
joint proxy statement/prospectus regarding the proposed acquisition when
it becomes available. Free copies of this document may be obtained as
described in the preceding paragraph.
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