Eight months after bidding its way into the central coast of California, PacWest Bancorp (PACW) executives think the rising valuations of banks there could make further expansion too costly.

That was one of the highlights of a meeting this week of investors with Matt Wagner, PacWest's chief executive, and Victor Santoro, its chief financial officer, according to a research note Friday by Aaron James Deer, an analyst with Sandler O'Neill. Sandler hosted the meeting.

The $5.5 billion-asset company bested Umpqua Holdings (UMPQ) in bidding for American Perspective Bank in San Luis Obispo, Calif., in April. Umpqua had an agreement to buy the $264 million-asset American Perspective for $44 million, when PacWest offered it $58 million. Don't expect the company to bid again like that in the region.

"Management acknowledged an interest in expanding its presence up the central coast but noted that franchises there have become too expensive relative to the cost saves it could realize to make the deals work," Deer writes.

The note is a rare glimpse into the thinking of a low-profile executive team. Reached by phone on Friday, Wagner said PacWest has a policy of not commenting to the press. The company, which counts private-equity firms Castle Creek and CapGen Financial among its largest investors, doesn't do quarterly conference calls, either. Deer was out of the office on Friday.

PacWest remains on the hunt for additional acquisitions but will be choosey, Deer's note says.

"Our sense was that nothing is on the horizon," the note says. "Investors at the meeting threw out names of several potential targets, but management cited fit issues with most."

Those issues could be related to the customer base or the business plan of the bank.

Wagner's hunt for bargains also extends to specialty finance companies. Those sorts of deals are increasingly hard to find at attractive prices, Deer's note says.

PacWest's agreement to buy the $2 billion-asset First California Financial Group (FCFG) in Westlake Village is on track, according to the note.

"While the holidays could slow down regulatory review a bit, management said it still anticipates a [first-quarter] approval with the deal closing quickly after approval," Deer writes.

The deal, announced in November, ended a months-long pursuit, where PacWest made public First California's rejection of its initial $212 million bid. It is now expected to pay $231 million.

"We suspect the pre-close integration efforts could be more challenging than usual given the nature of the deal," Deer says. "But the PacWest team said it is making good progress."

PacWest has already identified employees it plans to keep. It has scheduled the systems conversion for April, and it is expecting to achieve full cost savings by the end of June, Deer wrote.

The American Perspective and First California deals were the first bank acquisitions PacWest announced following a six-year hiatus. The nontraditional nature of both showed an aggressive company well-rested and hungry for growth.

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