Pacific Premier Bancorp, Inc. to Acquire Heritage Oaks Bancorp - 12/13/16

Highlights of the Announced Transaction:

  • Strengthens Pacific Premier’s position as one of the leading commercial banks in California with $6.0 billion in total assets on a pro forma basis

  • Extends Pacific Premier’s geographic footprint into the Central Coast of California with Heritage Oaks’ 12 branches and $2.0 billion in total assets

  • Compelling economics for Pacific Premier’s shareholders – immediately accretive to tangible book value and earnings per share

IRVINE, Calif., Dec. 13, 2016 (GLOBE NEWSWIRE) -- Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) (the “Company”, “Pacific Premier”, “we”, “us” or “our”), the holding company of Pacific Premier Bank (“Pacific Premier Bank”) and Heritage Oaks Bancorp (NASDAQ:HEOP) (“Heritage Oaks”) today announced that they have entered into a definitive agreement under which Pacific Premier will acquire Heritage Oaks in a stock transaction for total consideration of approximately $405.6 million, or $11.68 per share, based on a closing price for Pacific Premier’s common stock of $33.65 as of December 12, 2016. The Company expects the transaction will be immediately accretive to tangible book value per share and 5.2% accretive to earnings per share in 2018.

Heritage Oaks, the holding company of Heritage Oaks Bank (“Heritage Oaks Bank”), is headquartered in Paso Robles, California with $2.0 billion in total assets, $1.3 billion in gross loans and $1.6 billion in total deposits at September 30, 2016. Heritage Oaks has 12 branches located in San Luis Obispo County and Santa Barbara County and a loan production office located in Ventura County.  The transaction will increase Pacific Premier’s total assets to approximately $6.0 billion on a pro forma basis.

Steve R. Gardner, Chairman and Chief Executive Officer of the Company, commented, “Heritage Oaks has built a highly attractive franchise with a strong team of relationship managers and a commitment to superior customer service. We have known the executive management team at Heritage Oaks for many years and we believe their bank will be an excellent fit with our existing franchise.  As the largest bank headquartered in California’s Central Coast, Heritage Oaks has built a leading market share and a high quality, low-cost core deposit base. We believe this combination and our entrance into the California Central Coast market will strengthen the Pacific Premier franchise and provide us with improved growth opportunities, greater earnings power, and meaningful operational scale as a $6.0 billion asset bank.”

Mr. Gardner continued, “This is a significant opportunity for our combined shareholders, customers and employees. Heritage Oaks’ existing customers will continue to receive the same excellent customer service and products without disruption. Additionally, we expect the financial impact will produce stronger profitability and returns for the combined shareholder base.”

“We believe the combination with Pacific Premier will create one of the most attractive commercial banks in California with a footprint that extends from Paso Robles to San Diego,” said Simone F. Lagomarsino, President and Chief Executive Officer of Heritage Oaks. “Our customers will become part of a larger banking franchise that can offer an expanded array of products and services.”

The earnings per share accretion estimates are based on estimated costs savings of approximately 26.5% of Heritage Oaks’ non-interest expense, with 60% of the cost savings phased-in during 2017 and 100% phased-in during 2018.  The earnings per share accretion estimates do not include any assumption of revenue synergies.

Expected benefits of the transaction include:

  • Higher levels of profitability driven by earnings accretion and increasing operating scale;

  • Broader base of low-cost core deposits;

  • Opportunities to redeploy Heritage Oaks’ excess liquidity into higher-yielding assets;

  • Increased diversification from both a geographic and loan mix perspective;

  • Broader market presence provides greater opportunities for future in-market acquisitions; and

  • Unique opportunity to expand franchise without diluting tangible book value per share.

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