Highlights of the Announced
Transaction:
Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) (the “Company”,
“Pacific Premier”, “we”, “us” or “our”), the holding company of
Pacific Premier Bank (“Pacific Premier Bank”) and Heritage Oaks
Bancorp (NASDAQ:HEOP) (“Heritage Oaks”) today announced that they
have entered into a definitive agreement under which Pacific
Premier will acquire Heritage Oaks in a stock transaction for total
consideration of approximately $405.6 million, or $11.68 per share,
based on a closing price for Pacific Premier’s common stock of
$33.65 as of December 12, 2016. The Company expects the transaction
will be immediately accretive to tangible book value per share and
5.2% accretive to earnings per share in 2018.
Heritage Oaks, the holding company of Heritage
Oaks Bank (“Heritage Oaks Bank”), is headquartered in Paso Robles,
California with $2.0 billion in total assets, $1.3 billion in gross
loans and $1.6 billion in total deposits at September 30, 2016.
Heritage Oaks has 12 branches located in San Luis Obispo County and
Santa Barbara County and a loan production office located in
Ventura County. The transaction will increase Pacific
Premier’s total assets to approximately $6.0 billion on a pro forma
basis.
Steve R. Gardner, Chairman and Chief Executive
Officer of the Company, commented, “Heritage Oaks has built a
highly attractive franchise with a strong team of relationship
managers and a commitment to superior customer service. We have
known the executive management team at Heritage Oaks for many years
and we believe their bank will be an excellent fit with our
existing franchise. As the largest bank headquartered in
California’s Central Coast, Heritage Oaks has built a leading
market share and a high quality, low-cost core deposit base. We
believe this combination and our entrance into the California
Central Coast market will strengthen the Pacific Premier franchise
and provide us with improved growth opportunities, greater earnings
power, and meaningful operational scale as a $6.0 billion asset
bank.”
Mr. Gardner continued, “This is a significant
opportunity for our combined shareholders, customers and employees.
Heritage Oaks’ existing customers will continue to receive the same
excellent customer service and products without disruption.
Additionally, we expect the financial impact will produce stronger
profitability and returns for the combined shareholder base.”
“We believe the combination with Pacific Premier
will create one of the most attractive commercial banks in
California with a footprint that extends from Paso Robles to San
Diego,” said Simone F. Lagomarsino, President and Chief Executive
Officer of Heritage Oaks. “Our customers will become part of a
larger banking franchise that can offer an expanded array of
products and services.”
The earnings per share accretion estimates are
based on estimated costs savings of approximately 26.5% of Heritage
Oaks’ non-interest expense, with 60% of the cost savings phased-in
during 2017 and 100% phased-in during 2018. The earnings per
share accretion estimates do not include any assumption of revenue
synergies.
Expected benefits of the transaction
include:
- Higher levels of profitability driven by earnings accretion and
increasing operating scale;
- Broader base of low-cost core deposits;
- Opportunities to redeploy Heritage Oaks’ excess liquidity into
higher-yielding assets;
- Increased diversification from both a geographic and loan mix
perspective;
- Broader market presence provides greater opportunities for
future in-market acquisitions; and
- Unique opportunity to expand franchise without diluting
tangible book value per share.
Transaction Details
Under the terms of the definitive agreement,
upon consummation of the transaction, holders of Heritage Oaks
common stock will have the right to receive 0.3471 shares of
Pacific Premier common stock for each share of Heritage Oaks common
stock they own. Based on a $33.65 closing price of Pacific
Premier’s common stock on December 12, 2016, the aggregate merger
consideration is approximately $405.6 million or $11.68 per share
of Heritage Oaks common stock.
Existing Pacific Premier shareholders will own
approximately 69.9% of the outstanding shares of the combined
company and Heritage Oaks shareholders are expected to own
approximately 30.1%.
The merger agreement provides for three
directors from Heritage Oaks to be added to the Board of Directors
of Pacific Premier, including Simone Lagomarsino, President &
CEO of Heritage Oaks, Michael J. Morris, Chairman of Heritage Oaks,
and Michael E. Pfau, Vice-Chairman of Heritage Oaks. Pacific
Premier plans to retain Heritage Oaks’ relationship bankers and key
members of the Heritage Oaks leadership team, including Rob
Osterbauer and Brooks Wise.
The transaction is expected to close early in
the second quarter of 2017, subject to satisfaction of customary
closing conditions, including regulatory approvals and approval of
Heritage Oaks’ shareholders, as well as the Company’s shareholders.
The directors and select executive officers of Heritage Oaks have
entered into agreements with the Company and Heritage Oaks pursuant
to which they have committed to vote their shares of Heritage Oaks
common stock in favor of the acquisition. For additional
information about the proposed acquisition of Heritage Oaks,
shareholders are encouraged to carefully read the definitive
agreement that was 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. Sandler O’Neill
+ Partners L.P. acted as financial advisor to Heritage Oaks in the
transaction and delivered a fairness opinion to the Board of
Directors of Heritage Oaks. Manatt, Phelps & Phillips,
LLP served as legal counsel to Heritage Oaks.
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 Tuesday, December 13, 2016 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
asking to join the “Pacific Premier Bancorp” conference call.
Additionally a telephone replay will be made available through
December 20, 2016 at 877-344-7529, access code 10097887. The
conference call will be webcast live on the Investor Relations
section of the Company’s website. An archived version of the
webcast will be made 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 December 13,
2016.
About Pacific Premier Bancorp, Inc.
Pacific Premier Bancorp, Inc. is the holding
company for Pacific Premier Bank, one of the largest banks
headquartered in Southern California with $3.8 billion in assets.
Pacific Premier Bank is a business bank primarily focused on
serving small and middle market businesses in the counties of Los
Angeles, Riverside, San Bernardino and San Diego, California.
Pacific Premier Bank offers a diverse range of lending products
including commercial, commercial real estate, construction, 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, Murrieta,
Newport Beach, Orange, Palm Desert, Palm Springs, Redlands,
Riverside, San Bernardino, and San Diego
About Heritage Oaks Bancorp
With $2.0 billion in assets, Heritage Oaks
Bancorp is headquartered in Paso Robles, California and is the
holding company for Heritage Oaks Bank. Heritage Oaks Bank
operates two branch offices each in Paso Robles and San Luis
Obispo; single branch offices in Atascadero, Templeton, Cambria,
Morro Bay, Arroyo Grande, Santa Maria, Goleta and Santa Barbara; as
well as a single loan production office in Ventura/Oxnard.
Heritage Oaks Bank conducts commercial banking business in San Luis
Obispo, Santa Barbara, and Ventura counties.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking
statements regarding the Company, Heritage Oaks 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 Heritage Oaks 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 Heritage Oaks 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.
Additional Information About the Merger
and Where to Find It
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 Heritage Oaks and the Company in connection with
their vote on the acquisition. SHAREHOLDERS OF HERITAGE OAKS 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 Heritage
Oaks and the Company. Investors and security holders will be able
to obtain the documents, and any other documents the Company and
Heritage Oaks have filed with the SEC, free of charge at the SEC's
website, www.sec.gov. In addition, documents filed with the SEC by
the Company and Heritage Oaks 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) accessing the Heritage Oaks website at www.heritageoaksbank.com
under the “Investor Relations” link and then under the heading “SEC
Filings,” (3) writing the Company at 17901 Von Karman Avenue, Suite
1200, Irvine, CA 92614, Attention: Investor Relations or (4)
writing Heritage Oaks at 1222 Vine Street Paso Robles, CA 93446,
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 2016 annual meeting of the Company shareholders,
which was filed with the SEC on April 27, 2016. The directors,
executive officers and certain other members of management and
employees of Heritage Oaks may also be deemed to be participants in
the solicitation of proxies in favor of the acquisition from the
shareholders of Heritage Oaks. Information about the directors and
executive officers of Heritage Oaks is included in the proxy
statement for its 2016 annual meeting of the Heritage Oaks
shareholders, which was filed with the SEC on April 26, 2016.
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.
Pacific Premier Bancorp, Inc.
Steve R. Gardner
Chairman & Chief Executive Officer
(949) 864-8000
sgardner@ppbi.com
Pacific Premier Bancorp, Inc.
Ronald J. Nicolas, Jr.
Senior Executive Vice President & CFO
(949) 864-8000
rnicolas@ppbi.com
or
Heritage Oaks Bancorp
Simone F. Lagomarsino
President and Chief Executive Officer
(805) 369-5260
slagomarsino@heritageoaksbank.com
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