Coast Bancorp, which owns Coast National Bank in San Luis Obispo, is being acquired by Sierra Bancorp of Porterville, the largest independent bank based in the south San Joaquin Valley, in a deal valued at about $13.8 million, or $2.37 per Coast Bancorp common share.
That’s based on the closing price of Sierra Bancorp common stock on Monday. The final price will be determined when the deal is finalized, after approval by state and federal regulators and stockholders, sometime in the second quarter.
Under the agreement, Coast Bancorp stockholders will receive about 75 percent of the purchase price in Bank of Sierra stock and the rest in cash, according to Kevin McPhaill, president and chief executive officer of Sierra Bancorp.
Coast National Bank, founded in 1997, was hit with problem loans during the recent recession but took steps to cut costs and staff, invest in more efficient technology and improve its credit issues. As a result, both a federal consent order requiring it to strengthen its financial performance and an informal agreement requiring it to make sure it maintains enough capital (cushion to protect against losses and support future growth) were lifted in 2014.
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“I think we are picking up a great community bank to become part of a much larger community bank,” McPhaill said. “Their earnings are improving. They’ve had nice loan growth, nice deposit growth, and (they have) a strong team.”
The acquisition will enable Sierra Bancorp, which has 29 offices throughout the Central Valley, as well as Ventura County and Santa Clarita, to expand up and down the Central Coast, according to McPhaill. The company specializes in agricultural lending and is a smaller market-based banking company, noted Anita Robinson, president and chief executive officer of Coast Bancorp and Coast National Bank.
Coast National has branches in Arroyo Grande, Paso Robles and San Luis Obispo, as well as a loan production office in Atasacadero. “Our plan would be to take the Atascadero office and make it a branch,” McPhaill said.
Robinson said the purchase offer was unsolicited but will benefit customers, giving them access to “many more products and services,” as well as a larger lending limit. Plus, she noted, the transaction will benefit shareholders “who have been steadfast during difficult times and rewards them with shares in BSRR, providing opportunity into the future.”
When the transaction is final, Robinson will become regional market president for the coastal region. Sierra Bancorp expects to retain most of the 35 Coast Bancorp employees. A “very small percentage’’ of employees who handle administrative work will lose their jobs, Robinson said.
As of Sept. 30, Coast Bancorp reported $146.4 million in assets, up 13.2 percent from $129.4 million in the year-earlier period. Deposits were $126 million, up 8 percent. Net income for the first nine months of last year was $6.7 million, or $1.18 per share, compared with a net loss of $146,000 in the same period in 2014.
Sierra Bancorp, founded in 1977, reported $1.7 billion in total assets as of Sept. 30. Total deposits were $1.43 billion, up 17 percent. Net income for the first nine months of last year was $12.7 million, up 9.6 percent. It employs about 450 people. Its stock (BSRR), traded on the NASDAQ exchange, closed Tuesday at $17.99 per share, up 2.74 percent.