Banc of California acquires PacWest in an all-stock deal
Santa Ana-based Banc of California is acquiring Beverly Hills-based PacWest Bancorp in an all-stock deal, the companies jointly announced on July 25.
The deal, expected to close in the fourth quarter of 2023 or the first quarter of 2024, will create a combined $36 billion in total loans and assets.
The bank will be based in Los Angeles and led by Banc of California CEO Jared Wolff, who previously served as PacWest’s general counsel.
“This transformational merger will create a robust, well-capitalized and highly liquid institution poised to deliver exceptional service to even more California businesses and communities,” Wolff said in a press release. “Out of the gate, the combined company will have the strength and market position to support the banking needs of small and medium-sized businesses in California and to capitalize on the opportunities created for stronger financial institutions in the wake of the recent banking industry turmoil.”
Pacific Western Bank, a subsidiary of PacWest Bancorp, operates 12 branches in the tri-county region.
The acquisition gives Banc of California an even larger footprint in Southern California, but especially on the Central Coast. Prior to this deal, Banc of California had only one branch in the tri-county area, located in downtown Santa Barbara.
PacWest Bancorp stockholders will receive 66% of a share of Banc of California common stock for every share of their PacWest common stock. The acquisition also comes with some backing from private equity firms Warburg Pincus and Centerbridge Partners.
The companies will put up $400 million upon completion of the deal for “newly issued equities securities.
News of the deal was first reported by the Wall Street Journal and the article’s publication sparked volatile movement in each stock. Shares of PacWest Bancorp plummeted roughly 26% almost immediately after the news broke and Wall Street rewarded Banc of California with a 14% surge up to $14.62 a share at the final bell.
The banking industry has been filled with volatility in the months succeeding the collapse of Silicon Valley Bank in March. Regional banks particularly have struggled and come under scrutiny, with Pacific Western Bank being a prime example.
The bank’s stock was trading as high as $29.36 this year but the general industry uncertainty and issues with the company’s balance sheet made for a difficult few months.
The combined company will have over 70 branches in the state.