8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) June 7, 2006

PLACER SIERRA BANCSHARES

(Exact name of registrant as specified in its charter)

California	0-50652	94-3411134
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

525 J Street, Sacramento, California	95814
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (916) 554-4750

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into Material Definitive Agreement

Effective June 9, 2006, Southwest Community Bancorp, a California corporation (“SWCB”) merged (the “Merger”) with and into Placer Sierra Bancshares (the “Company” or “PLSB”). In addition, Southwest Community Bank, the wholly owned subsidiary of SWCB, merged with and into Placer Sierra Bank (the “Bank”), the wholly owned subsidiary of the Company. The Merger was consummated pursuant to an Agreement and Plan of Merger and Reorganization (the “Reorganization Agreement”) between the Company and SWCB. Pursuant to the Reorganization Agreement, certain agreements were assumed by the Company and the Bank, including certain supplemental executive compensation agreements, as amended, and split dollar plans, as amended, by and between Southwest Community Bank and Frank J. Mercardante (the former Chief Executive Officer of SWCB), Alan J. Lane (the former President and Chief Operating Officer of SWCB) and Stuart McFarland (the former Executive Vice President of SWCB). As a consequence of the change in control of SWCB contemplated by the Reorganization Agreement, Messrs. Mercardante and Lane are entitled to accelerated vesting of their supplemental retirement benefits. Mr. McFarland is continuing employment with Placer Sierra Bank and the vesting of his supplemental retirement benefits will continue as set forth in his supplemental executive compensation agreement, as amended. The present value of the supplemental executive compensation benefits are estimated at $2.72 million for Mr. Mercardante, $1.24 million for Mr. Lane and $1.04 million for Mr. McFarland. The supplemental executive retirement agreements and split dollar plans will be filed as exhibits to the Company’s next quarterly report on Form 10-Q. Mr. Mercardante has been appointed to the Board of Directors of the Company (see Item 2.01) and Mr. McFarland is continuing employment as officer of the Bank.

On June 7, 2006, the Compensation Committee of the Board of Directors of the Company approved an Amended and Restated Employment Agreement with Ronald W. Bachli, the Company’s Chairman of the Board of Directors and Chief Executive Officer. The agreement has an effective date of January 1, 2006 and continues through December 31, 2008 and, in connection with the agreement, the Committee granted Mr. Bachli 125,000 options. The options vest twenty percent (20%) on December 31, 2006, twenty percent (20%) on December 31, 2007, forty percent (40%) on December 31, 2008, and the remaining twenty percent (20%) vest on December 31, 2009; provided that if Mr. Bachli is not retained as a director of the Company through December 31, 2009, then and in that event, the vesting of the last twenty percent (20%) increment shall accelerate and become fully exercisable at December 31, 2008. Other material terms that were amended provide that the agreement does not continue to renew for additional one-year periods, that Mr. Bachli will receive one times his base salary if the Company terminates his employment without cause and two times his base salary if Mr. Bachli’s employment is terminated in connection with a change in control (the employment agreement previously provided Mr. Bachli was entitled to receive up to three times his base salary in both instances). Provisions were also added to ensure the contract complies with Internal Revenue Code 409A. The Amended and Restated Agreement will be filed with the Company’s next quarterly report on Form 10-Q.

Item 2.01 Completion of Acquisition or Disposition of Assets.

As discussed under Item 1.01, effective June 9, 2006, SWCB merged with and into the Company. In connection with the Merger, each outstanding share of SWCB common stock will be converted into 1.58 shares of Company common stock. The exchange ratio was determined by the average daily volume-weighted stock price of the Company’s common stock over a 20 trading day measurement period ending the fifth trading day prior to the closing date of the transaction. Provided that none of the shareholders of SWCB dissent, Placer Sierra Bancshares will issue approximately 7.2 million shares as payment for this transaction including shares reserved for issuance upon exercise of SWCB warrants that were assumed by the Company in connection with the Merger.

The Reorganization Agreement and a press release relating to the Merger are attached hereto as Exhibits 2.1 and 99.1 to this Form 8-K, respectively, and are incorporated herein by reference. A copy of the Warrant Agreement, as assumed, Form of Warrant and First Amendment to the Warrant Agreement (which was amended effective June 12, 2006 to make administrative changes such as setting forth new notification provisions in the Warrant Agreement) will be filed with the Company’s next quarterly report on Form 10-Q.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant

On April 22, 2003, SWCB completed a trust preferred securities transaction in the amount of $8,248,000. In connection with the transaction, SWCB formed a wholly-owned business trust subsidiary, Southwest Community Statutory Trust I (the “Trust”), pursuant to the laws of the State of Connecticut, to facilitate the transaction. The Trust issued and sold $8,000,000 aggregate principal amount of floating rate trust preferred securities (the “Capital Securities”) to private investors and issued $248,000 Common Securities to the Company. The Trust used the proceeds of these issuances to purchase $8,248,000 of SWCB’s Floating Rate Junior Subordinated Debentures due 2033 (the “Debentures”). The terms for the Capital Securities and the Debentures are essentially identical.

The holders of the Capital Securities are entitled to receive cumulative cash distributions at a variable annual rate, reset quarterly, equal to three month LIBOR plus 3.15%. Assuming that no default has occurred, distributions may be deferred at any time for a period of up to twenty consecutive calendar quarters. The Capital Securities can be called on or after June 26, 2008 at their face value.

Concurrently with the issuance of the Capital Securities, SWCB entered into a Guarantee Agreement dated April 22, 2003 between SWCB and U.S. Bank National Association, a national association (“U.S. Bank”) under which SWCB guaranteed the payment of various obligations associated with the Capital Securities.

The Debentures were issued pursuant to an Indenture dated as of April 22, 2003 (the “Indenture”), between SWCB and U.S. Bank, as trustee. The terms of the Debentures are governed by an Amended and Restated Declaration of Trust dated as of April 22, 2003 (the “Declaration”) between SWCB as sponsor, U.S. Bank, as institutional trustee and the Administrators named therein.

In connection with the Merger, on June 9, 2006, the Company assumed all of SWCB’s obligations in connection with the Debentures and Capital Securities. As successor to SWCB under the Indenture, the Company entered into a First Supplemental Indenture with U.S. Bank, whereby the Company assumed all right, title and interest in, to and under the Indenture and assumed and agreed to fully and completely pay, perform and discharge all of SWCB’s liabilities and obligations under the Indenture.

The preceding discussion is qualified in its entirety by reference to the terms of the Indenture, the Declaration, the Floating Rate Junior Subordinated Deferrable Interest Debentures, the Guarantee Agreement and the First Supplemental Indenture. Copies of the Indenture, the Declaration, the Floating Rate Junior Subordinated Debentures, the Guarantee Agreement and the First Supplemental Indenture will be filed with the Company’s next quarterly report on Form 10-Q.

Item 5.02 Departure of Directors or Principal Officers’; Election of Directors; Appointment of Principal Officers

In connection with the Merger, two members of SWCB’s Board of Directors, Allan W. Arendsee and Mr. Mercardante, were appointed by the Board of Directors of the Company to serve as members of its Board of Directors. Mr. Mercardante will serve on the Audit Committee of the Company’s Board of Directors and Mr. Arendsee will serve on the ALCO Committee, which is an executive committee.

In connection with the Merger, Mr. Arendsee is entitled to receive approximately 344,647 shares of common stock of PLSB and warrants to purchase approximately 10,949 shares of common stock of PLSB based on his ownership of SWCB common stock and warrants to purchase common stock immediately prior to the Merger. Based on the average of the high and low sales prices of PLSB’s common stock on June 9, 2006, Mr. Arendsee’s ownership interest in PLSB (excluding the warrants) has a value of approximately $8.1 million.

In connection with the Merger, Mr. Mercardante is entitled to receive approximately 360,769 shares of common stock of PLSB and warrants to purchase approximately 995 shares of common stock of PLSB based on his ownership of SWCB common stock and warrants to purchase common stock immediately prior to the Merger. Based on the average of the high and low sales prices of PLSB common stock on June 9, 2006, Mr. Mercardante’s ownership interest in PLSB (excluding the warrants) has a value of approximately $8.5 million.

Item 9.01 Financial Statements and Exhibits

(a) Financial Statements of Business Acquired.

Financial statements required by this item shall be filed not later than 71 days after the date that this report is required to be filed.

(b) Pro Forma Financial Information.

Financial statements required by this item shall be filed no later than 71 days after the date that this report is required to be filed.

(c) Shell Company transactions.

(d) Exhibits.

Exhibit Number	Exhibit Title or Description
2.1	Agreement and Plan of Merger and Reorganization, between Placer Sierra Bancshares and Southwest Community Bancorp, dated February 15, 2006 (incorporated herein by reference to Form 8-K filed with the SEC on February 21, 2006.)
99.1	Press release dated June 12, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Placer Sierra Bancshares
	(Registrant)
Date June 12, 2006
	/s/ David E. Hooston
	David E. Hooston Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
2.1	Agreement and Plan of Merger and Reorganization, between Placer Sierra Bancshares and Southwest Community Bancorp, dated February 15, 2006 (incorporated herein by reference to Form 8-K filed with the SEC on February 21, 2006.)
99.1	Press release dated June 12, 2006

EX-99.1

Exhibit 99.1

PLACER SIERRA BANCSHARES /

SOUTHWEST COMMUNITY BANCORP

JOINT PRESS RELEASE

FOR IMMEDIATE RELEASE

For more information contact:

Placer Sierra Bancshares:	Southwest Community Bancorp:
Ronald W. Bachli, Chairman & CEO	Frank J. Mercardante, Chief Executive Officer
David E. Hooston, Chief Financial Officer	James L. Lemery, Chief Financial Officer
(916) 554-4750	(760) 918-2616

At Financial Relations Board:

Tony Rossi

(310) 854-8317

PLACER SIERRA BANCSHARES AND SOUTHWEST COMMUNITY BANCORP ANNOUNCE

CLOSING OF MERGER

Sacramento, California – June 12, 2006—Placer Sierra Bancshares (Nasdaq: PLSB) and Southwest Community Bancorp, jointly announced today the closing of their merger. Southwest Community Bancorp shareholders will receive 1.58 shares of Placer Sierra Bancshares for each share of Southwest Community Bancorp they own. The exchange ratio was determined by the average daily volume-weighted stock price of Placer Sierra’s common stock over a 20 trading day measurement period ending the fifth trading day prior to the closing date of the transaction. Provided that none of the shareholders of Southwest Community Bancorp dissent, Placer Sierra Bancshares will issue approximately 7.2 million shares as payment for this transaction including shares reserved for issuance upon exercise of Southwest Community Bancorp warrants that were assumed in the merger.

The combined company has $2.7 billion in assets and 49 branches stretching from the Sacramento area to San Diego. The acquired branches will continue to operate under the Southwest Community Bank brand name. Frank J. Mercardante, a director and former Chief Executive Officer of Southwest Community Bancorp and Southwest Community Bank, and Allan Arendsee, a Southwest Community Bancorp and Southwest Community Bank director, have joined the Board of Directors of Placer Sierra Bancshares. Stuart McFarland, President of Southwest Community Bank, will now serve as President for the Bank’s Southwest Community division.

“We are pleased to finalize the Southwest Community Bancorp transaction, which significantly advances our goal of becoming a statewide banking franchise,” said Ron Bachli, Chairman and Chief Executive Officer of Placer Sierra Bancshares. “The integration process is proceeding smoothly and we look forward to introducing Southwest’s customers to our expanded line of competitive products and services. Following the merger, Placer Sierra is in a much stronger position to capitalize on growth opportunities in San Diego County and the Inland Empire. Our previous acquisitions have generated significant value for shareholders and we believe this transaction will produce similar results in the future.”

ABOUT PLACER SIERRA BANCSHARES

Placer Sierra Bancshares is a Northern California-based bank holding company for Placer Sierra Bank with 49 branches operating throughout California. The bank has 31 branches in an eight-county area of Northern California, including Placer, Sacramento, El Dorado, Sierra, Nevada, Amador, San Joaquin and Calaveras counties and 18 branches in Southern California’s Orange, Los Angeles, and San Diego counties. Placer Sierra Bank and its divisions, Sacramento Commercial Bank, Bank of Orange County, Bank of Lodi and Southwest Community Bank offer customers the resources of a large financial institution and the resourcefulness and superior customer service of a community bank.

Placer Sierra Bank offers a broad array of deposit products and services for both commercial and retail customers. These products include electronic banking, cash management services, electronic bill payment and investment services with an emphasis on relationship banking. Placer Sierra Bank also provides competitive loan products such as commercial loans and lines of credit, commercial real estate loans, Small Business Administration loans, residential mortgage loans, home equity lines of credit and construction loans. For more information, please visit www.placersierrabank.com.

Placer Sierra Bancshares is publicly traded on NASDAQ under the stock symbol PLSB. For more information about Placer Sierra Bancshares, please visit www.placersierrabancshares.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that involve inherent risks and uncertainties. All statements other than statements of historical fact are forward looking statements including statements relating to the prospects of Placer following the merger. Placer cautions readers that a number of important factors could cause actual results to differ materially from those in such forward-looking statements. Risks and uncertainties include, but are not limited to: the possibility that personnel changes will not proceed as planned; growth may be inhibited if Placer cannot attract deposits, including low-cost deposits; revenues are lower than expected or expenses are higher than expected; competitive pressure among depository institutions increases significantly; the cost of additional capital is more than expected; changes in the interest rate environment reduces interest margins; general economic conditions, either nationally or in the market areas in which Placer does business, are less favorable than expected; changes that may occur in the securities markets; Placer may suffer an interruption of services from third-party service providers that could adversely affect Placer’s business; Placer may not be able to maintain an effective system of internal and disclosure controls; estimated cost savings from the merger cannot be fully realized within the expected time frame; revenues following the merger are lower than expected; potential or actual litigation relating to Placer occurs; costs or difficulties related to the integration of the businesses of Placer and Southwest are more than expected; legislation or changes in regulatory requirements adversely affect the businesses in which Placer would be engaged; or factors occur which result in a condition to the merger transaction not being met. Additional factors that could cause Placer’s financial results to differ materially from those described in the forward looking statements can be found in Placer’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (under the headings “Risk Factors”), Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC. Placer undertakes no obligation, and specifically disclaim any obligation, to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made. If any of these uncertainties materializes or any of these assumptions proves incorrect, Placer’s results could differ materially from Placer’s expectations as set forth in these statements.

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