Heritage Oaks, the largest bank on the Central Coast, is being sold

Heritage Oaks Bancorp, based in Paso Robles, is being acquired by Pacific Premier Bancorp of Irvine in a deal valued at $405.6 million, or $11.68 a share.

Pacific Premier Bancorp, which has $3.8 billion in assets, is about twice the size of Heritage Oaks, which has $2 billion in assets, according to a Pacific Premier news release issued Tuesday.

Heritage Oaks’ stock closed Tuesday at $11.54 a share, up 6.26 percent, on the Nasdaq exchange.

Heritage Oaks opened its first bank in Paso Robles in 1983. It has since grown to become the largest bank on the Central Coast, with 12 branches in San Luis Obispo and Santa Barbara counties and a loan production office in Ventura County.

Pacific Premier has 16 branches throughout Southern California, including banks in Orange, Riverside and San Diego counties. The bank has been in the process of expanding since 2011, when it began acquiring other banks throughout the region.

The merger, subject to regulatory and stockholder approval, is expected to close in the second quarter of 2017. After it’s complete, former Heritage Oaks shareholders will own about 30 percent of Pacific Premier’s stock.

“We have known the executive management team at Heritage Oaks for many years,” Pacific Premier chairman and CEO Steve Gardner said in a statement. “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.”

Heritage Oaks CEO Simone Lagomarsino said she and Garner had previously discussed merging the banks during the 20 years they’ve worked together, and they decided now was the best time. Interest rates remain low after the housing market crash and recession, which means banks are pursuing mergers that help cut costs in today’s competitive environment.

“We felt like we found a great partner in Pacific Premier,” Lagomarsino said.

All Heritage Oaks locations will be renamed to Pacific Premier once the merger is approved, she said. Some of the bank’s 300 employees will be laid off to avoid duplication, but many branch and lending employees around San Luis Obispo County will keep their jobs, Lagomarsino said. She declined to elaborate, saying those plans have not been finalized. Employees will be informed about the state of their positions by Feb. 1.

Heritage Oaks Chairman Michael Morris, board member Mike Pfau and Lagomarsino will become members of Pacific Premier’s board.

Lagomarsino said she’ll stay in her position and help some employees relocate until the merger is complete. Then she’ll likely take some time off to assess her options, she said.

Heritage Oaks customers will be in good hands with Pacific Premier, Lagomarsino said.

“They’re a very strong, community-oriented bank,” she said.

This story was originally published December 13, 2016 at 4:59 PM with the headline "Heritage Oaks, the largest bank on the Central Coast, is being sold."