Mission Community Bank said Oct. 24 that it acquired Santa Lucia Bank, doubling the San Luis Obispo-based bank’s size and kicking off its effort to consolidate smaller lenders along the Central Coast.
The previously announced deal closed Oct. 21, Mission said. Although it did not confirm the deal price in its announcement, Mission’s top executive previously told the Business Times that the bank would pay 35 cents per share to Santa Lucia’s shareholders, and pay off about $3 million in Troubled Asset Relief Program, or TARP, funds that Santa Lucia still owed the federal government.
About 2 million shares of Santa Lucia common stock were outstanding on Oct. 6, when the Atascadero-based bank held a shareholder meeting to consider the deal. At 2 million shares, the total sale price comes to more than $700,000. That represents a slight premium over Santa Lucia’s market capitalization of $667,000 on Oct. 21.
Before the deal was announced, Santa Lucia had come under fire from regulators for low capital levels and problem loans. At the shareholder meeting, 65.8 percent of the company’s common shares were cast in favor of the deal with Mission, with 1.6 percent against it, according to regulatory filings.
Mission, meanwhile, is backed by Carpenter Fund Manager, a private equity group that has invested in a number of banks around the country. The Irvine-based fund injected at least $25 million into Mission in 2009 with an eye toward acquisitions. In 2010 it recruited retired banker Jim Lokey to head up the bank’s board.
Lokey is the former CEO of Mid-State Bank & Trust who guided that bank to the most successful bank merger in tri-county history when Mid-State was sold to Dutch giant Rabobank.
“The proposed merger lays the foundation for our Central Coast initiative,” Lokey told the Business Times on June 27. “We see our natural territory as the four-county region from Ventura to Monterey County. Eventually, where we are going is to build the next super-regional bank for the Central Coast.”
With last week’s acquisition, Mission has about $450 million in assets and $410 million in deposits, it said in a statement. All four former Santa Lucia Bank branch offices – in Atascadero, Paso Robles, Arroyo Grande and Santa Maria – will remain open, the bank said. The conversion of Santa Lucia’s operating systems to the Mission operating platform is scheduled to be completed in January.
Both Mission and Santa Lucia suffered losses last year — $6.7 million and $14,754, respectively — but Mission has the benefit of being backed by a deep-pocketed private equity group. After cleaning up its books and recapitalizing last year, the bank started to shop around for other Central Coast banks to acquire. “Many banks like us are looking at the opportunities that are out there to perhaps merge together and create a bank of a size that can be competitive,” Lokey told the Business Times in June.[wikichart align=”center” ticker=”MISS.OB” showannotations=”true” livequote=”true” rollingdate=”6 months” width=”390″ height=”245″]