Nasdaq-listed First PacTrust Bancorp, the holding company for Pacific Trust Bank, has reached a definitive agreement with California-based Beach Business Bank, under which the latter bank will be merged with a wholly-owned subsidiary of First PacTrust.

The transaction is initially valued at approximately $37.4 million, or $9.07 per diluted share, to Beach Business Bank shareholders, and both firms' shareholders have unanimously approved the deal. It is expected to close in the first quarter of 2012.

Yesterday Beach Business Bank’s shares closed at $8.60 on the OTCBB, up by around 45 per cent from their previous day’s close on the news.

Greg Mitchell, president and chief executive of First PacTrust, said the acquisition was a “significant milestone” in the bank’s strategy of growing its HNW and business banking operations in Southern California.

"We are bringing together two highly complementary organizations that will enable First PacTrust to broaden its Southern California footprint into new attractive markets such as Manhattan Beach, Long Beach, Costa Mesa and Torrance,” added Mitchell.

Beach Business Bank is headquartered in the affluent Manhattan Beach area of California, and also has a division called The Doctors Bank, which caters specifically to physicians and dentists.

Once the transaction has closed, First PacTrust says it expects to have around $1.3 billion in total assets and for its Tier 1 Capital Ratio, on a pro forma basis, to exceed 19 per cent on a fully consolidated basis. It also expects the deal to be accretive to earnings in the first year excluding one-off merger costs, and intends to repay the acquired firm’s remaining TARP preferred securities in full as part of the merger.