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In California, Pacific Premier acquiring Plaza Bancorp in $226.3M all-stock deal

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In California, Pacific Premier acquiring Plaza Bancorp in $226.3M all-stock deal

Pacific Premier Bancorp Inc. is buying Plaza Bancorp in an all-stock transaction valued at approximately $226.3 million, or $7.29 per share, based on a closing price for Pacific Premier's common stock on Aug. 8. Both companies are headquartered in Irvine, Calif.

Under the terms of the deal, holders of Plaza Bancorp common stock will have the right to receive 0.200 shares of Pacific Premier common stock for each share of Plaza common stock they own. Existing Pacific Premier shareholders will own approximately 86.9% of the outstanding shares of the combined company, and Plaza Bancorp shareholders are expected to own approximately 13.1%.

After deal closing, Carpenter Fund Manager GP LLC which manages funds that currently own approximately 86% of the outstanding shares of Plaza Bancorp common stock — may designate one individual to serve on the boards of Pacific Premier and unit Pacific Premier Bank, as long as such funds own at least 9.9% of Pacific Premier's outstanding common shares.

Plaza Bancorp, the parent company of Plaza Bank, has $1.3 billion in total assets, $1.1 billion in gross loans and $1.1 billion in total deposits as of June 30. The company operates seven regional offices. Pacific Premier has approximately $6.4 billion in assets, and more than 25 depository branches. The transaction will increase Pacific Premier's total assets to approximately $7.7 billion on a pro forma basis.

Pacific Premier Bancorp Inc. will enter Los Angeles County with four branches to be ranked No. 48 with a 0.09% share of approximately $381.99 billion in total market deposits; will enter Clark County, Nev., with one branch to be ranked No. 15 with a 0.37% share of approximately $53.34 billion in total market deposits; will expand in Orange County, Calif., by one branch to be ranked No. 13 with a 1.81% share of approximately $112.37 billion in total market deposits; and will expand in San Diego County, Calif., by one branch to be ranked No. 26 with a 0.26% share of approximately $79.90 billion in total market deposits.

The transaction is expected to close in the fourth quarter of 2017 or early first quarter of 2018, subject to regulatory approvals and approval of Plaza Bancorp's shareholders.

On a per-share basis, SNL calculates that the deal value is 173.8% of book, 186.6% of tangible book, and 17.0x earnings. The price is 20.98% of deposits and 17.80% of assets.

Pacific Premier expects the transaction to be immediately accretive to tangible book value per share and 2018 earnings per share, and 3.9% accretive in 2019. The EPS accretion estimates are based on estimated costs savings of approximately 35% of Plaza Bancorp's noninterest expense, with 75% of the cost savings phased in during 2018 and 100% phased in during 2019. They do not include any assumption of revenue synergies. Internal rate of return is expected to be greater than 15%.

SNL valuations for bank and thrift targets in the West region between Aug. 9, 2016, and Aug. 9, 2017, averaged 161.25% of book and 175.42% of tangible book and had a median of 25.29x last-12-months earnings, on a per-share basis.

D.A. Davidson & Co. acted as financial adviser to Pacific Premier in the transaction and delivered a fairness opinion to the company's board. Holland & Knight LLP served as legal counsel.

Sandler O'Neill & Partners LP acted as financial adviser to Plaza Bancorp in the transaction and delivered a fairness opinion to the company's board. Sheppard Mullin Richter & Hampton LLP served as legal counsel.

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