Banc of California in Santa Ana, Calif., has agreed to buy Pacific Mercantile Bancorp in Costa Mesa, Calif.
The $7.9 billion-asset Banc of California said in a press release Monday that it will pay $235 million in stock for the $1.6 billion-asset Pacific Mercantile. The deal, which is expected to close in the third quarter, priced Pacific Mercantile at 146% of its tangible book value.
Pacific Mercantile would be Banc of California's first bank acquisition since it bought Private Bank of California in July 2013. It bought
But Jared Wolff, Banc of California's president and CEO, has significant M&A experience. While serving as president of PacWest Bancorp's bank, he handled the company's
Banc of California said it expects the transaction to be 12.9% accretive to its 2022 earnings per share. It should take about two years for the company to earn back any dilution to its tangible book value.
Banc of California plans to cut about 35% of Pacific Mercantile's annual noninterest expenses. It expects to incur $18.1 million in merger-related expenses.
Pacific Mercantile has three branches, $1.2 billion of loans and $1.4 billion of total deposits. Two Pacific Mercantile directors will join Banc of California's board.
“Pacific Mercantile’s talented team has built an attractive roster of operating company clients, and we look forward to serving them with high-touch relationship banking,” Wolff said in the release.
“Pacific Mercantile is a strong strategic fit for Banc of California,” Wolff added. “Their size, business focus, and deposit profile perfectly align with our existing operations, and will accelerate our growth and operating scale in key markets.”
Piper Sandler and Sullivan & Cromwell advised Banc of California. Keefe, Bruyette & Woods and Sheppard, Mullin, Richter & Hampton advised Pacific Mercantile.
