Paso Robles-based Heritage Oaks Bank is buying the Morro Bay branch and assets of San Luis Obispo-based Coast National Bank.
The acquisition, announced Oct. 1, will include about $30 million in deposit accounts. It will also include the branch building. Heritage Oaks said it will pay “market value” for the building at 898 Morro Bay Blvd. and a 2.2 percent premium for the deposits. No loans are included in the deal.
The acquisition continues a trend of bank consolidation along the Central Coast and marks a re-entry into the Morro Bay market for Heritage Oaks, which earlier this year closed its branch there when the lease on its building expired.
“When the purchase is completed, Heritage Oaks Bank will once again be able to serve the Morro Bay community with a full-service branch,” Heritage Oaks CEO and President Simone Lagomarsino said in a statement. “This is great for both banks and for the Morro Bay community.”
The deal still needs regulatory approval and is expected to close by the end of the year.
After Heritage Oaks shuttered its Morro Bay operation, customers in the coastal town had to travel to San Luis Obispo for the next-closest branch, the bank said. About 80 percent of its Morro Bay deposit accounts remained with the bank, it said.
With $1 billion in assets as of June 30, Heritage Oaks is the fourth-largest bank based in the Tri-Counties, coming in just behind Pacific Capital Bancorp, First California Financial Group and Montecito Bank & Trust. Although it faced some headwinds during the financial crisis, a $60 million capital raise in 2010 fended off any further potential regulatory actions. Lagomarsino joined the bank in September 2011, taking over the chief executive spot from longtime CEO Larry Ward when he retired.
Earlier this year, Heritage Oaks said it was consolidating some of its San Luis Obispo County branches as it expanded into Ventura County with the opening of an Oxnard branch.
Coast National Bank is one of the smallest banks based in the region, with $134 million in assets as of June. It has struggled with asset quality and capital levels in recent years and operates under a March 2011 regulatory order from the Office of the Comptroller of the Currency. CEO Anita Robinson took the position after leaving Mission Community Bank, also based in San Luis Obispo, in January.
“The sale of this branch will help Coast National Bank move ahead with its own growth plans and will also keep a community bank in Morro Bay. We are thrilled that our Morro Bay customers will continue to be served by a locally managed community bank,” Robinson said in a statement.
Shares of Heritage Oaks were up 1.6 percent in morning trading following the announcement.