DMG Bancshares, Inc. to Acquire Liberty Bancorp

Rhea-AI Summary

DMG Bancshares and Liberty Bancorp have signed a merger agreement for an all-cash transaction valued at approximately $31.2 million, equating to $35.19 per Liberty share. Additional cash considerations of up to $2.9 million may be payable depending on future events. Liberty Bank, a subsidiary of Liberty, has total assets of $293 million. Post-merger, DMG will approach $500 million in total assets. The deal, subject to shareholder and regulatory approvals, is expected to close in summer 2022, enhancing DMG's business banking capabilities in the San Francisco Bay Area.

Positive

• DMG to acquire Liberty for approximately $31.2 million, enhancing asset base further to nearly $500 million.
• Merger expected to create a stronger business banking platform and expand product offerings.
• Additional cash consideration of up to $2.9 million signifies potential future value for Liberty shareholders.
• Liberty's established presence complements DMG's growth strategy in the competitive San Francisco Bay Area market.

Negative

• Merger subject to regulatory approvals and shareholder consent, creating some uncertainty about the completion timeline.
• Potential challenges in integrating Liberty's operations and culture with DMG's, affecting employee retention.

IRVINE, Calif. and SOUTH SAN FRANCISCO, Calif., Feb. 28, 2022 (GLOBE NEWSWIRE) -- DMG Bancshares, Inc. (“DMG”) and Liberty Bancorp (“Liberty”) (OTCPK: LIBC) jointly announced today, the signing of a definitive merger agreement under which DMG will acquire Liberty in an all-cash transaction with a base consideration of approximately $31.2 million, or $35.19 per Liberty share for all Liberty shareholders. In addition to the base consideration, cash consideration of up to approximately $2.9 million, or $3.31 per Liberty share, for all Liberty shareholders, may become payable to Liberty shareholders at or following the closing depending on the occurrence of certain events.

Liberty’s primary subsidiary, Liberty Bank, was founded in 1982 and serves the business communities of the San Francisco Peninsula and San Lorenzo Valley. Headquartered in South San Francisco, Liberty Bank had $293 million in total assets, $216 million in total loans and $254 million in total deposits as of December 31, 2021.

Following the merger, DMG will have total assets approaching $500 million with four locations operating under the name, Liberty Bank, N.A.

“I am pleased to announce that Liberty has agreed to join DMG to create a stronger combined business banking platform with greater scale,” said Don Griffith, Chairman and Chief Executive Officer of DMG Bancshares, Inc. “Liberty is a respected banking institution which has focused on serving the needs of small and medium sized businesses in the vibrant San Francisco Bay Area economy.” Mr. Griffith continued, “This acquisition adds to our momentum in creating a premier business bank in California. We are eager to welcome the talented employees and loyal customers of Liberty into DMG, and we look forward to our combined success going forward.”

Bruce Farrell, President, Chief Executive Officer & Director of Liberty, added, “We are very excited to join DMG and believe this combination will deliver significant value to our shareholders and great opportunities for our clients and employees. We believe this is a natural fit which increases lending capabilities, expands capital resources and provides a more expansive product offering to the San Francisco Peninsula business community.”

Deborah Marsten, President, Chief Operating Officer& Director of DMG, added, “Liberty is a great fit for us. I think our corporate culture and approach to business banking will be highly complementary. The greater San Francisco Bay Area is an excellent business banking market area and this combination will provide us with the operational scale to take advantage of significant growth opportunities.

The definitive merger agreement has been unanimously approved by the boards of directors of both DMG and Liberty. The merger is subject to regulatory approvals, approval by Liberty shareholders, and certain other customary closing conditions and is expected to close in the summer of 2022.

Transaction Advisors

Piper Sandler & Co. served as financial advisor and provided a fairness opinion to Liberty’s board, and Aldrich & Bonnefin, PLC served as legal counsel to Liberty. Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to DMG.

About DMG Bancshares, Inc.

DMG Bancshares, Inc. (DMG) is the parent company of California First National Bank (CalFirst), a full-service commercial bank supporting businesses and entrepreneurs with an expertise in commercial real estate. The bank operates out of its Irvine, CA office and provides service to the greater Orange County and Los Angeles County markets. DMG was capitalized in early 2021 with capital commitments of $170 million. The executive officers and majority of the staff are all alumni of and were instrumental in the success of Grandpoint Bank which operated in Los Angeles from 2010 until it was sold in 2018.

About Liberty Bancorp

Liberty Bank is a full-service commercial bank headquartered in San Mateo County with offices serving the San Lorenzo Valley communities of Boulder Creek and Felton, California. The bank is dedicated to providing quality banking and financial services to businesses, professionals and individuals who prefer a high level of personalized client service and management. For more information, visit Liberty Bank on the web at www.libertybk.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements regarding DMG, Liberty, the proposed merger and the combined company after the close of the transaction that are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. These statements involve inherent risks, uncertainties and contingencies, many of which are difficult to predict and are generally beyond the control of DMG, Liberty and the combined company. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. Risks and uncertainties for each institution and the combined institution include, but are not limited to, the following factors: the expected cost savings, synergies and other financial benefits from the merger might not be realized within the expected time frames or at all; governmental approval of the merger may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; conditions to the closing of the merger may not be satisfied; the shareholders of Liberty may fail to approve the consummation of the merger; the integration of the combined company, including personnel changes/retention, might not proceed as planned; and the combined company might not perform as well as expected, and any statements of assumptions underlying and any of the foregoing. All forward-looking statements included in this communication are based on information available at the time of the communication. Forward-looking statements are typically identified by words such as “believe”, “expect”, “anticipate”, “intend”, “seek”, “plan”, “will”, “would”, “could”, “may”, “target”, “outlook”, “estimate”, “forecast”, “project” and other similar words and expressions or negatives of these words. Forward-looking statements speak only as of the date they are made. DMG and Liberty undertake no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect new information, future events or circumstances or otherwise that occur after the date on which such statements were made.

Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results.

Contact:
Bruce K. Farrell
650-871-2400
bfarrel@libertybk.com

FAQ

What is the value of the acquisition between DMG and Liberty Bancorp?

The acquisition is valued at approximately $31.2 million, or $35.19 per Liberty share.

What additional consideration might Liberty shareholders receive?

Liberty shareholders may receive up to an additional $2.9 million in cash based on certain future events.

When is the expected closing date for the DMG and Liberty merger?

The merger is expected to close in summer 2022, pending regulatory and shareholder approvals.

How will the merger affect DMG's total assets?

Post-merger, DMG's total assets are expected to approach $500 million.

What strategic advantages does this merger offer DMG?

The merger is expected to enhance DMG's business banking capabilities and expand its market presence in the San Francisco Bay Area.