First Business Bank (OTCBB: FBBN) and 1st Pacific Bancorp (NASDAQ: FPBN) announced that they have signed a definitive merger agreement under which 1st Pacific Bank of California, 1st Pacific Bancorp’s banking subsidiary, will merge with First Business Bank.

Under the terms of the agreement, each outstanding share of 1st Pacific Bancorp will receive $1.40 per share in cash and a percentage of the recoveries of certain charged-off loans and a lawsuit. The initial cash payment to 1st Pacific Bancorp shareholders represents a transaction value of approximately $7.0 million. Shareholders of First Business Bank will become the shareholders of 1st Pacific Bancorp.

The banking subsidiary will operate a total of 11 branch offices and will retain the name 1st Pacific Bank of California. First Business Bank’s three full-service offices in Del Mar Heights, Carlsbad and Ramona will be rebranded. Corporate headquarters functions will be consolidated at 1st Pacific Bank’s corporate headquarters in University Towne Center. 1st Pacific Bank’s eight offices in La Jolla, Solana Beach, University Towne Center, Mission Valley, Tri-Cities, Inland North County, El Cajon and Downtown San Diego will also continue to operate.

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