PASO ROBLES and SAN LUIS OBISPO, Calif.–(GLOBE NEWSWIRE)–Heritage Oaks Bancorp (Nasdaq:HEOP) (“Heritage Oaks”) and Mission Community Bancorp (OTCQB:MISN) (“Mission Community”) today announced that they have signed a definitive agreement and plan of merger (“Agreement”) whereby Heritage Oaks will acquire Mission Community and merge their respective banks, Heritage Oaks Bank and Mission Community Bank. Under the terms of the Agreement, holders of Mission Community common stock, warrants and options will receive aggregate cash consideration of $8.0 million and aggregate stock consideration of 7,541,353 shares of Heritage Oaks common stock. Based on the shares outstanding of Mission Community as of September 30, 2013, each share will be exchanged for approximately 0.8614 shares of Heritage common stock and cash consideration of approximately $0.19. The total value of the merger consideration is $56.4 million, based on a $6.42 closing price of Heritage Oaks common stock on October 18, 2013.
Heritage Oaks expects that the transaction will be immediately accretive to EPS, excluding deal related and restructuring expenses in 2014, and expects earnings accretion to be in excess of 20% in 2015. Heritage Oaks expects tangible book value dilution of approximately 5.7% at close to be earned-back within 2.75 years. The transaction is currently expected to close in the first quarter of 2014, subject to customary conditions, including the approval of bank regulatory authorities and the shareholders of both companies.
Upon completion of the transaction, the combined bank will be the largest community bank headquartered on the Central Coast of California, and will operate under the Heritage Oaks name and brand. The combined organization will have approximately $1.5 billion in assets, $1.3 billion in deposits, and $1.0 billion in loans, and will operate primarily in San Luis Obispo, Santa Barbara and Ventura Counties.
“This is an exceptional opportunity to combine two well-respected banks that share a deep commitment to our local communities,” said Simone Lagomarsino, President and Chief Executive Officer of Heritage Oaks Bancorp and Bank. “The merger of Heritage Oaks and Mission Community provides an exciting future for customers, the community, and shareholders. The combined institution will continue to provide the same level of outstanding personalized banking service, to which the customers of both institutions have become accustomed, while offering an expanded product array.”
James Lokey, Chairman and Chief Executive Officer of Mission Community Bancorp said, “The combination of Mission Community with Heritage Oaks produces tremendous benefits for customers and shareholders. Mission Community shareholders will be exchanging their shares into Heritage Oaks stock, which is a strong currency with the potential for greater overall returns.”
Simone Lagomarsino further noted, “This transaction represents a unique opportunity to provide significant value for the shareholders of both organizations. Because of the overlap of Mission Community Bank’s branches with ours, we expect to reduce total operating costs by approximately $9.0 million per year, once all of the synergies have been realized, representing a reduction of approximately 50% of current Mission Community’s noninterest expense, and 17% of the combined pro forma company core noninterest expense. We believe the combination of these organizations creates a more valuable community bank franchise, with a low cost core deposit base, strong capital ratios, attractive net interest margins, lower operating costs, and better overall returns for the shareholders of the combined institution. It also creates a banking platform that is well positioned for future growth, both organically and through acquisitions.”