While announcing plans to buy an Inland Empire bank, First California Bank said Feb. 28 that it will close four branches, including one in Thousand Oaks.
First California plans to pay $2 million in an all-stock deal to buy Riverside-based Premier Service Bank. The deal is still subject to regulatory and shareholder approval and is expected to close in the third quarter, it said.
The purchase price is about 30 percent of Premier Service Bank’s book value, First California said, and the deal is expected to be accretive to earnings immediately in 2012. For the full year of 2013, the merger would generate additional earnings per share of at least 5 cents, it aid.
Premier Service Bank has two offices, its headquarters in Riverside and a full-service branch in Corona, and assets of $141 million as of Dec. 31. It reported a net loss of $2.2 million last year.
“The transaction provides the opportunity to expand First California Bank’s presence in the Riverside and Corona markets and add a talented group of bankers,” First California CEO and President C. G. Kum said in a statement. “Premier Service Bank has a strong customer base and fits into our desired geographic footprint extremely well.”
After the deal, Premier’s president and CEO, Kerry Pendergast, is expected to serve as market president of the two branch offices being acquired and a branch in Redlands.
Branch closings planned
Westlake Village-based First California said the branch consolidation, which includes the closing of the location at 11-A E. Hillcrest Drive in Thousand Oaks, is scheduled for mid-2012, and will result in cost savings of about $1.4 million this year and $2.7 million per year after that. The other three branches being closed are in Brea, Temecula and Woodland Hills.
First California has been one of the most active banks based in the region in recent years, acquiring the assets of three failed banks during the financial crisis, and announcing plans to make its first foray into Santa Barbara with a downtown branch set to open this year. It also purchased the prepaid debit card business of Palm Desert National Bank in late 2010.
The recently announced plans to cut costs through branch consolidations may be part of an effort to appease three members of the Pohlad banking family who together own more than 12 percent of First California’s shares. In a January regulatory filing, James, Robert and William Pohlad said they’re concerned that the bank’s “current strategy is inadequate to maximize stockholder value.”
Kum told the Business Times soon after that the bank was “not doing anything different based on the Pohlad filing. We’re just going to continue to do what we’re doing.”
The consolidation move is expected to boost earnings per share by 3 cents in 2012 and by 6 cents in 2013, First California said. One-time charges associated with the closings are not expected to be material, it said, and loan and deposit totals should not be materially impacted, as relationship managers from the closed offices will be moved to other locations.
“Through our merger and acquisition activity in recent years, we have gained branch banking locations,” Kum said in a statement. “This growth created the need to conduct an evaluation of our banks’ coverage area across our regional footprint. The resulting branch realignment plan will help ensure that we are efficient and productive.”
First California’s shares slipped 0.4 percent to $4.67 after the after-hours announcement. Shares of Premier Service Bank plunged 5.9 percent to 95 cents.