(New York) American regional banks PacWest and Banc of California announced on Tuesday the signing of a “definitive agreement” to merge, a transaction which will be accompanied by a capital increase intended for outside investors.
This merger, unanimously approved by both boards of directors and which has yet to receive regulatory green lights, “will create California’s first specialized commercial banking network,” the two banks said in a joint statement.
Completion is expected in late 2023 or early 2024.
Under the agreement, PacWest shareholders will receive 0.6569 Banc of California shares for each of their shares.
The capital of the new group, which will operate under the name of Banc of California and whose headquarters will be located in Los Angeles, will be held 47% by former PacWest shareholders and 34% by former Banc of California shareholders.
The remaining 19% will be held by the investors who will subscribe to a capital increase of 400 million dollars, namely the investment companies Warburg Pinkus and Centerbridge Partners.
The new group will hold approximately $36.1 billion in assets, will accumulate $25.3 billion in loans, $30.5 billion in deposits and will have more than 70 branches in California.
Its pro forma net earnings per share is expected to be in the range of $1.65 to $1.80 in 2024.
Pacific Western, or PacWest, has been battered on the New York Stock Exchange in recent months after the vicissitudes of the US banking sector in the spring.
It was considered the new weak link in the system after the bankruptcies of SVB and Signature Bank in March, and the takeover by the authorities of First Republic in early May before its resale to JPMorgan Chase.
Trading in Banc of California stock was suspended Tuesday about 30 minutes before the New York Stock Exchange closed, pending an announcement. It then progressed by 11.17%, but in the exchanges after the session, it gave up 0.34%.
PacWest stock was up 0.52% in post-Wall Street shutdown trading.