Banc Of California, PacWest Combine Forces With Aim To Create 'Robust, Well-Capitalized' Institution

Banc of California, Inc. BANC and PacWest Bancorp PACW shares were volatile in after-hours trading Tuesday after a merger between the companies was announced. 

The Banc Of California, PacWest Deal: The companies signed a definitive agreement through which they will combine in an all-stock merger transaction.
PacWest will merge into Banc of California, and Banc of California, N.A. will merge into Pacific Western Bank, under the terms of the agreement.

PacWest stockholders will receive 0.6569 of a share of Banc of California common stock for each share of PacWest common stock.

The merger is expected to put the business banking franchise in an opportune position to take advantage of market opportunities and broaden the channels and customers it serves through increased scale and expanded product offerings, according to the companies. 

Another purported benefit of the merger is additional liquidity through a targeted balance sheet repositioning.

The announcement of the merger came in conjunction with the companies' respective earnings reports. 

Banc of California reported second-quarter earnings of 32 cents per share, which beat the analyst consensus estimate of 30 cents. Quarterly sales came in at $69.63 million, which missed the analyst consensus estimate of $71.65 million.

PacWest reported second-quarter earnings of 22 cents per share, which beat the analyst consensus estimate of 20 cents. 

Jared Wolff, president and CEO of Banc of California, will retain the same roles at the combined company. John Eggemeyer, who currently serves as the independent lead director on the board of PacWest, will become the chairman of the board of the combined company following the merger.

"This transformational merger will create a robust, well-capitalized and highly liquid institution poised to deliver exceptional service to even more California businesses and communities," Wolff said in a statement. 

"We believe both Banc of California and PacWest stockholders will benefit from the compelling economics of the combined company and its enhanced ability to deliver profitable and sustainable growth."

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BANC, PACW Price Action: Banc of California is down about 8% year-to-date, while PacWest is down more than 65%.

At the time of publication, Banc of California shares were up 2.8% at $15.03 in the after-hours session, while PacWest shares were up 24.3% at $9.56, according to Benzinga Pro.

Image by Gerd Altmann from Pixabay.