The all-stock merger deal between Banc of California, Inc. BANC and PacWest Bancorp PACW has received the approvals from their respective shareholders. The transaction is expected to close on or around Nov 30, 2023, as planned.

Both BANC and PACW received all necessary regulatory approvals for the merger (announced in July) last month. Per the terms of the agreement, PacWest will merge into Banc of California, and Banc of California, N.A. will merge into Pacific Western Bank.

Jared Wolff, president and CEO of BANC, said, “We appreciate this vote of confidence in our transformational merger, which will create an exceptional franchise with the strength and ability to grow profitably and deliver results to our stockholders. The merger also creates a well-capitalized and highly liquid institution that will provide our clients with exceptional service and expanded expertise.”

Paul Taylor, president and CEO of PACW, noted, “We are confident that this strategic transaction will deliver immediate and long term value to PacWest’s stockholders, customers, communities and employees and now look forward to its closing.”

Under the terms of the transaction, PacWest stockholders will receive 0.6569 shares of BANC common stock for each share of PacWest common stock they own. The combined company will focus on serving small and medium-sized businesses in its footprint through commercial and real estate lending and treasury management services.

Following the completion of the deal, the total assets of Banc of California will quadrupole to almost $36 million after the previously disclosed balance sheet repositioning is done. Also, the total loan balance will be approximately $25 billion and the total deposits $30 billion. Further, the total number of branches will jump to 70 from the current 26.

As part of the balance sheet repositioning, Banc of California and PacWest intend to sell an aggregate of $7.0 billion of the assets at or shortly after closing.

At the time of the deal announcement, it was stated that it is expected to deliver earnings per share accretion of more than 20% in 2024. Further, the pro forma combined company is expected to achieve compelling operating and return metrics, including a loan-to-deposit ratio of nearly 85%, wholesale funding asset ratio of roughly 8% and Common Equity Tier 1 capital ratio of almost 10%.

The merger between Banc of California and PacWest is poised to create a robust, well-capitalized and highly liquid banking institution. The combined company will be well-positioned to serve the banking needs of small and medium-sized businesses in California while capitalizing on market opportunities and delivering profitable and sustainable growth.

Since the announcement of the deal on Jul 25, shares of Banc of California have declined 14.9%, while PacWest has gained 5.5%.
 

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At present, BANC carries a Zacks Rank #3 (Hold) and PACW has a Zacks Rank of 4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inorganic Expansion Efforts by Other Bank

First Financial Corporation THFF announced that it has signed an agreement to acquire Dayton, TN-based SimplyBank for $73.4 million. The completion of the deal, expected in the second quarter of 2024, is subject to customary closing conditions, as well as the receipt of regulatory and SimplyBank stockholder approvals.

Following the deal closure, SimplyBank will be merged with and into First Financial Bank, a wholly-owned subsidiary of THFF. Under the terms of the deal, First Financial will pay $718.38 per share in cash for each share of SimplyBank’s common stock outstanding.

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Banc of California, Inc. (BANC) : Free Stock Analysis Report

PacWest Bancorp (PACW) : Free Stock Analysis Report

First Financial Corporation Indiana (THFF) : Free Stock Analysis Report

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