Suncrest to absorb Security First Bank in $18.1 million merger

The central San Joaquin Valley’s newest locally based community bank is poised to take over the region’s smallest community bank in a merger announced Friday.

Suncrest Bank, based in Visalia and established in 2008, and Fresno-based Security First Bank jointly announced an agreement for a cash-and-stock deal valued at about $18.1 million. Suncrest Bank is getting a cash infusion of $5.6 million from the sale of stock to an investment partnership to support not only the merger, but growth of the combined company.

The merger is subject to regulatory approvals as well as backing by Security First Bank shareholders.

Suncrest Bank reports total assets of about $316.7 million, according to the Federal Deposit Insurance Corporation, and is the fourth-smallest of nine Valley-based banks in terms of assets. The company has branches in Visalia, Porterville, Kingsburg and Yuba City, and earlier this year opened a small business office in Fresno. Its merger partner, Security First, was established in 2007 and has total assets of $105 million, the smallest of the nine Valley banks, with a single office in Fresno.

If the merger closes as anticipated, the combined company would have assets of about $422 million based on FDIC data, making it the fifth-largest Valley-based bank. The boards of directors of the two banks already have given their unanimous approval to the merger and committed to vote all shares under their control in favor of the merger. All five branches of the two banks would operate under the Suncrest name.

Shareholders in Security First would have the option of receiving either $10 per share of common stock that they own, or about 1.2 shares of Suncrest common stock, based on an overall split on the transaction of 50 percent stock and 50 percent cash. The valuation of the deal is based on the estimated value of Suncrest stock at $8.25 per share.

Ciaran McMullan, Suncrest’s president/CEO, will hold the same titles to lead the combined bank. Steve Jones, president/CEO of Security First, will become chief operating officer following the merger. Additionally, one member of the board from Security First will join the Suncrest board. The remaining Security First board members will form a “local market advisory board” representing the Fresno market.

McMullan said Friday that the two companies began their courtship earlier this year, after Security First’s proposed merger with a Southern California firm failed to materialize. He added that there were two key factors that made Security First an attractive merger partner for Suncrest.

“The first is that we are trying to grow our presence in Fresno … and this gives us an opportunity to expand that presence,” McMullan said. “And second, we really like the culture, the management, and the products that Security First has. We just love everything about it; it’s a wonderful cultural fit.”

McMullan said the two banks both were founded within the same time frame, and have similar operating processes and technology infrastructure.

Some of the cash for Suncrest to do the deal will come from the sale of almost 679,000 shares of its stock at $8.25 per share to a limited partnership, Castle Creek Capital Partners VI, amounting to a $5.6 million cash investment in the bank. Suncrest reports that the cash from that sale — which is subject to closing conditions — will be used not only for the merger but also for growth.

Castle Creek Capital Partners VI is an investment fund of Castle Creek Capital in Rancho Santa Fe in San Diego County. The company, founded in 1990, describes itself as “an alternative asset management firm focused on the community banking industry.”

McMullan said the stock sale to Castle Creek “is much less about getting the deal done and much more about making sure we have sufficient capital to grow in Fresno. … We think that in order to support our growth, it’s important to have that additional capital available.”

Other assets in the Castle Creek Capital VI fund are bank companies in Wilmington, Del., and Loris, S.C.

Suncrest Bank is traded on the OTC-QX over-the-counter bulletin board under the stock symbol SBKK. Suncrest stock closed Friday at $7.75 a share, up from Thursday’s closing price of $7.28.

Security First Bank’s stock is traded on the OTC-Pink bulletin board under the symbol SFRK, and closed at a price of $9.11 a share on Friday afternoon. That’s up $1.56 from Thursday’s close of $7.55 a share.

Central Valley Community merger

The announcement of the Suncrest/Security First merger came a day after Fresno-based Central Valley Community Bancorp received final approval from shareholders of Sierra Vista Bank, headquartered in Folsom in Sacramento County, for a merger between the two companies.

Central Valley Community Bancorp is the parent company of Central Valley Community Bank.

That merger is expected to be complete by Oct. 1, subject to various closing conditions. Sierra Vista’s Sacramento County offices in Folsom and Fair Oaks, and in Cameron Park in El Dorado County, will undergo changes in signage to the Central Valley Community brand in October, and operating systems are expected to be converted by early November.

The two companies agreed to the merger in April. Under the terms of the deal, and based on Central Valley Community’s stock price at that time, the merger is valued at $24 million, or $5.22 per share of Sierra Vista common stock. Sierra Vista shareholders will be able to receive cash or shares of Central Valley Community stock, or a combination of cash and stock shares.

Central Valley Community Bank is the second-largest of nine Valley-based banks, with 20 offices in the Sacramento and San Joaquin valleys and total assets of almost $1.3 billion as of June 30. Sierra Vista Bank has total assets of about $157 million.

Central Valley Community Bank stock is traded on Nasdaq under the stock symbol CVCY. The stock closed Friday at $15.78 a share, up from Thursday’s close of $15.47.

Sierra Vista Bank shares trade on the OTC-Pink board under the symbol SVBA. Its stock price was quoted at $5.60 a share, unchanged from Thursday with no shares changing hands.

This story was originally published September 2, 2016 at 12:17 PM with the headline "Suncrest to absorb Security First Bank in $18.1 million merger."