RBB Bancorp entered into a definitive agreement to acquire Gateway Bank in a cash transaction valued at approximately $22.9 million, subject to certain terms and conditions, including customary holdbacks if certain contingencies are not met and other possible adjustments as contained in the definitive agreement.
Gateway Bank, a commercial bank based in Oakland, CA, had total assets of $172.4 million, total gross loans of $123.1 million, total deposits of $147.5 million and total tangible equity of $15.5 million as of Sept. 30. Principally serving the Asian-American communities in the San Francisco Bay Area, Gateway Bank has one branch located in Oakland’s Chinatown neighborhood, offering consumer and business banking and loan products and services.
RBB Bancorp is a community-based financial holding company headquartered in Los Angeles that operates through its wholly-owned subsidiary, Royal Business Bank.
“We are very pleased to announce this transaction with Gateway Bank and our entry into the San Francisco Bay Area,” Alan Thian, president and CEO of RBB Bancorp, said. “Expansion into the Bay Area, with one of the largest Asian-American communities in the United States, has long been a goal of ours. We are excited to enter this market and bring our relationship-based banking model to the Bay Area.”
“With our acquisition of Gateway Bank, Royal Business Bank will have a physical presence in six of our nine target markets,” Dr. James Kao, chairman of RBB Bancorp, said. “Gateway Bank provides a profitable base from which to continue our growth in the Bay Area.”
“After 31 years of serving the Chinatown community of Oakland and the broader Bay Area as an independent community bank, we are excited for the opportunity to join Royal Business Bank,” Glen Terry, CEO of Gateway Bank, said. “We believe their community bank model, culture and commitment to high-quality client service make Royal Business Bank an excellent partner for Gateway Bank.”
Under the terms of the definitive agreement, RBB Bancorp will pay approximately $22.9 million in cash to Gateway Bank shareholders. RBB Bancorp expects the transaction to be accretive to earnings per share in 2022 in the mid-single digit range. RBB Bancorp also expects to incur tangible book value per share dilution of approximately 1.8% upon closing of the transaction, with a tangible book value dilution payback period of approximately 1.8 years. The earnings per share accretion estimates are based on estimated cost savings of approximately 60% of Gateway Bank’s non-interest expense, with the cost savings phased in during 2022. The earnings per share accretion estimates do not include any assumption of revenue synergies. The transaction is expected to close in Q2/22 and is subject to RBB Bancorp obtaining all regulatory approvals as well as other customary closing conditions.
The Findley Group is serving as financial advisor to RBB Bancorp and Loren P. Hansen is acting as RBB Bancorp’s legal counsel. Janney Montgomery Scott is serving as financial advisor to Gateway Bank and Godfrey & Kahn is acting as Gateway Bank’s legal counsel.