Southern California Bancorp in San Diego has agreed to buy California BanCorp in Oakland.
The $2.4 billion-asset Southern California said in a press release that it will pay $233.6 million in stock for the $2 billion-asset California BanCorp. The deal is expected to close in the third quarter.
Southern California shareholders will own about 57.1% of the outstanding shares of the combined company, which will remain in San Diego and go through a rebranding process.
The deal “brings together two premier California business banks to create a franchise with a footprint that covers the two most attractive markets in California,” David Rainer, Southern California’s chairman and CEO, said in the release.
“Our two companies share the same vision and values with a customer-centric focus on providing outstanding service to mid-market businesses,” Rainer added. “We believe this combination, resulting in increased size and scale, will drive improved profitability and increase shareholder value.”
The 12-member board will have equal representation from each company. A lead independent director will be appointed after closing.
Rainer will serve as executive chairman. Steven Shelton, California BanCorp’s CEO, will retain that position and join the board. Richard Hernandez, Southern California’s president, will remain in that role.
The plan is to cut about 15% of the combined company’s annual noninterest expenses. There should be about $19.5 million of merger-related expenses.
The deal should b 48% accretive to Southern California’s 2025 earnings per share. It should take about three years for Southern California to earn back an estimated 18% dilution to its tangible book value.
MJC Partners and Stuart Moore Staub advised Southern California. Keefe, Bruyette and Woods and Sheppard, Mullin, Richter & Hampton advised California BanCorp.