Banc of California is buying long-struggling rival Pacific West Bancorp, also known as PacWest, the two announced yesterday (July 25). The all-stock merger transaction will create a combined $36 billion asset bank headquartered in Los Angeles that will operate under the Banc of California name.
Beverly Hills-based PacWest had warned that it was weighing strategic options, including a potential sale, in May. Later that month, it sold $2.6 billion worth of real estate loans to Kennedy Wilson Holdings.
The takeover is a bid to shore up confidence at a time when a bunch of regional banks have struggled under pressure on account of assets losing value as interest rates increased, and a glut of uninsured depositors who could potentially lose out if the bank became insolvent.
Banc of California will bring niche strength in healthcare, education, entertainment and warehouse lending to the table, while PacWest’s expertise lies in HOA (Homeowners associations) banking services, portfolio lending, equipment lending and leasing, and SBA (Small Business Administration) lending, the two banks said.
“Getting caught in the headlines could have happened to any bank. A liquidity run could have happened to anybody. The way that they’ve de-risked the franchise and moved it more toward a community bank and layered on some good deposit generators is gonna be a really good fit for us.”—Jared Wolff, president and CEO of Banc of California who will retain the same roles at the combined company, said on a call discussing the deal to buy PacWest, Bloomberg reported
$400 million: Value of private equity firm Warburg Pincus and Centerbridge Partners’ investment in the company concurrently with, and subject to, closing of the merger
0.6569: Share of Banc of California common stock PacWest shareholders will receive for each share of PacWest common stock they own
$36.1 billion: Assets the combined company will have, less than the $44.2 billion PacWest held at the end of March
$25.3 billion: Total loans the combined company will have
$30.5 billion: Total deposits the combined company will have
70+: Branches the combined entity will have throughout California
~$13 billion: How much the combined company will repay in wholesale borrowings, funded by sales of assets which are fully marked as a result of the transaction, and excess cash.
12: Directors on the board of the combined company, eight from the existing Banc of California board, three from the existing PacWest board, and Todd Schell from the Warburg Investors. John Eggemeyer, who is the independent Lead Director on the board of PacWest currently, will become chairman of the board
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