FREE MEMBERSHIP Includes » ABL Advisor eNews + iData Blasts | JOIN NOW ABLAdvisor Gray ABLAdvisor Blue
 
Skip Navigation LinksHome / News / Read News

Print

PacWest Bancorp and CapitalSource Agree to Merge

July 23, 2013, 08:04 AM
Filed Under: Mergers & Acquisitions

PacWest Bancorp ("PacWest") and CapitalSource Inc.  ("CapitalSource") announced the signing of a definitive agreement and plan of merger (the "Agreement") whereby PacWest and CapitalSource will merge in a transaction valued at approximately $2.3 billion. The combined company will be called PacWest Bancorp and the combined subsidiary bank will be called Pacific Western Bank. The CapitalSource national lending operation will continue to do business under the name CapitalSource as a division of Pacific Western Bank.

CapitalSource Inc., headquartered in Los Angeles, California, is the parent of CapitalSource Bank, a California Industrial Bank with approximately $8.7 billion in assets at June 30, 2013 and 21 branches located in southern and central California. In connection with the transaction, CapitalSource Bank will be merged into Pacific Western Bank, the Los Angeles-based wholly-owned subsidiary of PacWest Bancorp. Pacific Western Bank had $6.7 billion in assets at June 30, 2013 and 75 branches across ten California counties.

The independent directors of PacWest and CapitalSource unanimously approved the transaction. Upon completion of the transaction, the combined company board will have thirteen directors, eight representatives from PacWest and five representatives from CapitalSource.

Matt Wagner, CEO of PacWest Bancorp and Chairman and CEO of Pacific Western Bank, will be CEO of the combined company and of Pacific Western Bank. James J. Pieczynski, Chief Executive Officer of CapitalSource, will become President of the new CapitalSource division of Pacific Western Bank, incorporating all of the current CapitalSource lending operations. John Eggemeyer, Chairman of PacWest Bancorp, will become Chairman of the combined company. Tad Lowrey, Chairman and CEO of CapitalSource Bank will become non-executive Chairman of Pacific Western Bank. The combined company will remain headquartered in Los Angeles and will have senior executives from each of the organizations in key positions.

The transaction, currently expected to close in the first quarter of 2014, is subject to customary conditions, including the approval of bank regulatory authorities and the stockholders of both companies. Certain stockholders of CapitalSource and PacWest, including all current directors, have agreed to vote in favor of the transaction.

As of June 30, 2013, on a pro forma consolidated basis, the combined company would have had approximately $15.4 billion in assets with 96 branches throughout California. The combined institution would be the 6th largest publicly-owned bank headquartered in California, and the 8th largest commercial bank headquartered in California (out of more than 232 financial institutions in the state).

Matt Wagner, CEO of PacWest Bancorp, commented, "This transaction represents the combination of two outstanding organizations. CapitalSource has built an enviable lending platform and growth engine. PacWest has a valuable community banking franchise and a low cost deposit base driven by our high percentage of noninterest bearing demand deposits. The combination of these two franchises will create a formidable company going forward, with a strong balance sheet and capital base, attractive margins and good earnings momentum."

"The combination of CapitalSource and PacWest will produce tremendous benefits for the shareholders of both companies," said James J. Pieczynski, CEO of CapitalSource. PacWest fills the need of CapitalSource for a more stable and low cost deposit base. CapitalSource will give PacWest a more robust and diverse lending presence. Both institutions share a conservative credit culture and have talented and dedicated employees that will make the combined company much more than the sum of its parts going forward."

"We have worked hard over the last five years to build a high performing bank and we are proud of our success," said Tad Lowrey, CapitalSource Bank Chairman and CEO. "PacWest is the perfect partner to accelerate and expand our capacity to serve the credit needs of middle market and small businesses and to broaden the products and services we can offer to our deposit customers here in California once the merger into Pacific Western Bank is completed."

JP Morgan Securities LLC acted as financial advisor to CapitalSource Inc. in the transaction and delivered a fairness opinion to the Board of Directors of CapitalSource. Wachtell, Lipton, Rosen & Katz served as legal counsel to CapitalSource. Jefferies LLC acted as lead financial advisor to PacWest Bancorp and delivered a fairness opinion to the Board of PacWest. Castle Creek Financial and Goldman Sachs & Co. also acted as financial advisors to PacWest. Sullivan & Cromwell LLP served as legal counsel to PacWest.

PacWest Bancorp is a bank holding company with $6.7 billion in assets as of June 30, 2013, with one wholly-owned banking subsidiary, Pacific Western Bank ("Pacific Western"). Through 75 full-service community banking branches, Pacific Western provides commercial banking services, including real estate, construction and commercial loans, to small and medium-sized businesses. Pacific Western had total assets of $6.7 billion and total deposits of $5.7 billion as of June 30, 2013. Pacific Western's branches are located throughout California in Los Angeles, Orange, Riverside, San Bernardino, Santa Barbara, San Diego, San Francisco, San Luis Obispo, San Mateo and Ventura Counties.  Through its subsidiaries, BFI Business Finance and Celtic Capital Corporation, and its divisions, First Community Financial and Pacific Western Equipment Finance, Pacific Western also provides working capital financing and equipment leasing to growing companies located throughout the United States, with a focus on the Southwestern U.S., primarily in Arizona, California, Utah and Texas.

CapitalSource Inc.  ("CapitalSource"), through its wholly owned subsidiary CapitalSource Bank, makes commercial loans to small and middle-market businesses nationwide and offers depository products and services in 21 retail branches in southern and central California. CapitalSource, headquartered in Los Angeles, CA, had total assets of $8.7 billion and total deposits of $5.9 billion as of June 30, 2013.







Comments From Our Members

You must be an ABL Advisor member to post comments. Login or Join Now.