PacWest Bancorp (PACW) in Los Angeles is experiencing life on the other side of the bargaining table after its bank agreed to sell 10 branches to Opus Bank.
The sale of branches in Los Angeles, San Bernardino, Riverside and San Diego counties are part of PacWest's "effort to improve our overall efficiency and profitability," Matt Wagner, the $5.4 billion-asset company's chief executive, said in a press release. The sale will not result in a material gain for PacWest, but will provide $2 million in after-tax cost savings, Wagner said.
PacWest reported that its first-quarter noninterest expense totaled $68.9 million, up 66% from a year earlier, after it recorded $22.6 million in debt termination expense. Its base efficiency ratio was 97.1%, up from 58.7% a year earlier, because of the debt termination expense.
In recent months, PacWest has been aggressively pursuing deals. After six years without a traditional bank acquisition, it trumped Umpqua Holdings (UMPQ) by placing a higher, unsolicited bid for American Perspective Bank. It also made public its attempt to buy First California Financial Group (FCAL) in a potentially hostile takeover.
Buying the branches is part of Opus Bank's plan to expand to all major metropolitan areas along the West Coast, Stephen H. Gordon, the bank's chairman and chief executive, said in a separate press release. The deal would give the $2.4 billion-asset bank a presence in San Bernardino and Riverside counties.
Opus raised $100 million in capital last year to help it expand through organic growth and acquisitions. The Irvine, Calif., company said in May that it had opened branches in Long Beach and Pasadena, Calif., and last year it bought the $1.5 billion-asset Cascade Bank in Everett, Wash., and the $640 million-asset Fullerton Community Bank in Fullerton, Calif.
Under the deal with Pacific Western, Opus would buy the roughly $145 million in deposits at the branches for a blended deposit premium of 2.5%. Certain other "immaterial assets" related to the branches will be included but no loans will change hands. The bank's expect to complete the deal by the end of the year.
The deposits being transferred represent about 3% of PacWest Bank's total deposits at March 31. Once the deal closes, Pacific Western Bank will have 66 branches in California.