NEW YORK--(BUSINESS WIRE)--Irvine, California based Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) signed a definitive agreement to acquire Los Angeles, California based Grandpoint Capital, Inc. (OTC:GPNC) (“Grandpoint”). The merger is an all-stock transaction with a price to tangible equity of 212%. The transaction is sizable, adding $3.2 billion of assets, and $2.4 billion of loans and deposits to PPBI’s balance sheet. The merger is expected to close in the third quarter of 2018 and should result in the second largest publicly-traded bank headquartered in Southern California, with pro-forma total assets of approximately $11.7 billion.
In Kroll Bond Rating Agency’s (KBRA) view, the transaction is neutral to PPBI’s ratings in the medium-term and consistent with PPBI’s strategic goals of seeking consolidation opportunities in its existing markets. The deal also achieves geographic expansion by targeting California banks with lines of businesses that complement existing commercial banking strategies. Through this transaction, PPBI will enhance its presence in Southern California (particularly in Los Angeles County), and enter Phoenix, Arizona, Tucson, Arizona, and Vancouver, Washington markets. KBRA acknowledges that there is a potential risk related to system integration given the relatively large size of the acquired institution. Nonetheless, the acquisition risk is largely mitigated by PPBI’s solid track record of successful acquisitions. Pro forma capital ratios are generally in line with PPBI’s year-end 2017 levels.
KBRA currently maintains BBB+ senior unsecured and BBB subordinated debt ratings for Pacific Premier Bancorp, Inc., with a short-term debt rating of K2. The Outlook for all long-term ratings is Stable. All ratings were last affirmed on October 27, 2017.
The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
