Pacific Premier Bancorp and Carpenter & Co. are becoming bosom buddies when it comes to dealmaking in Southern California.
For the second time in a year, the $6.4 billion-asset Pacific Premier announced an agreement to buy a bank in the portfolio of the private-equity fund Carpenter. Pacific Premier will pay $226 million in stock to buy the $1.3 billion-asset Plaza Bancorp, which is majority-owned by Carpenter. Both banks are in Irvine.
Four months ago Pacific Premier completed its acquisition of the $2 billion-asset Heritage Oaks Bancorp in Paso Robles. Carpenter had been the largest shareholder in Heritage Oaks, owning about 17% of the company. However, Carpenter sold the Pacific Premier shares it obtained shortly after the Heritage Oaks sale was completed.
Now Carpenter is set to become the largest shareholder of Pacific Premier. The all-stock transaction would give Carpenter an 11% stake and a seat on Pacific Premier’s board.
“We have known the Carpenter team well, and we’ve talked to them over the years,” Steve Gardner, Pacific Premier’s chairman and CEO, said in an interview. “We have told them if they had any interest in selling [any of their banks], we’d have an interest in buying.”
Pacific Premier and rival banks made bids for Plaza, Gardner said. Carpenter’s familiarity with Pacific Premier — and the level of skin in the game that an all-stock deal represents — may have helped turn the tide in its favor, Gardner said.
“Although it was a competitive process, I think at the end of the day, the attractiveness of our currency, our ability to execute on our business plan and model and the certainty around closing were all important factors for them to consider,” Gardner said Wednesday during a conference call to discuss the agreement. He did not identify the other bidders.
This week’s announcement continues Carpenter’s run of selling its investments in California banks. Carpenter has sold either majority or minority stakes in five banks since 2012, including the $425 million sale of Bridge Bank in San Jose to Western Alliance Bancorp. in Phoenix.
Carpenter owns about 86% of Plaza Bank, according to an estimate by Jacquelynne Bohlen, an analyst at Keefe, Bruyette & Woods. Carpenter founded Plaza Bank in 2009 with an initial investment of $18 million. In addition to its own investments, Carpenter has advised hundreds of other banks, including de novo formations, according to the firm’s website.
Carpenter did not respond to a request for comment Thursday.
The tie-up between Pacific Premier and Plaza Bank seems natural for many reasons. The two banks are located literally a half mile from each other on the same street, their buildings on opposite sides of the San Diego Freeway.
The two banks also have very similar loan books, each made up largely of commercial loans. Pacific Premier’s $4.9 billion-asset portfolio is about 44% commercial real estate and 21% commercial and industrial. Plaza’s loan book is about 29% owner-occupied commercial real estate; 25% Small Business Administration loans; and 16% commercial and industrial.
The acquisition would also give Pacific Premier four branches in Los Angeles County, something that Gardner has coveted for years, said Tim Coffey, an analyst at FIG Partners. Pacific Premier would also get a beachhead in Las Vegas.
“Steve Gardner has been very entrepreneurial in finding banks to acquire,” Coffey said. “I’m not surprised that this deal happened. It’s a good strategic fit.”
Pacific Premier’s agreement for Plaza would be its ninth acquisition in the past seven years. The deal is expected to close by the first quarter.