Bank of Southern California to Merge with California Bank of Commerce

Southern California Bancorp, the holding company for Bank of Southern California, and California BanCorp, the holding company for California Bank of Commerce, executed a definitive merger agreement pursuant to which the companies will combine in an all-stock merger valued at approximately $233.6 million, or $26.54 per share of California BanCorp, based on the closing price of Southern California Bancorp on Jan. 29. The merger will create a California financial institution with approximately $4.6 billion in assets

“This merger of equals 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, chairman and CEO of Southern California Bancorp, said. “Our two companies share the same vision and values with a customer-centric focus on providing outstanding service to mid-market businesses. We believe this combination, resulting in increased size and scale, will drive improved profitability and increase shareholder value. It also offers customers increased product offerings and lending limits, as well as access to branches in both Northern and Southern California. The merger will also provide employees of both companies with increased career opportunities. I am very excited to work with Steven Shelton and his impressive team to build what we believe will be the premier business banking franchise in California.”

“The expanded scale and capabilities we will have as a result of this merger will enhance our ability to continue adding attractive full banking relationships with commercial clients that provide operating deposit accounts and high-quality lending opportunities, as well as enabling us to move up market and work with larger businesses,” Shelton, who is the CEO of California BanCorp, said. “This merger is bringing together two highly compatible institutions with similar cultures, a relationship-based approach and commercial banking expertise with strong deposit bases that will offer opportunities for growth in various lending verticals. With our combined capabilities, we believe that we will be well positioned to consistently generate profitable growth and further enhance the value of our franchise in the years to come.”

“We believe this merger will benefit all our constituents, including shareholders, employees and the clients that we serve,” Stephen Cortese, chairman of California BanCorp, said. “Over the past several years, we have made investments in talent and technology that strengthened our franchise and led to the strong growth we have seen in our client base, increased efficiencies and improved profitability. This merger will accelerate the growth of our franchise and further improve our ability to create long-term value for shareholders.”

Under the terms of the definitive agreement, which was unanimously approved by the boards of directors of Southern California Bancorp and California BanCorp, each outstanding share of California BanCorp common stock will be exchanged for the right to receive 1.59 shares of Southern California Bancorp common stock. As a result of the transaction, Southern California Bancorp shareholders will own approximately 57.1% of the outstanding shares of the combined company and California BanCorp shareholders will own approximately 42.9% of the outstanding shares of the combined company.

The companies will evaluate rebranding with new names and logos for the combined company and bank at the close of the transaction. The combined company’s common stock will continue to trade on the Nasdaq Capital Market and its corporate headquarters will be located in San Diego.

The combined company’s Southern California footprint will include Bank of Southern California’s 13 branches that serve Los Angeles, Orange, San Diego and Ventura counties, and the Inland Empire. The combined company’s Northern California footprint will include the California Bank of Commerce branch in Contra Costa County and its four loan production offices serving Alameda, Contra Costa, Sacramento and Santa Clara counties.

The combined company’s board of directors will consist of six directors from Southern California Bancorp, including David Rainer, chairman of Southern California Bancorp, and six directors from California BanCorp, including Shelton. A lead independent director will be appointed after closing.

Rainer will serve as executive chairman of the combined company, bank and boards.

Shelton will serve as CEO and director of the combined company and the combined bank.

Hernandez, who is currently president of Southern California Bancorp, will serve as president of the combined company and combined bank.

Thomas Sa, who currently serves as president, CFO and chief operating officer of California BanCorp, will serve as chief operating officer of the combined company and combined bank.

Thomas Dolan, who currently serves as CFO and chief operating officer of Southern California Bancorp, will serve as CFO of the combined company and chief strategy officer of the combined bank.

The transaction is expected to close in Q3/23, subject to satisfaction of customary closing conditions, including receipt of required regulatory approvals and approvals from Southern California Bancorp and California BanCorp shareholders.

Members of the board of directors of each of Southern California Bancorp and California BanCorp entered into agreements pursuant to which they have committed to vote their shares of common stock in favor of the merger of California BanCorp with and into Southern California Bancorp.

MJC Partners acted as financial advisor to Southern California Bancorp and delivered a fairness opinion to its board of directors for this transaction, while Stuart Moore Staub acted as legal counsel to Southern California Bancorp. Keefe, Bruyette and Woods acted as financial advisor to California BanCorp and delivered a fairness opinion to its board of directors. Sheppard, Mullin, Richter & Hampton served as legal counsel to California BanCorp.

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