trending Market Intelligence /marketintelligence/en/news-insights/trending/Iy71J8pzIrn5S_SPy0jb0g2 content esgSubNav
In This List

In California, PacWest to acquire CU Bancorp for $705M

Blog

Latin American and Caribbean Market Considerations Blog Series: Focus on LGD

BLOG

Banking Essentials Newsletter: June Edition

Case Study

กรณีศึกษา A Bank Takes its Project Finance Assessments to a New Level

Blog

Financial Institutions Factor Transition Risk into Climate-Related Stress Testing


In California, PacWest to acquire CU Bancorp for $705M

In California, Beverly Hills-based PacWest Bancorp agreed to acquire Los Angeles-based CU Bancorp in a cash-and-stock transaction valued at approximately $705 million.

CU Bancorp shareholders will receive 0.5308 of a share of PacWest common stock and $12.00 in cash for each share of CU Bancorp. The total value of the merger consideration is $39.45 per CU Bancorp share, based on PacWest's April 5 closing price of $51.72.

The merger's terms also include a termination fee of $26.5 million, to be paid by CU Bancorp to PacWest under certain circumstances.

SNL calculates the deal value to be 221.5% of book, 284.3% of tangible book, 26.7x earnings and 22.9x estimated EPS, on a per share basis. The price is also 24.9x last-12-month core earnings, 27.46% of deposits and 23.91% of assets. It has a tangible book premium-to-core deposits ratio of 18.04%. It carries a one-day premium of 0.80%, based on CU Bancorp's April 4 closing price of $39.75, and a one-month premium of 5.17%, based on a closing price of $38.10 on March 6.

For comparison, offers for bank and thrift targets in the West between April 5, 2016, and April 5, 2017, averaged 144.80% of book, 155.17% of tangible book and had a median of 20.57x last-12-month earnings, on an aggregate basis. On a per-share basis, they averaged 147.70% of book, 161.11% of tangible book and had a median of 25.00x last-12-month earnings.

As part of the transaction, California United Bank will merge into Pacific Western Bank. SNL data shows California United had $3.00 billion in assets at the end of 2016; Pacific Western had $21.85 billion.

On a pro forma consolidated basis, using year-end 2016 figures, the resulting entity will have approximately $25.0 billion in assets and 87 branches, prior to branch closures. PacWest will expand in Los Angeles County by five branches, to be ranked No. 12 with a 1.49% share of approximately $381.99 billion in total market deposits. In Orange County, it will expand by two branches, to be ranked ninth with a 2.77% share of approximately $112.37 billion in total market deposits. It will expand in Ventura County by one branch, to be ranked seventh with a 3.68% share of approximately $17.91 billion in total market deposits, and it will expand in San Bernardino County by one branch, to be ranked eighth with a 3.55% share of approximately $20.86 billion in total market deposits.

The transaction is expected to be completed in the fourth quarter, pending regulatory and shareholder approvals.

Keefe Bruyette & Woods acted as financial adviser to CU Bancorp and delivered a fairness opinion to its board, and Manatt Phelps & Philips LLP served as legal counsel. Sandler O'Neill & Partners LP acted as financial adviser to PacWest, with Caspar Bentinck as lead banker. Sullivan & Cromwell LLP served as legal counsel to the buyer.

To use SNL's branch analytics tools to compare market overlap, click here. To use SNL Maps to create custom maps, click here.

SNL is an offering of S&P Global Market Intelligence.

SNL Image