PacWest Bancorp (PACW - Free Report) announced signing an agreement to acquire Placerville, CA-based El Dorado Savings Bank, F.S.B., for nearly $466.7 million. The company plans to merge El Dorado with its principal subsidiary — Pacific Western Bank.
The merger, approved by the board of directors of both companies, will likely conclude by first-quarter 2019. The cash-and-stock deal now awaits approval from regulatory authorities and El Dorado’s shareholders.
As part of the agreement, for each share of El Dorado, PacWest will issue 58.2209 shares of its common stock and pay $427.92 in cash. This will result in a new equity of $406.9 million and total cash outlay of $59.8 million for PacWest.
El Dorado, with an asset base of $2.2 billion, deposits of $1.93 million and capital of $220 million, enjoys a robust financial position. Following the closure of the transaction, El Dorado branches will not be consolidated with PacWest’s. Notably, compilation of both companies’ assets, as of Jun 30, 2018, totals nearly $26.7 billion in assets for the merged entity.
El Dorado’s management considers this merger to provide lucrative returns to all its stakeholders. Moreover, PacWest’s experience in seamless merger transition will ensure that El Dorado’s customers do not face any difficulties post merger.
El Dorado’s presence in eight Northern California counties and two Northern Nevada counties will likely expand PacWest’s reach in California. This will also result in long-term wealth creation for shareholders of both companies.
PacWest’s shares have gained 9.8% over the past year compared to the industry’s growth of 20.5%. The stock currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same space are Bank of Commerce Holdings (CA) (BOCH - Free Report) , Bank of Marin Bancorp (BMRC - Free Report) and Bay Commercial Bank (BCML - Free Report) . All these stocks flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..
Over the last 60 days, the Zacks Consensus Estimate for Bank of Commerce’s current-year earnings has been revised 8.8% upward. Its share price has gained 25.5% in the past year.
Bank of Marin’s earnings estimates for 2018 have been revised 5.6% upward over the past 60 days. Its shares have surged 32.5% in a year’s time.
Over the last 60 days, Bay Commercial’s 2018 earnings estimate moved 9.4% north. Over the past year, its share price has appreciated 54.2%.
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