The merger between Banc of California (NYSE:BANC), Inc. and PacWest Bancorp has taken a significant step forward with approvals from the Federal Reserve System and the California Department of Financial Protection and Innovation. This information was disclosed on Thursday, October 19, 2023. The all-stock transaction, first announced in July, is scheduled to close by the end of the year, pending approval from the respective stockholders of both banks.
The merger agreement was initially outlined on July 25, 2023. The completion of this transaction is subject to further approvals from holders of Banc of California's common stock and PacWest's common stock, among other closing conditions. Once finalized, the merged entity will operate with a solid financial footing, boasting $36 billion in assets, $25 billion in loans, and $30 billion in deposits.
According to InvestingPro data, Banc of California has a market cap of 709.88M USD and a P/E ratio of 8.96, while PacWest Bancorp has a market cap of 912.78M USD and a negative P/E ratio of -0.73. This data could be crucial for investors as they navigate the upcoming changes due to the merger.
Jared Wolff, CEO of Banc of California, highlighted the benefits that this merger would bring to stakeholders and the regional banking industry. As of June 30, 2023, Banc of California held $9.37 billion in assets and operated 32 offices in Southern California through Banc of California, N.A., providing customized banking and lending solutions. It also offers a full-stack payment processing solution via Deepstack Technologies. On the other hand, PacWest Bancorp provides business banking and treasury management services to small and middle-market businesses through Pacific Western Bank.
InvestingPro Tips indicates that Banc of California has a high earnings quality, with free cash flow exceeding net income, and management has been aggressively buying back shares. However, it also suffers from weak gross profit margins and an expected drop in net income this year. On the other side, PacWest Bancorp has maintained its dividend payments for 24 consecutive years, despite a predicted sales decline and weak gross profit margins. Investors can find more insights like these on the InvestingPro platform.
The merged company will significantly impact California's banking landscape with over 70 branches primarily located within the state.
Investors are urged to read all relevant documents filed with the U.S. Securities and Exchange Commission (SEC), including Banc of California's registration statement on Form S-4, before making any voting or investment decision related to this merger. The documents contain forward-looking statements about the proposed transaction involving Banc of California, PacWest, and Cal Merger Sub, Inc., as well as the proposed investment by Warburg Pincus LLC and Centerbridge Partners, L.P. These statements are subject to various assumptions, risks, and uncertainties.
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