Enterprise Financial Services in St. Louis has agreed to buy Seacoast Commerce Banc Holdings in San Diego.
The $8.4 billion-asset Enterprise said in a press release Thursday that it will pay $156 million in stock for the $1.3 billion-asset Seacoast. The deal, which is expected to close late this year or in early 2021, valued Seacoast at 151.2% of its tangible book value.
Seacoast has five branches, $1.1 billion in loans and $1 billion in deposits. It also has 20 loan production offices and six deposit production offices across the country.
About half of Seacoast’s loan portfolio consists of Small Business Administration loans.
"We are excited to announce this transaction and believe the combination … is an excellent fit for our business model,” Jim Lally, Enterprise’s president and CEO, said in the release. Seacoast has “built an extraordinarily successful SBA platform that will complement our commercial and specialty lending verticals."
"We believe that now is the right time to join forces with Enterprise because there is a substantial opportunity for each of us to leverage each other's strengths and more efficiently move toward our shared long-term vision," Richard Sanborn, Seacoast's CEO, wrote in a letter to the company's employees.
"Our specialty niches complement Enterprise’s business lending focus, in addition to its strong community bank profile," added Sanborn, who will join Enterprise's board. "We believe the combined company will have an attractive blend of both specialized and commercial lending with the ability to add specialized low-cost core deposits that are not dependent on a traditional branch network."
Enterprise said it expects the deal to be 4% accretive to its 2021 earnings per share, excluding the impact of merger-related expenses, and 11% accretive the next year. It should take less than three years for Enterprise to earn back the expected 2% dilution to its tangible book value.
Enterprise plans to cut about 25% of Seacoast's annual noninterest expenses. The company said it will incur $17.9 million in one-time expenses tied to the deal.
Boenning & Scattergood and Holland & Knight advised Enterprise. Keefe, Bruyette & Woods and Sheppard, Mullin, Richter & Hampton advised Seacoast.
