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Thursday, Mar 30, 2023

Proposed Bank Merger Could Result in ‘Formidable Company’

PacWest Bancorp, parent of Pacific Western Bank, which operates 18 branches in the county, caused a bit of buzz recently when it announced a $2.3 billion merger with CapitalSource Inc., an industrial loan company based in Los Angeles.

Assuming regulators bless the transaction, the combination would result in a bank with $15.4 billion in assets, making it the state’s eighth largest commercial bank.

The cash and stock deal is about the closest to a merger than anything done in many years. At completion, existing shareholders of PacWest will own 45 percent of the outstanding shares, while CapitalSource shareholders would own the remaining 55 percent.

Matt Wagner, PacWest’s CEO, said “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.”

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Under the proposed deal, John Eggemeyer, chairman of PacWest, will retain his title of the combined entity while James Pieczynski, CEO of CapitalSource, will become president of a new division of Pacific Western Bank.

CapitalSource is the larger of the two institutions, with $8.7 billion in assets, and 21 offices. PacWest has $6.7 billion in assets and 75 branches in 10 counties.

Eggemeyer launched what is now called PacWest in 2000 when he formed First Community Bancorp through the purchase of Rancho Santa Fe Bank, and began buying up community banks in Los Angeles, Riverside and San Diego. The local purchases included First National Bank in San Diego and Community Bank in Escondido.

In 2010, PacWest moved its official headquarters out of San Diego to downtown Los Angeles although it had been effectively managed from there for a long time.

Rick Levenson, president of Western Financial Corp., a San Diego-based investment bank specializing in community banks, said the PacWest/CapitalSource merger is the largest deal in the state this year, and one that catapults the combined entity to another level.

“This is the kind of deal that moves the needle significantly,” Levenson said. “It obviously increases their market share and footprint.”

The deal is also one that appears to drive shareholder value, and resulted in an initial pop of about $2.50 to PacWest’s stock price after it was announced July 22, Levenson noted.

Shares closed at $35.37 on July 30, up 1 percent over the prior day’s closing price and near its 52-week high. That gave the company a market capitalization of $1.57 billion.

This is also a transaction that won’t be completed quickly; the parties said they expect it to close in the first quarter of 2014.

When completed, it will likely result in an unspecified amount of job contraction. PacWest has 991 full-time employees while CapitalSource has 530.

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Vibra Bank Profit Returns: Vibra Bank, with a single office in Chula Vista, reported second quarter net income of $61,000, down from the like quarter of 2012 when it had $207,000 in net income.

But those results are better than the first quarter when Vibra reported a net loss of $362,000, caused mainly by higher expenses associated with the bank having to comply with a regulatory order issued last year involving the reporting of certain bank data.

CEO Scott Parker said in the past quarter the bank continued its robust asset growth, expanding its loan portfolio 28 percent to $104 million.

Total assets at June 30 were $126 million, up 13 percent from the like quarter of 2012, while deposits were $112 million, up 14 percent.

Capital levels all exceed minimum standards to be regarded as well-capitalized with total risk-based capital at 16.8 percent, above the 10 percent threshold.

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U.S. Bank Sponsors Workshops: U.S. Bank, based in Minneapolis and with 78 branches in San Diego County, said it’s sponsoring free online workshops on a variety of topics aimed at small business including financial planning, creating a business plan, business management, technology development, marketing, compliance and international trade.

The interactive seminars will provide strategies, tools, processes and solutions that can help business owners grow and manage their businesses, the bank said.

The workshops are being offered through the North San Diego Small Business Development Center which is based at Mira Costa College in Oceanside. The online registration for the workshops is at www.va-interactive.com/sbdc/ot/modules_bank.php?state_name=CA-SANDIEG.

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Small Change: Wells Fargo Bank’s West Coast Banking unit expanded its team adding three new members: Harold Walk, Sean Welch, and Monique Payan. The unit that is focused on small business lending, has three locations in San Diego, Escondido and El Centro … C. Matthew Allen joined Western Financial Corp. as managing director and head of investment banking. Allen, who is based in Newport Beach, will focus on providing investment banking services to community banks and financial companies.

Send any news about locally based financial institutions to Mike Allen via email at mallen@sdbj.com. He can be reached at 858-277-6359.


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