First California Financial Group Inc. in Westlake Village, Calif., has agreed to buy a small California bank about a month after announcing that it had hired an investment bank to explore its options.
The $1.8 billion-asset First California said Tuesday that it will pay $2 million, or roughly $1.59 a share, for the $141 million-asset Premier Service Bank. The stock deal translates into an exchange ratio of about 0.38 share of First California stock for each Premier common share.
"The transaction provides the opportunity to expand First California Bank's presence in the Riverside and Corona markets and add a talented group of bankers," C. G. Kum, First California's president and chief executive, said in a press release. "Premier Service Bank has a strong customer base and fits into our desired geographic footprint extremely well."
First California earned almost $21 million last year but its shares have been trading below book value. Two separate investment groups that collectively own more than 17% of its outstanding shares have publicly questioned the bank's plan to increase shareholder value by cutting costs, hiring seasoned lenders and completing inexpensive acquisitions. First California has picked up three failed banks since 2009.
In mid-January, the Pohlad family, which owns about 12% of First California's stock, demanded that the company hire an investment bank "to assess all strategic alternatives." Castine Capital Management said later that it backed the family's position.
Kerry L. Pendergast, the president and chief executive of Premier in Riverside, Calif., will serve as the market president for three branches after the deal is completed. First California expects to complete the acquisition in the third quarter.
First California has 19 branches in Southern California and serves small and midsize businesses and high-net-worth individuals. Premier has two branches.