SummaryCompaniesCombined bank to have total loans of $25.3 blnWarburg Pincus, Centerbridge buy new sharesPacWest shares soar 34%, Banc of California up 9%July 25 (Reuters) – Banc of California (BANC.N) and PacWest Bancorp (PACW.O) will merge in an all-stock deal to create a bank with $36 billion in assets, the companies said on Tuesday, coming together just months after the regional banking sector was mired in crisis.To help fund the combination, the lenders have also agreed to sell $400 million of new shares to private equity firms Warburg Pincus and Centerbridge Partners.The combined bank will have $25.3 billion in total loans and more than 70 branches in California. It will be based in Los Angeles and led by Banc of California CEO Jared Wolff.PacWest was among the lenders that were rocked by the collapse of three regional banks earlier this year, prompting the worst industry turmoil since the 2008 financial crisis.”Both the banks are in the same geographies, are focused on commercial assets and so this could be seen as a marriage of convenience,” Timothy Coffey, an analyst at Janney Montgomery Scott, said before the deal was announced.Shares of PacWest surged 34% after the market close, while Banc of California jumped 9%.PacWest stockholders will receive 0.6569 Banc of California shares for each PacWest share they currently own. Meanwhile, the two private equity firms will be issued new Banc of California stock worth $400 million at a price of $12.30 per share.Treasury Secretary Janet Yellen said in May that more mergers among midsize U.S. banks could be necessary after a series of bank failures.PacWest has been signing deals to shed some assets and strengthen its balance sheet. Last month, it said it would sell a $3.54 billion lender finance portfolio to asset manager Ares Management (ARES.N).While the turbulence at regional banks has abated and lenders have stemmed deposit outflows, there remain concerns that some lenders may still be struggling.RARE DEALThe deal marks a rare transaction in the market after several months of government-negotiated sales of failed banks. Bank mergers have also been held up for months or scrapped awaiting regulatory approval.Securing regulatory clearance for bank mergers on a timely basis has been a key concern of industry figures in recent times. However, two sources familiar with the transaction said the announcement showed confidence among the parties of achieving necessary sign-offs.Wolff said regulators were aware of the merger process from a “very early phase.”The merger is expected to be completed by late 2023 or early 2024.PacWest had a market capitalization of $1.24 billion as of Monday, almost 63% higher than that of Banc of California, according to Refinitiv data.PacWest had total assets of $44 billion at the end of March, while Banc of California had assets of $10 billion, according to separate company filings.”Over the past 18 months, the competitive environment in California has changed…
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