Bank of California's PacWest takeover receives the green light from the Federal Reserve
California-based Banc of California is set to expand its footprint significantly with the acquisition of PacWest, a regional bank. The transaction, worth $1.1 billion, is expected to close by the end of this year, subject to regulatory approvals and other customary closing conditions.
The combined entity will become the third-largest California-based commercial bank, with approximately $36.1 billion in assets. This merger will nearly quadruple Banc of California's asset total, boosting its presence in the state.
The deal includes a $400 million investment from Warburg Pincus and Centerbridge Partners, who will hold a 19% stake in the combined company. However, the specific private investors involved in the $400 million investment related to the merger have not been publicly detailed.
Jared Wolff, CEO of Banc of California, expressed his excitement about the merger, stating it represents significant immediate and long-term value beyond PacWest's standalone strategic plan.
Meanwhile, PacWest has assured its shareholders that it is not experiencing "out-of-the-ordinary" deposit flows. The bank has offloaded its real-estate lending business and sold a pair of multibillion-dollar loan portfolios in May and June.
The merger comes amidst the crisis of confidence that affected regional banks after the failures of Silvergate, Signature, and Silicon Valley Bank. Notably, the Federal Deposit Insurance Corp. has seized regional bank First Republic and sold it to JPMorgan Chase.
The Federal Reserve has approved Banc of California's acquisition of PacWest. California's Department of Financial Protection and Innovation also gave its approval on October 5. The bank's branch footprint is set to increase to more than 70, but details about the commercial or retail aspects of the business are not included in the transaction.
The combined entity is expected to hold roughly $25.3 billion in loans and $30.5 billion in deposits. The transaction does not seem to include details about the purchase licensing rights.
As the acquisition proceeds, both Banc of California and PacWest are poised to make a significant impact in the California banking sector. The merger is expected to bring about a more robust and competitive banking environment, benefiting both the banks and their customers.
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