Blue Gate Bank in Costa Mesa, Calif., which opened last year, is being sold.
The $1.6 billion-asset Big Poppy Holdings in Santa Rosa, Calif., has agreed to buy the $130 million-asset Blue Gate, said Khalid Acheckzai, Big Poppy's CEO. Acheckzai declined to disclose the price his company will pay in the all-stock deal that is expected to close later this year.
Blue Gate, which opened in January 2017 after raising $30 million, decided to sell after its board decided that the regulatory environment was too challenging, Acheckzai said.
William Gallaher, Big Poppy's chairman, and Molly Gallaher Flater, Blue Gate's chairman, hold about 84% of Blue Gate's common stock, according to Big Poppy's merger application filed with the Federal Deposit Insurance Corp. Gallaher and Flater also own 48.7% of Big Poppy's stock.
Efforts to contact Flater were unsuccessful.
Poppy was looking to expand into southern California as part of a plan to become a statewide bank, Acheckzai said. The bank, formerly known as First Community Bank, had recently rebranded. It had also issued at least $3.5 million in subordinated debt in April, based on a filing from StoneCastle Financial, which holds the debt.
Big Poppy said in its application that it will add three Blue Gate directors, including Flater, to its board.