Southern California Bancorp and California Bancorp Complete Merger of Equals

Rhea-AI Summary

Southern California Bancorp and California BanCorp have successfully completed their merger of equals on July 31, 2024. The combined holding company, now named California BanCorp, will trade on Nasdaq under the symbol "BCAL". The merged bank will operate as California Bank of Commerce, N.A. Key points:

• Total assets of approximately $4.2 billion
• Expanded presence with 13 full-service branches in Southern California and 5 locations in the Bay Area
• Each share of California BanCorp stock converted to 1.59 shares of Southern California Bancorp stock
• 12-member Board of Directors equally represented by both companies
• Full integration expected by September 23, 2024

Customers will experience no immediate changes to their banking services.

Positive

• Merger creates a state-wide California commercial banking franchise
• Combined assets of approximately $4.2 billion, indicating increased scale
• Expanded geographical presence across major California markets
• Potential for enhanced product and service offerings
• Equal board representation suggests balanced governance

Negative

• Potential integration challenges during the transition period
• Possible short-term disruptions for customers during system integration

Insights

Financial Analyst

The merger of Southern California Bancorp and California BanCorp marks a significant development in the California banking landscape. With combined assets of approximately $4.2 billion, this merger of equals creates a formidable state-wide commercial banking franchise. The transaction's structure, with California BanCorp shareholders receiving 1.59 shares of Southern California Bancorp stock for each share held, suggests a balanced deal that values both entities' contributions.

From an investor's perspective, this merger presents several potential benefits:

• Increased market presence: The combined entity now covers all major California markets, potentially leading to enhanced revenue opportunities and market share.
• Operational synergies: The integration of banking systems and operations, scheduled for completion by September 23, 2024, could lead to cost savings and improved efficiency.
• Expanded product offerings: The merger promises an expanded suite of products and services, which could drive customer acquisition and retention.

However, investors should also consider potential challenges:

• Integration risks: Mergers often face hurdles in cultural integration and systems consolidation, which could impact short-term performance.
• Regulatory scrutiny: Given the increased size of the combined entity, it may face additional regulatory oversight.
• Market reaction: The stock's performance in the coming months will be important to watch as the market assesses the merger's potential.

Overall, while the merger presents promising opportunities for growth and value creation, its success will ultimately depend on effective execution of the integration plan and the combined entity's ability to leverage its expanded footprint and resources.

Market Research Analyst

The merger between Southern California Bancorp and California BanCorp represents a strategic move to create a more competitive player in the California banking sector. This consolidation reflects broader trends in the industry, where mid-sized banks are joining forces to better compete with larger institutions and fintechs.

Key market implications include:

• Competitive landscape shift: The combined entity, with its $4.2 billion in assets and expanded geographical reach, is now better positioned to challenge larger regional banks and potentially capture market share from both smaller community banks and larger institutions.
• Customer impact: The promise of an expanded product suite and maintained branch network suggests a focus on customer retention and acquisition. This could lead to increased competition in product offerings and customer service across the California banking market.
• Potential for further consolidation: This merger may trigger similar moves among other mid-sized California banks seeking to remain competitive, potentially leading to a wave of consolidation in the state's banking sector.

From a market research perspective, it will be important to monitor:

• Customer retention rates post-merger, especially during the integration period
• The combined entity's ability to cross-sell products and services across the expanded customer base
• Any shifts in market share among California banks in the coming 12-24 months
• The reaction of competitors, particularly in terms of product offerings and pricing strategies

This merger serves as a case study for the evolving dynamics of regional banking markets and could provide valuable insights into the effectiveness of scale-building strategies in the face of changing customer preferences and technological disruption in the financial services sector.

Legal Expert

The successful completion of the merger between Southern California Bancorp and California BanCorp represents a significant legal and regulatory achievement in the banking sector. Several key legal aspects of this transaction warrant attention:

• Regulatory approval: The merger's completion indicates successful navigation of regulatory hurdles, likely including approvals from the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and potentially state regulators. This smooth process suggests effective due diligence and compliance measures.
• Corporate governance: The balanced composition of the new board of directors, with equal representation from both merging entities, demonstrates a commitment to fair representation and could help mitigate potential conflicts in the integration process.
• Shareholder rights: The stock conversion ratio of 1.59 shares of Southern California Bancorp stock for each California BanCorp share appears to have satisfied shareholder interests, avoiding potential legal challenges often associated with mergers.
• Branding and intellectual property: The adoption of the California BanCorp name for the holding company and California Bank of Commerce, N.A. for the bank entity involves complex trademark and branding considerations that must be carefully managed.

Looking forward, legal considerations for the merged entity include:

• Integration compliance: Ensuring regulatory compliance across all operations as systems and procedures are integrated.
• Customer communication: Clear, legally compliant communication with customers about the changes to their banking relationships will be important to avoid potential disputes.
• Employment law: Managing any workforce changes or restructuring resulting from the merger in compliance with applicable labor laws.
• Increased regulatory scrutiny: With the increased size and market presence, the combined entity may face more rigorous regulatory oversight, necessitating robust compliance frameworks.

Overall, the successful closure of this merger demonstrates effective legal and regulatory management. However, the post-merger period will require continued vigilance to ensure smooth integration and ongoing compliance in the evolving banking regulatory landscape.

SAN DIEGO and OAKLAND, Calif., July 31, 2024 (GLOBE NEWSWIRE) -- Southern California Bancorp (NASDAQ: BCAL), the holding company for Bank of Southern California, N.A., and California BanCorp, the holding company for California Bank of Commerce, announce the successful closing of their previously announced merger of equals. Effective July 31, 2024, California BanCorp has merged with and into Southern California Bancorp, and California Bank of Commerce has merged with and into Bank of Southern California, N.A. The combined holding company has assumed the California BanCorp name, and the combined bank has assumed the California Bank of Commerce, N.A. name. The combined holding company will trade on the Nasdaq Capital Market under the symbol “BCAL.”

“We are pleased to announce the closing of a transaction that brings together two leading commercial banks to form a state-wide California commercial banking franchise that serves all of our state’s major markets,” said David Rainer, Executive Chairman of California Bancorp. “We are grateful for the hard work, perseverance and collaborative efforts of our directors and management teams to make this merger possible. Going forward, the combined company’s board of directors will consist of six directors selected from each of the merging companies. On behalf of Steve Shelton and myself, we thank all the departing directors for the leadership they have provided to both banks over the years.”

“We are excited to announce the completion of this merger of two highly compatible banking institutions and begin this new chapter,” said Steven Shelton, Chief Executive Officer of California BanCorp. “We look forward to building a franchise with greater scale and an expanded suite of products and service offerings which will allow us to deliver exceptional service to our clients and generate significant value to our shareholders.”

At the effective time of the merger on July 31, 2024, each share of California BanCorp common stock was converted into the right to receive 1.59 shares of Southern California Bancorp common stock. The resulting company, with total assets of approximately $4.2 billion, retains the banking offices of both banks, adding California Bank of Commerce’s one full-service bank branch and its four loan production offices in the Bay Area to Bank of Southern California, N.A.’s 13 full-service bank branches located throughout the Southern California region.

The combined holding company’s Board of Directors consists of 12 directors: six from Southern California Bancorp and six from California BanCorp:

• Andrew Armanino
• Stephen Cortese
• Kevin Cullen
• Frank Di Tomaso
• Rochelle Klein
• Lester Machado
• Richard Martin
• Frank Muller
• David Rainer
• Steve Shelton
• David Volk
• Anne Williams

Banking locations for Bank of Southern California, N.A. and California Bank of Commerce will begin to operate under the new California Bank of Commerce, N.A. name as of August 1, 2024, while full integration is anticipated to take place by September 23, 2024. At this time, customers will not experience any changes to their banking and should continue using their current banking locations, checks, bank cards, online banking and other banking services. Signage and documents will begin to reflect the California Bank of Commerce, N.A. name following the integration of the companies’ banking systems.

About California BanCorp

California BanCorp (NASDAQ: BCAL) is a registered bank holding company headquartered in San Diego, California. California Bank of Commerce, N.A., a national banking association chartered under the laws of the United States (the “Bank”) and regulated by the Office of Comptroller of the Currency, is a wholly owned subsidiary of California BanCorp. Established in 2001 and headquartered in San Diego, California, the Bank offers a range of financial products and services to individuals, professionals, and small to medium-sized businesses through its 14 branch offices and four loan production offices serving Northern and Southern California. The Bank’s solutions-driven, relationship-based approach to banking provides accessibility to decision makers and enhances value through strong partnerships with its clients. Additional information is available at www.bankcbc.com.

Forward-Looking Statements

This communication may contain certain forward-looking statements, including but not limited to certain plans, expectations, projections and statements about the benefits of the proposed merger (the “Merger”) of Southern California Bancorp (“SCB”) and California BanCorp (“CBC”), and other statements that are not historical facts. Such statements are subject to numerous assumptions, risks, and uncertainties. All statements other than statements of historical fact, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as “expect,” “anticipate,” “believe,” “intend,” “estimate,” “plan,” “target,” “goal,” or similar expressions, or future or conditional verbs such as “will,” “may,” “might,” “should,” “would,” “could,” or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by the Private Securities Litigation Reform Act of 1995.

Factors that could cause or contribute to results differing from those in or implied in the forward-looking statements include but are not limited to the ability to complete the integration of SCB and CBC successfully; costs being greater than anticipated; cost savings being less than anticipated; changes in economic conditions; the risk that the Merger disrupts the business of the combined company; difficulties in retaining senior management, employees or customers; the dilution caused by SCB’s issuance of additional shares in connection with the Merger; the impact of bank failures or other adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks; and other factors that may affect the future results of the combined company. Additional factors that could cause results to differ materially from those described above can be found in SCB’s Annual Report on Form 10-K for the year ended December 31, 2023, which is on file with the Securities and Exchange Commission (the “SEC”) and is available in the “Investor Relations” section of SCB’s website, www.bankcbc.com, and in other documents that SCB files with the SEC. Investors may obtain free copies of these documents and other documents filed with the SEC on its website at www.sec.gov.

All forward-looking statements speak only as of the date they are made and are based on information available at that time. SCB does assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements.

INVESTOR RELATIONS CONTACT

Kevin Mc Cabe
California BanCorp
kmccabe@bankcbc.com
818.637.7065

FAQ

When did Southern California Bancorp and California BanCorp complete their merger?

The merger was completed on July 31, 2024.

What is the new stock symbol for the merged company CALB?

The combined holding company will trade on the Nasdaq Capital Market under the symbol "BCAL".

How many shares of Southern California Bancorp stock did California BanCorp shareholders receive in the merger?

Each share of California BanCorp common stock was converted into the right to receive 1.59 shares of Southern California Bancorp common stock.

What is the total asset value of the combined company after the CALB merger?

The resulting company has total assets of approximately $4.2 billion.

When is the full integration of Southern California Bancorp and California BanCorp expected to be completed?

Full integration is anticipated to take place by September 23, 2024.