The Federal Reserve has approved Banc of California’s acquisition of PacWest, paving the way for the $1.1 billion transaction to close by the end of this year, Banc of California announced Thursday.
The green light marks the last regulatory sign-off the deal needed to proceed, the bank said. California’s Department of Financial Protection and Innovation had given its blessing Oct. 5, Banc of California said.
“We appreciate the active engagement and focused efforts of the Federal Reserve and the California DFPI to review and approve this merger, which will be beneficial not only for our clients, communities and shareholders, but also for the broader regional banking industry,” Banc of California CEO Jared Wolff said in a statement Thursday. “We are excited to be bringing Banc of California and Pacific Western Bank together and unlock the strength of our combined platform to create a robust, well-capitalized and highly liquid institution.”
The deal will nearly quadruple Banc of California’s asset total, creating the third-largest California-based commercial bank — an entity with roughly $36.1 billion in assets, compared with the $9.7 billion the Santa Ana-based bank counts now. The bank’s branch footprint will balloon to more than 70 — from 27 — and the combined entity is expected to hold roughly $25.3 billion in loans and $30.5 billion in deposits.
Los Angeles-based PacWest, meanwhile, was hit relatively hard by the crisis of confidence that beset the nation’s regional banks after the failures of Silvergate, Signature and Silicon Valley Bank. The lender’s stock dropped 21% on the Monday after those failures, and trading was halted amid market volatility.
After the Federal Deposit Insurance Corp. seized fellow regional First Republic and sold it to JPMorgan Chase, PacWest assured shareholders it was not experiencing “out-of-the-ordinary” deposit flows and said it would “evaluate all options.”
It sold a pair of multibillion-dollar loan portfolios in May and June, and offloaded its real-estate lending business but ultimately concluded that the acquisition by Banc of California “represent[ed] significant immediate and long-term value beyond PacWest’s standalone strategic plan.”
The deal includes a $400 million investment from Warburg Pincus and Centerbridge Partners, giving the private-equity firms a 19% stake in the combined company.
