First Foundation in Irvine, Calif., has agreed to buy Community 1st Bank in Auburn, Calif.
The $3.7 billion-asset First Foundation said in a press release Thursday that it will pay $50.4 million in stock for the $373 million-asset Community 1st. The deal, which is expected to close in the fourth quarter, prices Community 1st at 204% of its tangible book value.
“This strategic partnership provides First Foundation with an excellent opportunity to expand our presence in northern California,” Scott Kavanaugh, First Foundation’s CEO, said in the release. “The Sacramento area is an important region to us and we’re committed to serving the financial needs of its thriving community and expanding programs available to local nonprofits.”
First Foundation said it expects the transaction to be immediately accretive to its earning per share, excluding about $4 million of merger-time expenses. It should take First Foundation less than four years to earn back the deal’s expected 2.5% dilution to tangible book value.
First Foundation said it plans to cut Community 1st’s annual noninterest expenses in half.
The deal is the first bank acquisition for First Foundation since it bought Pacific Rim Bank in Honolulu in June 2015.
Sheppard, Mullin, Richter & Hampton advised First Foundation. Community 1st Bancorp was advised by Sandler O'Neill and Weintraub Tobin Chediak Coleman Grodin Law.