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California banks to combine in $234 million 'merger of equals'

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California banks to combine in 4 million 'merger of equals'


The deal involving Southern California Bancorp and California BanCorp, expected to close in the third quarter, would form a $4.6 billion-asset lender with a footprint spanning San Diego as well as Greater Los Angeles and the San Francisco Bay Area.

Southern California Bancorp in San Diego and Oakland-based California BanCorp said they would merge in a $233.6 million, all-stock deal that would create a combined company with $4.6 billion of assets spanning the major metropolises of the country’s most populous state.

The $2.4 billion-asset Southern California Bancorp, the parent of Bank of Southern California, and the $2 billion-asset California BanCorp, the holding company for California Bank of Commerce, jointly announced the deal on Tuesday and billed it as a “merger of equals.”

However, the transaction, slated to close in the third quarter, would give Southern California Bancorp shareholders 57.1% ownership of the outstanding shares of the combined company. California BanCorp investors would own the rest. The deal consideration was based on Southern California Bancorp’s Jan. 29 closing stock price.

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The merged bank would be based in San Diego and also cover Greater Los Angeles and the San Francisco Bay Area.

It marked the second large bank deal to date in the West in the new year. Seattle-based HomeStreet in mid-January said it planned to sell itself to FirstSun Capital Bancorp in Denver for $286 million.

The transactions come on the heels of a sluggish 2023 for M&A. There were only 98 deals announced last year, according to S&P Global Market Intelligence. That was down from 161 in the prior year. Buyers largely moved to the sidelines last year amid elevated regulatory scrutiny in the wake of regional bank failures and recession fears induced by a surge in interest rates. 

Jon Winick, CEO of bank consultancy Clark Street Capital, said the M&A headwinds “continue to blow” early in 2024. But he also said the economy has proven resilient and in growth mode, and this could give more bank executives confidence to jump back into the deal fray as community lenders need to bulk up to compete with larger peers.

The California banks said Tuesday their merger would unite two institutions that focus on middle market lending with complementary footprints, creating scale needed to further invest in technology and better manage risk, increase efficiency and provide customers with more products and services.

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“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,” David Rainer, chairman and CEO of Southern California Bancorp, said in a press release announcing the deal.

“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,” he added.

Rainer would become executive chairman of the combined parent company and bank as well as the boards of both.

Steven Shelton, CEO of California BanCorp, would assume that title of the merged company and bank. He would also be a director.

“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,” Shelton said in the release. The deal also would create opportunities to “move up market and work with larger businesses.”

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The combined company’s board would consist of six directors from both banks. A lead independent director would be appointed after closing.

Additionally, Richard Hernandez, president of Southern California Bancorp, would retain that title post-merger.

Thomas Sa, who is president, chief financial officer and chief operating officer of California BanCorp, will serve as COO of the combined company and bank.

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

The companies said they would evaluate rebranding with new names and logos at the close of the transaction. The combined company’s common stock would continue to trade on the Nasdaq Capital Market.

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The merged company’s Southern California footprint would include Bank of Southern California’s 13 branches that serve Los Angeles, Orange, San Diego and Ventura counties, as well as the Inland Empire of California. Its Northern California territory would 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.

It would have $2.6 billion of loans and $3.8 billion of deposits.

The companies estimated the deal would create cost savings equal to about 15% of their combined noninterest expense base. They expect one-time, pre-tax merger expenses of $19.5 million.

They also projected 2025 earnings per share accretion of 48%. They expect to earn back tangible book value dilution of 18% in less than three years.



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Rain continues in parts of California reeling from flooding and high tides – WTOP News

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Rain continues in parts of California reeling from flooding and high tides – WTOP News


CORTE MADERA, Calif. (AP) — Crews cleared mud from key California highways as forecasters warned Sunday that more thunderstorms were…

CORTE MADERA, Calif. (AP) — Crews cleared mud from key California highways as forecasters warned Sunday that more thunderstorms were on the way after downpours and high tides caused flooding, road closures and rescues of people trapped in cars.

Five northern counties remained under a flood watch, with up to three inches (7.6 cm) of rain possible through Monday night in areas that have been drenched off and on since around Christmas, said the National Weather Service office in Eureka. At least a foot (.3 meters) of snow was likely in the mountains.

To the south near the San Francisco Bay Area, waters were slowly receding after roadways from Sausalito to San Rafael were flooded during heavy rain that coincided with record-breaking “ King Tides.” Such tides occur when the moon is in its closest position to the Earth, creating a stronger gravitational pull.

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Some people kayaked along swamped streets, while others waded through water above their knees. Authorities were called to assist when cars got stuck in water as high as 3 and 4 feet (1.1 and 1.2 meters), Marin County Sheriff’s Sgt. Michael Dobbins said Saturday.

“I’ve been around here for the King Tides and I’ve never seen it this high. Never,” Jeremy Hager of San Rafael told KTVU-TV.

Flooding was reported across Marin, Sonoma, Alameda, San Mateo and San Francisco counties.

While the tides were waning, lingering thunderstorms on Sunday could cause additional problems throughout low-lying areas, forecasters said. “For anyone driving, slow down and allow extra time to reach your destination,” the Bay Area office of the weather service warned on social media.

Farther south in Santa Barbara County, a key highway was reopened Sunday after it was blocked for most of the weekend near Goleta due to a series of mudslides. A man died after he was swept into a creek during the storm, the sheriff’s office said Saturday.

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Parts of Santa Barbara County received more than four inches (10 cm) of rain over two days, the weather service said Sunday.

After a mostly dry autumn, California has been hit by a series of powerful winter storms that brought the wettest holiday season to the state in years.

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California’s gubernatorial race heats up as Newsom’s term nears end, with many contenders

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California’s gubernatorial race heats up as Newsom’s term nears end, with many contenders


In just over a year, Gavin Newsom’s term as California’s governor will come to an end, capping off nearly eight years in office.

Now the question is – who will take over once he steps down?

We spoke to political scientist Nathan Monroe about what could be one of Californias most unpredictable gubernatorial races yet.

With Governor Gavin Newsom’s term ending, the race to replace him begins.

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This race will determine who leads the worlds fifth largest economy at a time when California is facing issues such as housing and affordability.

Californias next gubernatorial election is shaping up to be crowded – and for the first time in years – there’s no incumbent on the ballot.

“You say, well, just which democrat is going to win, right? Like, sort of republicans don’t have a shot. But what we have to keep in mind, right, is that the rules of elections matter. And in California, we have the top two primary system,” said Nathan Monroe, a Political Science Professor at UC Merced.

More than a dozen candidates are vying for the spot.

On the democratic side, contenders include former U.S. Secretary of Health and Human Services Xavier barrera, former U.S. Representative Katie Porter, Representative Eric Swalwell, former Los Angeles Mayor Antonio Villaraigosa, and former State Controller Betty Yee.

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Political experts say the size of the field could make turnout and name recognition decisive and could lead to unexpected results in the primary.

“But if you divide that pie up by just two, and you divide the democratic pie up, which is admittedly a larger pie, by 7 or 8, the concern you get here is that democrats are going to lose out on even running to the general election. So even though there might be more democratic votes to be found in California for governor, they might not have a shot to cast those ballots for a democrat on the general election ballot,” said Monroe.

Monroe says party leaders may need to step in soon.

“I think the concern has to be among voters and I’m sure among the party leaders, so to speak, right, the party leaders sort of amorphously, is that they’ve got to figure out a way to delicately, you know, assure some candidates out of the race and figure out which candidates those should be and figure out how to manage those personalities and try to coordinate all the things that go in and around a gubernatorial election,” said Monroe.

On the Republican side, former Riverside County Sheriff Chad Bianco and Fox News contributor Steve Hilton.

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With just a few months from the midterm elections, Monroe says both parties need to organize.

“What’s happening behind the scenes for the parties to try to coordinate themselves to make sure that the field that they offer to voters in June is a field that gives them the best chance for their best candidate to go forward to the general election,” said Monroe.

The primary election is set for June, with the general election in December.



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Heavy rain, high tides cause flooding along stretch of Northern California

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Heavy rain, high tides cause flooding along stretch of Northern California


CORTE MADERA, Calif. (AP) — Heavy rain and high tides believed to be the most severe in two decades caused flooding in parts of Northern California on Saturday, prompting road closures and rescues of residents trapped in their cars.

Roadways through a 15-mile (24-kilometer) stretch from the Sausalito area to San Rafael were flooded after a downpour coincided with record-breaking “ King Tides,” Marin County Sheriff’s Sgt. Michael Dobbins said.

No injuries were reported but authorities were called to assist when cars got stuck in floodwater as high as three and four feet (1.1 and 1.2 meters), he said.

“There is a lot of water in the roadways,” Dobbins said, adding the tides were reportedly the highest in more than two decades. “Along with heavy rains, it just created the perfect storm for flooding on the streets.”

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Authorities in the communities near San Francisco asked residents to stay home wherever possible until waters recede. Some residents kayaked along what normally would be city streets. Others waded out in water that passed their knees.

A flood warning was in place for the San Francisco area until 2 p.m. Saturday and an advisory until 2 p.m. Sunday, according to the National Weather Service in San Francisco.

King Tides occur when the sun, moon and Earth are in alignment and the moon is in its closest position to the Earth, creating a stronger gravitational pull.





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