Irvine, Calif.-based First Foundation Inc. is buying Los Angeles-based PBB Bancorp in an all-stock deal valued at approximately $106.0 million, based on First Foundation's Dec. 18 closing price of $19.04.
Under the deal terms, PBB Bancorp shareholders will receive 1.050 First Foundation common shares for each share held. This reflects a $19.99-per-share value for PBB Bancorp shareholders.
SNL calculates the deal value to be 200.0% of book, 202.9% tangible book and 19.2x earnings, on a per-share basis. It is also 18.05% of assets and 23.13% of deposits. The premium to tangible book amounts to 16.20% of core deposits. It has a one-day premium of 58.67%, based on the target's closing price of $12.60 as of Dec. 15, and a one-month premium of 66.32%, based on the target's closing price of $12.02 as of Nov. 20.
SNL valuations for bank and thrift targets in the West region between Dec. 18, 2016, and Dec. 18, 2017, averaged 176.14% of book, 186.47% of tangible book and had a median of 24.72x last-12-months earnings, on a per-share basis.
The deal, which is subject to approval from regulators and PBB Bancorp shareholders, is expected to close in the second quarter of 2018.
Upon completion, PBB Bancorp unit Premier Business Bank will merge with and into First Foundation Bank. As of Sept. 30, First Foundation Bank had $4.7 billion in total assets on a pro forma consolidated basis. Premier Business Bank, meanwhile, had $587 million in assets, six branches and an SBA loan center in Southern California.
A PBB Bancorp director will also be appointed to the combined company's board.
The deal is expected to be immediately accretive to First Foundation's EPS, excluding one-time expenses of around $5.1 million. It is also expected to be around 3.6% dilutive to First Foundation's tangible book value per share, with an estimated earnback period of 3.8 years, calculated via the crossover method. First Foundation calculated the deal to be 203% of tangible book value and 19.8x last-12-months earnings, with a tangible book premium to core deposits of 16.2%.
If the deal is terminated under certain circumstances, PBB Bancorp will pay First Foundation $4.2 million.
SNL data shows that in California, First Foundation will expand in Los Angeles County by three branches to be ranked No. 46 with a 0.11% share of about $404.03 billion in total market deposits and will enter San Bernardino County with three branches to be ranked No. 17 with a 0.60% share of roughly $22.56 billion in total market deposits.
First Foundation had Sandler O'Neill & Partners LP as financial adviser and Sheppard Mullin Richter & Hampton LLP as legal counsel. MJC Partners LLC acted as financial adviser and provided a fairness opinion to PBB Bancorp, while King Holmes Paterno & Soriano LLP served as legal counsel.
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