Wednesday August 31, 2011, 8:30AM

By Yahoo! Finance staff

CHULA VISTA & MANHATTAN BEACH, Calif.--(BUSINESS WIRE)-- First PacTrust Bancorp (NASDAQ:FPTB - News), the holding company for Pacific Trust Bank, and Manhattan Beach, California-based Beach Business Bank (OTCBB:BBBC.ob - News) today jointly announced that they have entered into a definitive agreement pursuant to which Beach Business Bank will merge into a wholly owned subsidiary of First PacTrust.

The transaction is initially valued at approximately $37.4 million, or $9.07 per diluted share, to Beach Business Bank shareholders, representing a 53 percent premium relative to its most recent closing stock price. The First PacTrust and Beach Business Bank boards of directors have unanimously approved the transaction, which is expected to close in the first quarter of 2012.

"The acquisition of Beach Business Bank represents a significant milestone in our stated strategy of becoming Southern California's bank of choice for growing families, small- to mid-sized businesses and high net worth individuals in the communities we serve," said Greg Mitchell, president and CEO of First PacTrust Bancorp. "We are bringing together two highly complementary organizations that will enable First PacTrust to broaden its Southern California footprint into new attractive markets such as Manhattan Beach, Long Beach, Costa Mesa and Torrance. Beach Business Bank enjoys an outstanding reputation in the markets it serves and its management team has long-term expertise in commercial and industrial (C&I) and SBA lending. With its emphasis on offering superior customer service to its business banking clients, Beach Business Bank provides an excellent foundation for expanding First PacTrust's presence in the commercial banking market."

The transaction will add to the depth of talent in the combined company's management team and board of directors. Greg Mitchell will remain chief executive officer of First PacTrust and will be joined by Robert M. Franko, currently president and CEO of Beach Business Bank, who will become president of First PacTrust Bancorp once the acquisition has been completed. Additionally, Robb Evans will join the Board of Directors of First PacTrust Bancorp, expanding it to seven members. James H. Gray, Daniel R. Mathis and Fred D. Jensen, currently members of the board of directors for Beach Business Bank, will join the Board of Directors of Pacific Trust Bank, expanding it to nine members.

"This transaction is great news for Beach Business Bank shareholders, customers, employees and the communities we serve," said Robert Franko. "By joining forces, our talented management team, along with our diversified business mix of commercial and industrial (C&I), commercial real estate, SBA and residential lending offerings, will result in a stronger bank with the capital strength and scale to continue to expand into new markets, offer attractive products to customers and enhance shareholder value."

Upon completion of the transaction and its previously announced acquisition of Gateway Business Bank, First PacTrust expects to have approximately $1.3 billion in total assets with 18 branches located throughout Los Angeles, Orange, San Diego and Riverside counties and 23 loan production offices in California, Arizona, Oregon and Washington. Additionally, First PacTrust will benefit from Beach Business Bank's top ranking SBA program as well as its C&I lending business.

First PacTrust expects to maintain strong capital ratios after the acquisition, in part due to the successful completion of its $27 million public offering of common stock in June 2011, at $15.50 per share, net, and the recently announced $32 million investment in First PacTrust by the U.S. Department of Treasury's Small Business Lending Fund. First PacTrust expects its Tier 1 Capital Ratio, on a pro forma basis, to exceed 19 percent on a fully consolidated basis.

The transaction is expected to be accretive to First PacTrust's earnings in the first year, excluding one-time merger costs, and accretive to tangible book value within two years of closing. In addition, First PacTrust intends to repay Beach Business Bank's remaining TARP preferred securities in full in connection with the completion of the merger.

Under the terms of the merger agreement, depending on specified criteria tied to the trading prices of First PacTrust common shares prior to closing, Beach Business Bank shareholders will be entitled to receive either (1) $4.61 per share in cash plus an aggregate of approximately 1.362 million First PacTrust common shares or (2) $9.12 per share in cash plus warrants exercisable for an aggregate of approximately 1.362 million First PacTrust common shares at an exercise price of $14.00 per First PacTrust share. The transaction is subject to customary closing conditions, including regulatory approvals and approval by the shareholders of Beach Business Bank.

Conference Call and Presentation Materials

First PacTrust also announced today that it will hold a conference call regarding the acquisition of Beach Business Bank on Wednesday, August 31, 2011 at 8:00 a.m. Pacific Time (11:00 a.m. Eastern Time). The conference call will be hosted by First PacTrust President and Chief Executive Officer Gregory Mitchell.

Shareholders, equity analysts, media representatives and other interested parties may participate in the conference call, and are asked to register five minutes prior to the scheduled start time by dialing (866) 372-5993.

Prior to the conference call, materials regarding the acquisition of Beach Business Bank, including a presentation in PDF format, will be available on First PacTrust's web site at www.firstpactrustbancorp.com.

A replay of the conference call will be available approximately two hours after the end of the conference call through 11:59 p.m. Eastern time September 2, 2011 by calling 1-855-859-2056 or 404-537-3406, and then entering Conference ID number 96274294. A replay of the conference call will also subsequently be available on First PacTrust's web site: http://www.firstpactrustbancorp.com, under Investor Relations: Investor Conference Calls.

Advisors

Wunderlich Securities, Inc. is acting as financial adviser to First PacTrust and Wachtell, Lipton, Rosen & Katz is serving as legal counsel for this transaction. Sandler O'Neill + Partners, L.P. is acting as financial adviser to Beach Business Bank and King, Holmes, Paterno & Berliner, LLP is serving as legal counsel to its board of directors.



Source: Yahoo! Finance