Banc of California, Inc. (NYSE:BANC) entered into a definitive agreement to acquire Pacific Mercantile Bancorp (NasdaqGS:PMBC) from Directors of Pacific Mercantile Bancorp and others for approximately $250 million on March 22, 2021. The consideration will be paid in stock and Pacific Mercantile common stock will receive 0.5 shares of Banc of California common stock for each share of Pacific Mercantile common stock. Cash price per acquirer share is $9.77 per share. In addition, as a result of the Merger, at the effective time of the Merger (i) each outstanding option to acquire PMB Common Stock, whether vested or unvested, will be cancelled and will be cashed out based on the product of (y) the total number of shares of PMB Common Stock subject to such option and (z) the excess of (A) the per share value of the merger consideration (based on an average BANC Common Stock price for a 20 day trading period prior to the closing of the Merger) over (B) the exercise price per PMB share of such option (less applicable taxes required to be withheld with respect to such payment), (ii) each outstanding PMB restricted stock award will become fully vested and will be exchanged for the Cashout Price (less applicable taxes required to be withheld with respect to such vesting), and (iii) each outstanding PMB restricted stock unit will become fully vested and will be exchanged for the Cashout Price (less applicable taxes required to be withheld with respect to such vesting). Existing Banc of California stockholders will own approximately 81% of the outstanding shares of the combined company and Pacific Mercantile shareholders are expected to own approximately 19%. Pacific Mercantile Bank will merge into Banc of California, N.A. upon closing of the acquisition. Pacific Mercantile shall pay a termination fee of $8.5 million to Banc of California. Prior to the PMB shareholder approval, Banc of California may terminate the merger agreement and require payment of an $8.5 million termination fee if PMB materially breaches the restriction against soliciting alternative acquisition proposals.

The transaction is subject to satisfaction of customary closing conditions, including regulatory approvals, the S-4 registration statement having become effective under the Securities Act of 1933, receipt by each party of a tax opinion to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended and shareholder approvals from Banc of California and Pacific Mercantile shareholders. The transaction was approved by the Board of Directors of both companies. Shareholders of Banc of California will hold a special meeting on June 23, 2021 to approve the transaction. The transaction has been approved by the shareholders of Pacific Mercantile and Banc of California on June 23, 2021. As of October 1, 2021, the transaction has received final regulatory approval. The transaction is expected to close in the third quarter of 2021. Subject to the satisfaction of the remaining closing conditions, the transaction is scheduled to close on or about October 18, 2021. Banc of California expects the transaction to be 12.9% accretive to EPS in 2022.

Piper Sandler & Co. acted as financial advisor to Banc of California in the transaction and delivered a fairness opinion to the Board of Directors of Banc of California and will receive a fee for such services in an amount equal to $1,750,000, which fee is contingent upon the closing of the merger. Piper Sandler also received a $250,000 fee from Banc of California upon rendering its opinion, which opinion fee will be credited in full towards the advisory fee which will become payable to Piper Sandler upon closing of the merger. Patrick S. Brown of Sullivan & Cromwell LLP served as legal counsel to Banc of California. Keefe, Bruyette & Woods, Inc. acted as financial advisor to Pacific Mercantile and delivered a fairness opinion to the Board of Directors of Pacific Mercantile. Pursuant to the KBW engagement agreement, PMB agreed to pay KBW a cash fee equal to 1.20% of the aggregate merger consideration, $250,000 of which became payable to KBW with the rendering of KBW's opinion and the balance of which is contingent upon the closing of the merger. Josh Dean of Sheppard, Mullin, Richter & Hampton LLP served as legal counsel to Pacific Mercantile. Computershare Trust Company, National Association acted as transfer agent for Banc of California.

Banc of California, Inc. (NYSE:BANC) completed the acquisition of Pacific Mercantile Bancorp (NasdaqGS:PMBC) from Directors of Pacific Mercantile Bancorp and others on October 18, 2021. Banc of California is issuing an aggregate of approximately 11.9 million shares of Banc of California common stock and paying approximately $3.2 million in cash to equity award holders. Pursuant to the agreement, PMBC merged (the “Merger”) with and into the Company, with the Company as the surviving corporation. In connection with the completion of the merger, two Pacific Mercantile directors, Denis P. Kalscheur and Shannon F. Eusey, have joined the Board of Directors of Banc of California and the Bank as Independent directors. Banc of California announced the appointment of Vania Schlogel to the Board, as an Independent director, effective October 18, 2021. Denis P. Kalscheur was most recently the Chairman of the Board of Pacific Mercantile, Shannon F. Eusey is the Co-Founder, Chief Executive Officer and President of Beacon Pointe Advisors, and Vania Schlogel is the Founder and Managing Partner of Atwater Capital. Barbara Fallon-Walsh, a well-respected and valued Board member, retired from both Boards effective at the closing of the merger. The appointments of directors, along with Barbara Fallon-Walsh retirement, expand the Board to 12 directors, 11 of whom are independent. Following the acquisition, Banc of California will have over $9 billion in total assets. The Pacific Mercantile acquisition significantly enhances the growth of Banc of California business banking franchise in Southern California with the addition of approximately $980 million in gross loans, $1.3 billion in total deposits and $1.5 billion in total assets as of September 30, 2021.