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Heritage Oaks Bancorp to Acquire Mission Community Banks

The parent companies plan to merge under the Heritage Oaks brand, reducing total operating costs by about $9 million annually

The parent companies of Heritage Oaks Bank and Mission Community Bank announced plans to merge this week, a move that would create the largest community bank headquartered on the Central Coast.

Heritage Oaks Bancorp will acquire Mission Community Bancorp, according to an agreement penned by both on Monday, which will allow Paso Robles-based Heritage Oaks Bank to absorb San Luis Obispo-based Mission Community Bank under its Heritage brand name.

The transaction is expected to close in the first quarter of 2014, pending approval of bank regulatory authorities and the shareholders of both companies.

Both banks operate primarily in San Luis Obispo, Santa Barbara and Ventura counties, and will continue to be headquartered in San Luis Obispo County.

Business First Bank, a division of Heritage Oaks Bank, is located at 1035 State St., along with a loan production office in Goleta.

Two Heritage Oaks locations are in Santa Maria, as well as one Mission Community bank.

Executives this week said the merger was expected to reduce total operating costs by about $9 million annually.

Detailed plans of how staffing might be affected weren’t immediately available, although officials said staff were working to review which banks might be consolidated.

Senior executives will predominately be from Heritage Oaks, while managers and associates will be from both organizations, according to a Heritage Oaks statement.

“This is an exceptional opportunity to combine two well-respected banks that share a deep commitment to our local communities,” Heritage Oaks Bancorp and Bank CEO Simone Lagomarsino said in a statement. “The merger of Heritage Oaks and Mission Community provides an exciting future for customers, the community and shareholders.

“The combined institution will continue to provide the same level of outstanding personalized banking service, to which the customers of both institutions have become accustomed, while offering an expanded product array.”

Mission Community Bancorp CEO James Lokey echoed benefits of the merger, noting that Mission Community shareholders would be exchanging their shares into Heritage stock.

Under the agreement, holders of Mission Community common stock, warrants and options will receive aggregate cash consideration of $8 million and aggregate stock consideration of 7,541,353 shares of Heritage Oaks common stock. Based on the shares outstanding of Mission Community as of Sept. 30, each share will be exchanged for approximately 0.8614 shares of Heritage common stock and cash consideration of approximately 19 cents.

Heritage Oaks existing shareholders are expected to own approximately 77 percent of the combined entity, with Mission Community shareholders owning approximately 23 percent.

Noozhawk staff writer Gina Potthoff can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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