Two local community banks are merging
Heritage Oaks Bank buying Mission Community Bank, plans merger
Heritage Oaks Bank and Mission Community Bank have signed an agreement to merge, the banks said in a joint statement this week. Heritage Oaks will buy Mission Community and merge the two operations. Under the terms of the agreement, holders of Mission Community common stock will receive $56 million in cash and stock.
Based on the shares outstanding of Mission Community as of September 30, 2013, each share of Mission will be exchanged for approximately .8614 shares of Heritage common stock and cash consideration of approximately $0.19. The total value of the merger consideration is $56.4 million, based on a $6.42 closing price of Heritage Oaks common stock on October 18, 2013.
Upon completion of the transaction, the combined bank will be the largest community bank headquartered on the Central Coast of California, and will operate under the Heritage Oaks name and brand. The combined organization will have approximately $1.5 billion in assets, $1.3 billion in deposits, and $1.0 billion in loans, and will operate primarily in San Luis Obispo, Santa Barbara and Ventura Counties.
The statement did not mention branch consolidations or employee layoffs. The agreement, which is subject to shareholder and regulatory approval, is expected to close in February. The boards of directors of both banks have already approved the transaction.
“This is an exceptional opportunity to combine two well-respected banks that share a deep commitment to our local communities,” said Simone Lagomarsino, President and Chief Executive Officer of Heritage Oaks Bancorp and Bank. “The merger of Heritage Oaks and Mission Community provides an exciting future for customers, the community, and shareholders. The combined institution will continue to provide the same level of outstanding personalized banking service, to which the customers of both institutions have become accustomed, while offering an expanded product array.”
James Lokey, Chairman and Chief Executive Officer of Mission Community Bancorp said, “The combination of Mission Community with Heritage Oaks produces tremendous benefits for customers and shareholders. Mission Community shareholders will be exchanging their shares into Heritage Oaks stock, which is a strong currency with the potential for greater overall returns.”
Simone Lagomarsino said, “This transaction represents a unique opportunity to provide significant value for the shareholders of both organizations. Because of the overlap of Mission Community Bank’s branches with ours, we expect to reduce total operating costs by approximately $9.0 million per year, once all of the synergies have been realized, representing a reduction of approximately 50% of current Mission Community’s noninterest expense, and 17% of the combined pro forma company core noninterest expense. We believe the combination of these organizations creates a more valuable community bank franchise, with a low cost core deposit base, strong capital ratios, attractive net interest margins, lower operating costs, and better overall returns for the shareholders of the combined institution. It also creates a banking platform that is well positioned for future growth, both organically and through acquisitions.”
Upon completion of the transaction, the combined company board will have thirteen directors, comprised of the current eleven Heritage Oaks directors, and two representatives selected by Mission Community. Michael J. Morris will be the Chairman of the combined company and combined bank and Simone Lagomarsino will be President and Chief Executive Officer of both. Senior executives will predominately be from Heritage Oaks, while managers and associates will be from both organizations. The combined company will remain headquartered in San Luis Obispo County.
About Heritage Oaks Bancorp
With $1.1 billion in assets, Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank, which operates as Heritage Oaks Bank and Business First, a division of Heritage Oaks Bank. Heritage Oaks Bank has its headquarters and two branch offices in Paso Robles, two branch offices in each of San Luis Obispo and Santa Maria, single branch offices in Cambria, Arroyo Grande, Atascadero, Templeton, and Morro Bay, as well as loan production offices in Goleta and Ventura/Oxnard. Heritage Oaks Bank conducts commercial banking business in the counties of San Luis Obispo, Santa Barbara, and Ventura. The Business First division has one branch office in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbancorp.com. By including the foregoing website address, Heritage Oaks Bancorp does not intend to and shall not be deemed to incorporate by reference herein any material contained therein.
About Mission Community Bancorp
Mission Community Bancorp is a bank holding company for Mission Community Bank and Mission Asset Management, Inc. Mission Community Bank is a locally operated community bank, which first opened its doors in 1997. There are full-service Mission Community Bank offices in San Luis Obispo, Atascadero, Santa Maria, Paso Robles and Arroyo Grande, and a loan production office in Oxnard. The bank’s administrative headquarters and Small Business Banking Center are located in San Luis Obispo at 3380 South Higuera Street.