Pacific Capital Bancorp is hopping on the consolidation bandwagon currently riding through Central California.
The company, based in the agriculture-intensive Salinas Valley, announced July 19 it had signed a definitive agreement to acquire another regional entity, South Valley Bancorp. The deal would create a $567 million institution.
Pacific Capital, Salinas, is the parent of First National Bank of Central California. South Valley, holding company for South Valley National Bank, is just to the north, in Morgan Hill.
The stock deal, valued at nearly $35 million, is expected to close in the fourth quarter.
Pacific Capital plans to take advantage of the Central California population boom of the past decade. With housing costs well below Bay Area averages and an increasing number of jobs, the region's economy is expected to continue growing.
Although there are several superregionals with offices in Pacific Capital's area, there are just four local competitors, none as big as Pacific would be after the merger. In a state often considered overbanked, Pacific Capital may be in one of the few areas where there's plenty of room to grow.
Pacific Capital president Clayton C. Larson said similarities between the two companies spurred merger talks.
They "share a very similar focus," he said. "We both have a very high regard for our employees and our customers. It's a perfect fit."
South Valley's chairman, Roger Knopf, expressed similar views. "The cultures and quality of both organizations mirror each other, particularly in the areas of customer service, quality of staff, and community involvement."
The combined entity would have branches in many key Central Coast communities.
First National, with nearly $400 million in assets, was formed in 1984 and has five branches, two in Salinas and three nearer the coast.
South Valley, with assets of nearly $180 million, was formed in 1983 and has four branches in the farming region east of Monterey.
Mr. Larson said Pacific Capital's further expansion would probably come through internal growth, although the company will continue to watch for acquisition opportunities.