Keith Holmes Advises Capital Bank on Merger Agreement with Seacoast Commerce Banc Holdings
Seacoast Commerce Banc Holdings and Capital Bank Announce Signing of Definitive Merger Agreement
Keith T. Holmes, Esq.
King, Holmes, Paterno & Soriano, LLP
SAN DIEGO and SAN JUAN CAPISTRANO, Calif., May 02, 2017 (GLOBE NEWSWIRE) — Seacoast Commerce Banc Holdings (the “Company”) (OTC Pink:SCBH), the parent company of Seacoast Commerce Bank (“Seacoast”), and Capital Bank (“Capital”) (OTCQB:CBJC) jointly announced the signing of a definitive merger agreement pursuant to which Capital will merge with and into Seacoast. The proposed merger has been unanimously approved by each company’s Board of Directors and is expected to close early in the fourth quarter of 2017. Completion of the transaction is subject to the satisfaction of customary closing conditions, including the receipt of required regulatory and shareholder approvals.
Founded in 2008, Capital is known as a premier business and professional bank operating in Orange and North San Diego County, with full-service branches in San Juan Capistrano and Encinitas, CA. Capital had assets of $305.2 million, loans of $246.0 million, and deposits of $270.6 million as of March 31, 2017.
The merger agreement provides that shareholders of Capital will have the option to receive 1.7297 shares of the Company’s Common Stock or $32.00 in cash for each share of Capital’s Common Stock, subject to the overall requirement that 80% of the consideration will be in the form of stock and 20% will be in the form of cash. In addition, all options to acquire shares of Capital’s Common Stock that are outstanding immediately prior to the closing of the merger will be converted into the right to receive cash based on the in-the-money value of each such option. Based on the Company’s stock price of $18.50 per share, Capital shareholders will receive consideration of approximately $53.6 million for 100% of the current outstanding Common shares held by Capital’s shareholders, plus an additional $6.4 million will be provided to Capital’s stock option holders, for fully diluted transaction consideration of approximately $60.0 million, which is approximately 193% of Capital’s tangible book value per share and 16x last twelve months’ earnings per share. Excluding one-time deal costs, the Company expects the acquisition to be marginally accretive to fourth quarter 2017 earnings; 19% accretive to 2018 earnings; have tangible book value dilution earn back in just 3 months; and achieve a 19% internal rate of return. Upon closing, two members of Capital’s Board of Directors are expected to join the Company’s Board of Directors.
Additionally, the Company has entered into a securities purchase agreement with certain Company insiders and accredited investors to issue 540,541 shares of common stock at $18.50 per share for aggregate proceeds of $10.0 million. The private placement was facilitated internally by the Company with no placement agent, and is expected to close prior to closing the merger.
Based upon March 31, 2017 financials, the combined institution will have four full-service branches in San Diego and Orange County, CA, and 13 loan production offices in seven Western States, with assets of $905.6 million, loans of $693.3 million, deposits of $783.4 million, and total shareholders equity of $94.5 million. Based on FDIC deposit data as of December 31, 2016, Seacoast will become the largest locally headquartered bank in San Diego County as a result of this transaction.
B. Ted Fields, M.D., Chairman of the Board of Capital commented, “Our tremendous team of talented bankers has been the key to the success of Capital Bank. We are extremely proud of the significant, ongoing and sustainable value we have created for our shareholders. The Board of Directors and management team at Capital Bank continually reviews the strategic plan, and evaluates the best approach to maximizing long-term shareholder value. Through a comprehensive process with our financial advisors, it became clear to all of us that there was a way to retain the exceptional institution that we have built, while still providing maximum value to our shareholders, by partnering with Seacoast Commerce Bank. The team at Seacoast has built a tremendous bank which specializes in SBA lending. When that platform can be combined with Capital’s complementary business banking platform and relationship banking culture, the combined institutions will truly become the market leader for not only our existing clients, but any business looking for a banking relationship in Southern California. The Board of Directors, management team, and employees truly are excited and look forward to the opportunities this merger will create.”
Richard M. Sanborn, President & CEO of the Company, stated, “It is hard to fully express in a press release how excited we are to be joining forces with the employees and customers of Capital Bank. Capital’s management team of Mike Justice, Danna Murphy, and Frank Ford, along with all the employees, has created an outstanding institution that has been admired not only by us, but by many in the banking industry for years. Their focus on service, creativity, and shareholder returns has been exemplary and we are honored to go forward together as one new institution.” Sanborn continued, “While we have primarily been focused on the SBA real estate lending market for many years now, we have always looked for complimentary institutions that also have an expertise in some specialized area or areas, as we do strongly believe that specialization is a key factor in becoming a high-performing institution. After looking at, evaluating, and dating many other community banks, this is clearly ‘the one’. We are confident our combined institutions will be stronger together, and allow us to perform at a high level together.”
Seacoast received advisory services and a fairness opinion from the investment banking firm of the Hovde Group, LLC, with assistance from Joshua A. Dean, with the law firm of Sheppard Mullin Richter & Hampton LLP. Capital received advisory services and a fairness opinion from the investment banking firm of D.A. Davidson & Co., with assistance from Keith Holmes of King Holmes Paterno & Soriano, LLP.
About Seacoast Commerce Banc Holdings: Seacoast Commerce Banc Holdings is a bank holding company with one wholly owned banking subsidiary, Seacoast Commerce Bank. Both the Company and the bank are headquartered in San Diego, California, with the Bank having full-service banking branches in San Diego and Chula Vista, California, and production offices in San Diego, Orange County, Los Angeles, Sacramento and San Ramon, California; Phoenix, Arizona; Denver, Colorado; Las Vegas and Reno, Nevada; Austin, Dallas, and Houston, Texas; and Bellevue, Washington. For more information on Seacoast Commerce Banc Holdings, please visit www.scbholdings.com; to learn more about Seacoast Commerce Bank, visit www.scbholdings.com, or contact Richard M. Sanborn, President and Chief Executive Officer at 858-432-7001, or [email protected].
This press release may contain forward-looking statements regarding the Company, Capital Bank and the proposed merger. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties 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; regulatory approvals of the merger may not be obtained or adverse regulatory conditions may be imposed in connection with such regulatory approvals; shareholder approvals of the merger may not be obtained, and other conditions to the closing of the merger may not be satisfied. Annualized, pro forma, projected and estimated numbers in this press release are used for illustrative purposes only, are not forecasts and may not reflect actual results.
The Company and Capital Bank undertake no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Seacoast Commerce Banc Holdings
Richard M. Sanborn
President & Chief Executive Officer
Email: [email protected]