The board of First California Financial Group Inc. took heat from shareholders for rejecting an acquisition offer earlier this year. But it seems holding out paid off.
The Westlake Village bank holding company agreed last week to sell itself to PacWest Bancorp for $231 million, or $8 a share – a 10 percent increase from PacWest’s offer in May.
The price also represented a 19 percent premium over First California’s share price when the deal was announced, sending its stock surging. Shares closed Nov. 7 at $7.60, up nearly 13 percent for the week, making it one of the top gainers on the LABJ Stock Index. (See page 36.)
Century City’s PacWest, which has closed two other acquisitions this year, had been after First California for a while. PacWest began exploring a possible deal last year and this May publicly disclosed that it had offered to buy First California for $7.25 a share, but the offer was “summarily rejected.”
Several large First California shareholders, including Castine Capital Management in Boston and Loeb Capital Management in New York, criticized the bank for rejecting the offer. In response, First California’s board announced in August that it had hired advisers to explore strategic options, including a possible sale.
Brian Klock, an analyst with New York’s Keefe Bruyette & Woods Inc., said several other banks expressed interest in acquiring the institution, including L.A.’s City National Corp. and an unnamed out-of-state bank, though it is unclear which banks actually made offers.
PacWest did not return calls requesting comment. First California declined to comment.
While PacWest ultimately paid a higher price for First California, Klock said it is still a good deal because it gives PacWest greater scale and will be accretive to earnings very quickly.
“It was an acquisition that had a lot of drama behind it, but I think it’s one of those rare acquisitions where both the buyer and seller are benefiting,” he said.
The deal, which is expected to close in the first quarter, gives PacWest pro forma assets of $7.5 billion and 81 branches across California. The holding company’s subsidiary, Pacific Western Bank, will become the fourth largest bank headquartered in Los Angeles County.
But the bank might not be done yet. Klock noted that PacWest has made about two dozen small acquisitions since 2000.
“By next year, I think they’ll be looking for another acquisition,” he said. “One of the things, in my opinion, that PacWest is very good at is acquisitions.”
City National last week seized the opportunity of favorable market conditions to raise capital.
The holding company for City National Bank priced an offering of $175 million of preferred stock, which management said would be used to pay down debt and explore expansion opportunities. The offering is expected to close this week.
“In light of the company’s robust growth in loans and deposits over the past four years as well as its two recent acquisitions, we want to further enhance our strong capital ratios, which already significantly exceed regulatory minimums, and expand our capacity and flexibility for future growth,” Chief Executive Russell Goldsmith said in a statement.
San Francisco’s First Republic Bank announced it will acquire Luminous Capital Holdings LLC, a wealth management firm in Century City.
Luminous, which also has offices near San Francisco, will merge with First Republic Investment Management. Luminous has about $5.5 billion in assets under management.
Financial terms of the deal, which is expected to close by the end of the year, were not disclosed.
As part of the agreement, Luminous’ six partners will sign long-term contracts.
Hanmi Financial Corp., the Koreatown parent of Hanmi Bank, said that Chief Financial Officer Lonny Robinson will resign this week. Shick (Mark) Yoon, currently a senior vice president, will serve as interim chief financial officer. … Gores Group LLC, a private-equity firm in Westwood, announced that Scott Honour, a senior managing director, is retiring. … Wedbush Securities, the broker-dealer subsidiary of downtown L.A.’s Wedbush Inc., has hired Richard Wright as a senior vice president in its private client services group. … Manhattan Bancorp, the El Segundo holding company for Bank of Manhattan, said that Gary Wallace was appointed to the board. … Early Growth Financial Services, a financial consulting firm in San Jose, has hired Mark Wilson as chief financial officer and head of its newly opened L.A. office.
Staff reporter Richard Clough can be reached at firstname.lastname@example.org or (323) 549-5225, ext. 251.
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