Lighthouse Bank will merge with and into Santa Cruz County Bank in an all-stock deal valued at about $68.9 million, or $25.50 per Lighthouse Bank common share, as of the close of market May 28.
Under the deal, Lighthouse Bank shareholders will receive a fixed exchange ratio of 0.5204 of a Santa Cruz County Bank common share for each share held. The value of the merger consideration will fluctuate based on Santa Cruz County Bank's stock price.
On a pro forma basis, Lighthouse Bank common shareholders will own about 36.0% of the issued and outstanding Santa Cruz County Bank common shares.
On a per-share basis, S&P Global Market Intelligence calculates that the deal value is 164.7% of each of book and tangible book and 12.7x earnings. It is also 21.64% of assets, 24.99% of deposits and the tangible book premium-to-core deposits ratio is 13.06%.
S&P Global Market Intelligence valuations for bank and thrift targets in the West region between May 28, 2018, and May 28, 2019, averaged 183.52% of book, 185.97% of tangible book and had a median of 22.72x last-12-months earnings, on an aggregate basis, and averaged 171.16% of book, 171.16% of tangible book and had a median of 20.93x LTM earnings, on a per-share basis.
The deal has a one-day premium of 8.28%, based on Lighthouse Bank's closing price of $23.55 as of May 24, and a one-month premium of 8.05%, based on its closing price of $23.6 as of April 29.
Santa Cruz County Bank will enter Santa Clara County, Calif., with one branch to be ranked No. 45 with a 0.01% share of approximately $141.67 billion in total market deposits. It will also expand in Santa Cruz County, Calif., by one branch to be ranked fourth with a 12.86% share of approximately $6.17 billion in total market deposits.
The deal of the two Santa Cruz, Calif.-based companies is expected to close in the third quarter.
At closing, Lighthouse Bank directors John Burroughs, Stephen Pahl, James Weisenstein and Craig French will join the Santa Cruz County Bank board. Lighthouse Bank President Jon Sisk will join Santa Cruz County Bank as a regional president. Lighthouse Bank director and CEO Lane Lawson will retire at closing.
As of March 31, Lighthouse Bank had about $314 million in total assets, according to the merger release. As of March 31, on a pro forma consolidated basis, the combined company would have total assets of about $982 million, total loans of $706 million and total deposits of $854 million.
FIG Partners was financial adviser to Santa Cruz County Bank, while Gary Steven Findley & Associates was its legal counsel. Sandler O'Neill & Partners LP was financial adviser to Lighthouse Bank, while Stuart Moore Staub was its legal counsel.