A long-delayed acquisition of Security First Bank of Fresno by Los Angeles-based SunPac Financial has been canceled by the two financial firms.
In a statement released Monday afternoon, Security First Bank announced the two companies mutually agreed to terminate a merger agreement forged in early 2015.
The cancellation came after SunPac Financial’s parent company, SunPac LLC, failed to satisfy a requirement to pay $150,000 to Security First by Friday to cover expenses related to the extended merger. That payment was to be on top of an earlier $250,000 reimbursement paid in February.
Security First CEO Steve Jones said the termination was largely the result of SunPac’s inability to raise the capital needed to complete the acquisition, along with changes in SunPac’s management and leadership.
“It’s had its fatigue,” Jones said Monday. “I can tell you that over the last year and a half, we’ve had a great deal of support from shareholders that helped the board make its decisions to continue” pursuing the merger. He added that the board was not actively seeking a merger partner before SunPac approached the Fresno bank.
“This wasn’t something we were looking to do,” Jones said. “But this group came in and made a very attractive offer that we had to take to our shareholders.” The merger agreement called for SunPac Financial to pay $10.50 per share of Security First stock – double the $5.25 price at which Security First shares were trading prior to the merger announcement.
SunPac Financial was formed less than two years ago as an investment entity aimed at developing a commercial and private bank in Southern California. The proposed merger with Security First Bank represented the first effort by SunPac LLC to obtain an operating bank infrastructure to launch a new bank in the L.A. market and expand operations in Fresno.
SunPac and Security First originally anticipated that regulators with the Federal Deposit Insurance Corp. and the state Department of Business Oversight would approve a merger by mid-2015. But when that didn’t occur, the merger agreement was extended several times. The latest extension, to mid-July, was contingent upon SunPac providing the reimbursement payment.
The statement issued by Security First Bank declared that the company, established in 2007, will continue to operate as an independent community bank in Fresno.
“We just had our best month ever. We’re growing. We’re strong. The board is all intact, and our shareholders are supporting us through thick and thin,” Jones said. “I think we’re in a pretty good position. … Through this whole process we have not slowed down.” He added that not all mergers are successfully concluded, due to factors involving regulators, investors and management teams. “There are a lot of factors that can cause things to not happen,” he said.