FIG Partners LLC is serving as financial advisor to RBB and Loren P. Hansen, APC is acting as RBB’s legal counsel. Sandler O’Neill + Partners, L.P. is serving as financial advisor to First American and Arnold & Porter is acting as First American’s legal counsel.
RBB Bancorp (NASDAQ: RBB) and its subsidiaries, Royal Business Bank and RBB Asset Management Company and First American International Corp. (OTC: FAIT) and its subsidiary First American International Bank, finalized the signing of a definitive agreement in a cash and stock transaction valued at $116.8 million, or $52.32 per share.
First American International Corp. is the holding company for First American International Bank, a community development financial institution and a minority depository institution with total assets of $873 million, total gross loans of $715 million, and total deposits of $630 million as of December 31, 2017. Principally serving the Chinese-American communities in the boroughs of Manhattan, Queens and Brooklyn, New York, First American has eight full-service branches, offering consumer and business banking and loan products and services, as well as non-deposit insured investment products and services, and one satellite mortgage origination office.
Under the terms of the definitive agreement, upon consummation of the transaction, all of First American common shares will be exchanged for approximately 3.0 million shares of RBB common stock and $33.7 million in cash. Based on a closing price for RBB Bancorp’s common stock of $27.48 as of April 20, 2018, the aggregate transaction value is approximately $116.8 million.
Existing RBB shareholders will own approximately 84.6% of the outstanding shares of the combined company and First American shareholders will own approximately 15.4%.
RBB expects the transaction to be accretive to earnings per share in 2019 in the mid-teens. RBB also expects to incur tangible book value per share dilution of approximately 4.1% upon closing of the transaction, with a tangible book value dilution payback period of approximately 1.9 years. The earnings per share accretion estimates are based on estimated cost savings of approximately 30% of First American’s non-interest expense, with 25% of the cost savings phased in during 2018 and 100% phased in during 2019. The earnings per share accretion estimates do not include any assumption of revenue synergies.
Pursuant to the terms of the definitive agreement, upon closing of the transaction, First American will designate two individuals, one of whom is First American’s Chairman, Mr. Raymond Yu, to serve on the Board of Directors of RBB, which will be expanded to 15 members. Mr. Yu will be appointed Vice Chairman of the Board of Directors of RBB.
First American’s Board of Directors has unanimously approved this transaction that is expected to close during the second half of 2018. The transaction is subject to the approval of First American’s shareholders, as well as regulatory approval and other customary closing conditions.
Arnold & Porter advised First American International Corporation with a team including Financial Services partner Michael Mancusi (Picture), Corporate and Finance partner Robert Azarow and associate Marianna Shelenkova. The team also included Tax partner Laurie Abramowitz, counsel Kathleen Wechter, and associate Reuven Graber; Corporate and Finance associate Eric An; and Financial Services associate Anthony Raglani.
Involved fees earner: Robert Azarow – Arnold & Porter Kaye Scholer LLP; Marianna Shelenkova – Arnold & Porter Kaye Scholer LLP; Eric An – Arnold & Porter Kaye Scholer LLP; Michael Mancusi – Arnold & Porter Kaye Scholer LLP; Anthony Raglani – Arnold & Porter Kaye Scholer LLP; Laurie Abramowitz – Arnold & Porter Kaye Scholer LLP; Kathleen Wechter – Arnold & Porter Kaye Scholer LLP; Reuven Graber – Arnold & Porter Kaye Scholer LLP;
Law Firms: Arnold & Porter Kaye Scholer LLP;
Clients: First American International Corp;