Enterprise Financial Services (EFSC) to Acquire First Choice Bancorp (FCBP)

Enterprise Financial Services Corp (Nasdaq: EFSC) (the “Company,” “EFSC,” or “Enterprise”), the holding company of Enterprise Bank & Trust (“EB&T”), and First Choice Bancorp (Nasdaq: FCBP) (“FCBP”), the holding company of First Choice Bank (“First Choice”), announced today that EFSC, EB&T, FCBP and First Choice have entered into a definitive merger agreement pursuant to which EFSC will acquire, in an all-stock merger, FCBP. Under the terms of the merger agreement, FCBP will merge with and into EFSC, and First Choice will subsequently merge with and into EB&T (with Enterprise and EB&T as the surviving entities) in a transaction valued at approximately $397.7 million, or $33.40 per FCBP share, based on the closing price of EFSC’s common stock on April 23, 2021. On a pro forma consolidated basis, the combined company would have approximately $12.7 billion in consolidated total assets as of March 31, 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20210426005693/en/

The transaction is expected to be approximately 8% accretive to Enterprise’s 2022 earnings per share (excluding the impact of one-time transaction expenses) after giving effect to estimated fully phased-in transaction synergies. Estimated tangible book value per share dilution to EFSC is expected to be earned back in less than three years under the crossover method including CECL “Day Two” accounting treatment. The acquisition is expected to generate an internal rate of return of approximately 21% for Enterprise.

Headquartered in Cerritos, California, FCBP had approximately $2.5 billion in total assets, $2.0 billion in loans, and $1.9 billion in deposits as of March 31, 2021. First Choice is a community-based financial institution that serves primarily commercial and consumer clients in diverse communities and specializes in loans to small- to medium-sized businesses and private banking clients, commercial and industrial loans, and commercial real estate loans. First Choice is a Preferred Small Business Administration (SBA) Lender. First Choice conducts business through eight full-service branches and two loan production offices located in Los Angeles, Orange, and San Diego Counties.

“I am thrilled to announce the transaction and our continued expansion into the California market,” stated Jim Lally, President and Chief Executive Officer of EFSC. “The acquisition of First Choice strengthens our commercial banking foundation in the largest economy in the country. I have tremendous respect for the associates of First Choice and the company they have built since its founding in 2005. They have successfully created a commercially-focused community bank with a demonstrated ability to generate organic growth. I am pleased to welcome the diverse and experienced First Choice team to our organization.”

Robert M. Franko, President, Chief Executive Officer and Director of FCBP added, “We are extremely excited to join forces with Enterprise. We believe that pairing our team’s in-depth knowledge of our local markets and communities with the more robust financial capabilities of Enterprise will enhance our lending capacity, products, and services. Enterprise’s stated mission of ‘Guiding people to a lifetime of financial success’ will continue the motto of First Choice of ‘First in speed, service and solutions.’ With the synergies of the combined organizations, we believe this transaction will deliver significant value to both of our shareholders, associates and the communities we serve.”

Under and subject to the terms of the definitive agreement, upon consummation of the transaction, each holder of FCBP common stock will receive 0.6603 shares of EFSC common stock for each FCBP common share held and cash in lieu of fractional shares. The transaction is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes and FCBP shareholders are not expected to recognize gain or loss to the extent of the stock consideration received.

Existing Enterprise shareholders will own approximately 80% of the outstanding shares of the combined company, and FCBP shareholders are expected to own approximately 20%.

The transaction, which has been unanimously approved by the boards of directors of the Company, EB&T, FCBP, and First Choice, is expected to close in the third quarter of 2021, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval of EFSC’s and FCBP’s shareholders. Upon closing of the transaction, FCBP Founder and Chairman of the Board, Peter Hui, will join the Enterprise board of directors. FCBP’s directors have entered into agreements with the Company pursuant to which they have committed to vote their shares, which represent approximately 16% of FCBP’s issued and outstanding common stock, in favor of the acquisition.

For additional information about the proposed acquisition, shareholders are encouraged to carefully read the definitive agreement that will be filed with the Securities and Exchange Commission (“SEC”) today.

Advisors to the Transaction

Boenning & Scattergood, Inc. served as financial advisor to EFSC and Holland & Knight LLP served as legal counsel. Keefe, Bruyette & Woods, A Stifel Company, served as financial advisor to FCBP and Duane Morris LLP served as legal counsel.

Conference Call and Investor Presentation

The Company will host a conference call and webcast at 10:00 a.m. Central Time on April 27, 2021 to discuss the transaction and related matters. This press release as well as a related slide presentation will be accessible on the Company’s website at enterprisebank.com under “Investor Relations” beginning prior to the scheduled broadcast of the conference call. The call can be accessed via this same website page, or via telephone at 1-800-353-6461 (Conference ID #2910583). A recorded replay of the conference call will be available approximately two hours after the call completion. Go to http://bit.ly/EFSC1Q2021earnings and register to hear a replay of the call. The replay will be available for approximately two weeks following the conference call.

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