Century City’s PacWest Bancorp announced a blockbuster deal, disclosing plans to buy CapitalSource Inc., the downtown L.A. parent of industrial lender CapitalSource Bank.
It’s the latest and largest acquisition for PacWest, which recently purchased Westlake Village’s First California Bank and has acquired a handful of other financial institutions over the past few years. The $2.3 billion cash-and-stock deal with CapitalSource is expected to close early next year, with CapitalSource Bank merging into PacWest’s Pacific Western Bank.
The combined institution will be the fourth largest bank in Los Angeles by assets, behind only only City National Bank, East West Bank and OneWest Bank.
CapitalSource is larger than PacWest, with $8.7 billion in assets as of June 30 compared with PacWest’s $6.7 billion. But CapitalSource is licensed as an industrial bank, not a typical commercial bank, meaning it cannot offer checking accounts. Checking accounts offer commercial banks a cheap source of funds.
In recent filings with the Securities and Exchange Commission, CapitalSource executives said they were seeking a commercial bank charter. In a statement Monday announcing the deal, James Pieczynski, chief executive of CapitalSource, said the need for cheaper funds spurred the deal.
“PacWest fills the need of CapitalSource for a more stable and low cost deposit base,” Pieczynski said. “CapitalSource will give PacWest a more robust and diverse lending presence. Both institutions share a conservative credit culture and have talented and dedicated employees that will make the combined company much more than the sum of its parts going forward."