Heritage Commerce Corp
(Nasdaq:HTBK)
, the parent company of Heritage Bank
of Commerce ("Heritage"), and Focus Business Bank (OTCQB:FCSB)
("Focus") today jointly announced the execution of a definitive
agreement and plan of merger and reorganization (the "Agreement")
whereby Focus will merge into Heritage in a transaction valued at
approximately $54.8 million. The transaction combines two of the
leading commercial banking franchises in San Jose, California with
more than $2 billion in combined assets.
The board of directors of both companies approved the
transaction, which is subject to customary conditions, including
the approvals of bank regulatory agencies and the shareholders of
HTBK and Focus. Upon completion of the transaction, the HTBK Board
of Directors will consist of 13 directors, eleven representatives
from HTBK and two representatives from Focus. Shareholders of Focus
will receive a fixed exchange ratio at closing of 1.8235 shares of
HTBK common stock for each share of Focus common stock. Based on
the HTBK stock price as of the close of the market on April 22,
2015, total consideration for each Focus share would be $16.41.
"We are excited about this opportunity to combine two fine
independent business banking franchises with similar philosophies
and cultures into a combined $2 billion business bank based in San
Jose. The pooling of our resources and knowledge will enhance our
capabilities, operational efficiencies, and community outreach. We
believe it will be a win-win merger for customers, shareholders and
the community. We expect the merger to close before the end of the
year and be accretive to earnings in 2016," stated Walter
Kaczmarek, the Chief Executive Officer of HTBK.
Focus Chairman and Chief Executive Officer Richard Conniff
noted, "The Focus Business Bank team looks forward to joining
forces with Heritage Bank of Commerce. Our companies have been
friendly and respectful competitors since Focus opened in 2007.
Given the challenges and opportunities of today, the merged bank
will be much better positioned to meet the needs of our community
than as two independent organizations. We share common values and
commitment that will provide significant benefit to our customers
and shareholders."
Conference Call
HTBK Management will host a conference call regarding this
announcement on Friday, April 24, 2015, at 7:30 a.m. Pacific
Daylight Savings Time (10:30 a.m. Eastern Daylight Savings Time).
Investment professionals and all current and prospective
shareholders are invited to access the live call by dialing (toll
free) 1-855-238-8901 immediately prior to the call and ask for
the Heritage Commerce Corp (HTBK) conference call. From Canada,
please dial 1-855-669-9657. To listen to the call online, either
live or archived, visit Heritage's website at
www.heritagecommercecorp.com.
An investor presentation in connection with the transaction will
be filed with the SEC and will be available on HTBK's website at
www.heritagecommercecorp.com under the link for "Investor
Relations" and on Focus's website at www.focusbusinessbank.com
under the link for "Investor Relations."
Heritage Bank of Commerce has approximately $1.7 billion in
assets at March 31, 2015, and eleven branches located in the San
Francisco Bay Area. Focus is a California bank with approximately
$391 million in assets at December 31, 2014, with a single branch
located in downtown San Jose.
As of December 31, 2014, on a pro forma consolidated basis, the
combined company would have had approximately $2.0 billion in
assets.
The transaction is intended to qualify as a tax-free
reorganization for U.S. federal income tax purposes and Focus
shareholders are not expected to recognize gain or loss to the
extent of the stock consideration received. Giving effect to the
transaction, existing shareholders of HTBK are expected to own
approximately 85.4% of the outstanding shares of the combined
company and Focus shareholders are expected to own approximately
14.6%.
Keefe, Bruyette & Woods, Inc. acted as financial advisor to
HTBK in the transaction and delivered a fairness opinion to the
Board of Directors of HTBK. Buchalter Nemer, a professional
corporation, served as outside legal counsel to HTBK. Sandler
O'Neill + Partners acted as financial advisor to Focus and
delivered a fairness opinion to the Board of Focus. Manatt Phelps
& Phillip, LLP served as legal counsel to Focus.
ABOUT HERITAGE COMMERCE CORP AND HERITAGE BANK OF
COMMERCE
Heritage Commerce Corp, a California corporation organized in
1998, is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended. Heritage provides a wide range of
banking services through Heritage Bank of Commerce, a wholly-owned
subsidiary. Heritage Bank of Commerce is a California
state-chartered bank headquartered in San Jose, California and has
been conducting business since 1994. Heritage is a multi-community
independent bank that offers a full range of commercial banking
services to small and medium-sized businesses and their owners and
employees. Heritage operates through 11 full service branch offices
located in the counties of Santa Clara, Alameda, Contra Costa, and
San Benito, which are in the southern and eastern regions of the
general San Francisco Bay Area of California. Our market includes
the headquarters of a number of technology based companies in the
region commonly known as "Silicon Valley." In November 2014,
Heritage Bank of Commerce acquired Bay View Funding which provides
business essential working capital factoring financing to various
industries throughout the United States.
To view Heritage Commerce Corp's most recent financial
information, please visit the Investor Relations section of the
Company's Web site at www.heritagecommercecorp.com.
ABOUT FOCUS BUSINESS BANK
Focus Business Bank is a state-chartered bank founded in early
2007 to meet the banking needs of closely-held businesses and
professionals in Santa Clara County. In addition to its core
commercial business market, the Bank specializes in serving
not-for-profit organizations and homeowner associations with
expertise, market knowledge, products and services tailored to
these specific industries. Focus Business Bank specializes in
business cash management services and commercial loans of all
types. Its office is located at 10 Almaden Boulevard in downtown
San Jose, California.
To view Focus Business Bank's most recent financial information,
please visit the Investor Relations section of the Company's Web
site at www.focusbusinessbank.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking information
about Heritage Commerce Corp, Heritage Bank of Commerce and Focus
Business Bank, and the combined company after the close of the
transaction that is intended to be covered by the safe harbor for
"forward-looking statements" provided by the Private Securities
Litigation Reform Act of 1995. All statements other than statements
of historical fact are forward-looking statements. Such statements
involve inherent risks and uncertainties, many of which are
difficult to predict and are generally beyond the control of
Heritage Commerce Corp, Heritage Bank of Commerce, Focus Business
Bank and the combined company. Forward-looking statements speak
only as of the date they are made and we assume no duty to update
such statements. We caution readers that a number of important
factors could cause actual results to differ materially from those
expressed in, or implied or projected by, such forward-looking
statements. In addition to factors previously disclosed in reports
filed by Heritage Commerce Corp with the SEC, risks and
uncertainties for each institution and the combined institution
include, but are not limited to: lower than expected revenues;
credit quality deterioration or a reduction in real estate values
which could cause an increase in the allowance for loan losses and
a reduction in net earnings; increased competitive pressure among
depository institutions; the ability to complete the proposed
transaction, including obtaining regulatory approvals and approval
by the shareholders of Heritage Commerce Corp and Focus Business
Bank, or any future transaction, successfully integrate such
acquired entities, or achieve expected beneficial synergies and/or
operating efficiencies, in each case within expected time-frames or
at all; regulatory approvals may not be received on expected
time-frames or at all; the possibility that the cost of additional
capital may be more than expected; the possibility that a change in
the interest rate environment may reduce net interest margins;
asset/liability re-pricing risks and liquidity risks; general
economic conditions, either nationally or in the market areas in
which the entities operate or anticipate doing business, are less
favorable than expected; and environmental conditions, including
natural disasters, may disrupt business, impede operations, or
negatively impact the values of collateral securing loans.
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION
AND WHERE TO FIND IT
Investors and security holders are urged to carefully review and
consider each of Heritage Commerce Corp's public filings with the
SEC, including but not limited to its Annual Reports on Form 10-K,
its Proxy Statements, Current Reports on Form 8-K and Quarterly
Reports on Form 10-Q. The documents filed by Heritage Commerce Corp
with the SEC may be obtained free of charge at Heritage Commerce
Corp's website at www.heritagecommercecorp.com or at the SEC's
website at www.sec.gov. These documents may also be obtained free
of charge from Heritage Commerce Corp by requesting them in writing
to Heritage Commerce Corp, 150 Almaden Boulevard, San Jose,
California 95113; Attention: Corporate Secretary, or by telephone
at (408) 947-6900.
Heritage Commerce Corp intends to file a registration statement
with the SEC which will include a joint proxy statement of Heritage
Commerce Corp and Focus and a prospectus of Heritage Commerce Corp,
and each party will file other documents regarding the proposed
transaction with the SEC. Before making any voting or investment
decision, investors and security holders of Heritage Commerce Corp
and Focus Business Bank are urged to carefully read the entire
registration statement and joint proxy statement/prospectus, when
they become available, as well as any amendments or supplements to
these documents, because they will contain important information
about the proposed transaction. A definitive joint proxy
statement/prospectus will be sent to the shareholders of each
institution seeking any required shareholder approvals. Investors
and security holders will be able to obtain the registration
statement and the joint proxy statement/prospectus free of charge
from the SEC's website or from Heritage Commerce Corp by writing to
the address provided in the paragraph above.
Heritage Commerce Corp, Heritage Bank of Commerce and Focus
Business Bank, their directors, executive officers and certain
other persons may be deemed to be participants in the solicitation
of proxies from Heritage Commerce Corp and Focus shareholders in
favor of the approval of the transaction. Information about the
directors and executive officers of Heritage Commerce Corp and
their ownership of Heritage Commerce Corp common stock is set forth
in the Annual Report on Form 10-K filed with the SEC on March 6,
2015. Shareholders may obtain additional information regarding the
interests of such participants by reading the registration
statement and the joint proxy statement/prospectus when they become
available.
CONTACT: Heritage Commerce Corp
Lawrence D. McGovern
Executive Vice President and
Chief Financial Officer
(408) 494-4562
Focus Business Bank
Richard Conniff
Chairman and Chief Executive Officer
(408) 200-8701
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