PacWest to enter northern Calif. with El Dorado Savings purchase
PacWest Bancorp in Los Angeles has agreed to buy El Dorado Savings Bank in Placerville, Calif.
The $26.7 billion-asset PacWest said in a press release Wednesday that it will pay $466.7 million in cash and stock for the $2.2 billion-asset El Dorado. The deal, which is expected to close in the first quarter, priced El Dorado at 205% of its tangible book value.
El Dorado has $600 million in loans and $2 billion in deposits. It has 35 branches in northern California and two in northern Nevada; PacWest plans to keep all of those branches open.
PacWest has more than 70 branches in central and Southern California. It has been active acquirer, buying eight banks over the last decade. Its most recent acquisition was last year's purchase of California United Bank in Los Angeles.
The acquisition "opens an entirely new banking market for us with a high-quality and prudently managed 60-year-old institution,” Matt Wagner, PacWest's president and CEO, said in the release. “We are confident the proposed merger will create long-term value for both PacWest and El Dorado stockholders, provide a broader product array for customers and enhance our California community bank franchise.”
PacWest said it expects the deal to be 1% accretive to its 2019 and 2020 earnings per share. It should take a little more than three years to earn back any dilution to PacWest's tangible book value.
PacWest plans to cut about 17% of El Dorado's annual noninterest expenses. It expects to incur roughly $35 million in merger-related expenses.
John Cook, El Dorado's president, will become president of PacWest's Central Valley-Sierra region.
Keefe, Bruyette & Woods and Sullivan & Cromwell advised PacWest. Sandler O’Neill and Manatt, Phelps & Philips advised El Dorado.