PacWest in Los Angeles has agreed to buy CU Bancorp in Los Angeles.
The $21.9 billion-asset PacWest said in a press release Thursday that it will pay $705 million, or $39.45 a share, for the $3 billion-asset parent of California United Bank. The cash-and-stock deal, which is expected to close in the fourth quarter, values CU Bancorp at 284% of its tangible book value.
PacWest also plan to redeem about $17 million of preferred stock issued to CU Bancorp under the Small Business Lending Fund.
PacWest said it expects the deal to be 6% accretive to its 2018 earnings per share. It should take four and a half years to earn back the acquisition’s dilution to PacWest’s tangible book value.
CU Bancorp has nine branches, $2.1 billion in loans and $2.6 billion in deposits.
“We have long admired the Southern California franchise the CU Bancorp team has built over the years,” Matt Wagner, PacWest’s CEO, said in the release. “We are confident the partnership announced today will create value for both PacWest and CU Bancorp shareholders.”
PacWest plans to cut costs equal to 50% of CU Bancorp’s operating expenses. It also expects to incur about $45 million in merger-related expenses.
Keefe, Bruyette & Woods and Manatt, Phelps & Phillips advised CU Bancorp. Sandler O’Neill and Sullivan & Cromwell advised PacWest.