California's Mid-State Bancshares has a deal to buy City Commerce Bank in Santa Barbara, Calif., for $40 million in stock-2.3 times City Commerce's book value and 20.26 times its earnings.

Mid-State, based in Arroyo Grande, has $1.2 billion of assets and 28 branches. If the deal with $154 million-asset City Commerce is completed, the company would operate 32 branches in three California counties.

Carrol R. Pruett, chairman of Mid-State, said his company was attracted to City Commerce because of its strong business lending franchise. "Mid- State, with its added resources, can expand those relationships," he said.

Terms of the deal call for Mid-State to exchange 0.7791 share of common stock for each share of City Commerce. The deal is expected to close in the fourth quarter.

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