Details behind Banc of California’s Merger with PacWest

Two of California’s biggest banks are to merge to create a $36 billion-asset institution.

Banc of California and PacWest Bancorp announced the merger plan last week, with financial backing from private equity companies Warburg Pincus and Centerbridge Partners, which will invest a total of $400 million for newly issued equity when the merger completes.

The combined company will operate under the Banc of California brand and is expected to have approximately $36.1 billion in assets, $25.3 billion in total loans, $30.5 billion in total deposits and more than 70 branches across California.

The deal is expected to close in “late 2023 or early 2024”, according to the merger announcement, subject to shareholder and regulatory approvals.

PacWest’s share price has been heavily affected by the recent banking sector uncertainty triggered in part by the collapse of fellow California bank Silicon Valley Bank. It had a market capitalization of more than $3 billion as recently as February this year, but this had fallen to less than $1 billion by July, according to the Financial Times. In May, PacWest’s market cap dipped below $500 million as concerns grew about a contagion effect across regional banks.

Jared Wolff, president and chief executive officer of Banc of California, said: “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 will continue in his roles at the combined company, and John Eggemeyer, who currently serves as the lead director on the board of PacWest, will become the chairman of the board post-merger.

To further boost the balance sheet of the combined company, it plans to repay an estimated $13 billion in wholesale borrowings, funded by asset sales and excess cash.

Separately, Atlantic Union Bankshares Corporation has announced an agreement to acquire American National Bankshares in a deal worth approximately $417 million.

The combined company will have total assets of $23.7 billion, total deposits of $19.1 billion and gross loans of $17.3 billion. The deal is expected to complete in the first quarter of 2024.