Two banks based in Santa Cruz, Calif. — Santa Cruz County Bank and Lighthouse Bank — announced an agreement pursuant to which Lighthouse Bank will merge into Santa Cruz County Bank in an all-stock transaction valued at approximately $68.87 million or $25.50 per Lighthouse Bank common share as of close of market on May 28. The merger will increase Santa Cruz County Bank’s total assets to nearly $1 billion on a pro forma basis with seven full service banking offices in Santa Cruz and Santa Clara Counties.
Lighthouse Bank is a full-service community bank headquartered in Santa Cruz with a branch in Cupertino. As of March 31, Lighthouse Bank had approximately $314 million in total assets and a return on average assets of 1.73 percent for the first quarter of 2019.
At closing, four directors from Lighthouse Bank, John Burroughs, Stephen Pahl, James Weisenstein and Craig French, will join the Santa Cruz County Bank board of directors. Jon Sisk, president of Lighthouse Bank, will join Santa Cruz County Bank as a regional president. Lane Lawson, CEO, director and one of the original executive level employees at the inception of Lighthouse Bank, will retire at closing.
Under the terms of the agreement, shareholders of Lighthouse Bank will receive a fixed exchange ratio of 0.5204 share of Santa Cruz County Bank common stock in exchange for each share of Lighthouse Bank common stock. The exchange ratio is fixed, and the value of the merger consideration will fluctuate based on Santa Cruz County Bank’s stock price. On a pro forma basis, the holders of Lighthouse Bank common shares will own approximately 36.0 percent of the issued and outstanding Santa Cruz County Bank common stock.
“We are excited to welcome Lighthouse Bank to our company,” said William Hansen, chair of Santa Cruz County Bank. “This merger creates tremendous opportunity for shareholders, employees and customers to both banks, all of whom stand to benefit greatly. The merger offers all shareholders both immediate value and the opportunity to participate in potential upside as the bank generates momentous growth from its market-focused community banking strategy. Planning for the integration of these two banks is in progress, and we expect to expeditiously realize the full value of the cost synergies we have identified.”
David Heald, Santa Cruz County Bank president and CEO added, “We are very pleased to welcome Lighthouse Bank’s board members, executives and employees to our team and look forward to their contribution to our combined premier performing institution. Together, we will achieve even greater milestones. We have all worked together in our community for many years and have tremendous mutual respect. Individuals who choose to bank with community driven institutions over the major banks recognize our shared value of community reinvestment, high-touch customer service and local decision-making. These fundamentals will not change.”
“Lighthouse has long regarded Santa Cruz Bank and shares similar values, celebrating community and a commitment to excellent customer service and shareholder returns,” remarked John Burroughs, chair of Lighthouse Bank.
“We have tremendous respect for the leadership at Santa Cruz County Bank, many of whom are former colleauges,” said Jon Sisk, president of Lighthouse Bank. “We’re thrilled to come together with their team, and to expand the breadth and depth of service and resources for our customers. The blending of two of the nation’s top-performing banks, each of them founded and headquartered in Santa Cruz, will deliver a premier banking experience for our community.”
The transaction is expected to close in the third quarter.
As of March 31, on a pro forma consolidated basis, the combined company of Santa Cruz County Bank and Lighthouse Bank would have approximately $982 million in total assets, $706 million in total loans and $854 million in total deposits.