DEF 14A: Banc of California Completes Transformative Merger with PacWest, Solidifying Position as Premier California Business Bank

Banc of California's merger with PacWest Bancorp establishes it as the third-largest bank headquartered in California, marking a transformational year for the company.

Summary

• Banc of California completed its merger with PacWest Bancorp on November 30, 2023, becoming the third-largest bank headquartered in California.
• The merger was accompanied by a $400 million equity raise from Warburg Pincus LLC and Centerbridge Partners, L.P.
• Following the merger, Banc of California sold approximately $6 billion of lower-yielding assets and used the proceeds to pay off higher-cost funding sources.
• The company maintained stability in its deposit base, with average noninterest-bearing deposits remaining above 35% of total average deposits up to the merger closing.
• The 2024 Annual Meeting of Stockholders will be held on May 9, 2024, in Santa Ana, California.
• Stockholders will vote on the election of twelve director nominees and the advisory approval of executive compensation.

Sentiment

Score: 8

Explanation: The document expresses a positive outlook due to the successful merger, equity raise, and strategic balance sheet repositioning. The tone is optimistic about future growth and shareholder value.

Positives

• The merger with PacWest Bancorp strengthens Banc of California's market position and provides increased resources for investment in technology and talent.
• The company successfully navigated the banking industry crisis in early 2023, maintaining stability in its deposit base and high levels of capital and liquidity.
• The completion of a $400 million equity raise enhances the company's financial strength.
• The company expects to capture market share due to competitors exiting or pulling back from the California banking market.
• The company's strong franchise and superior level of service should allow it to capture market share.

Negatives

• The document does not explicitly detail any negatives, but it acknowledges economic uncertainty and pressure on earnings from the high-interest rate environment.

Risks

• The document does not explicitly detail any risks, but it acknowledges economic uncertainty and pressure on earnings from the high-interest rate environment.

Future Outlook

The company believes that it will generate strong results for its stockholders and further enhance the long-term value of its franchise in 2024 and beyond, due to its strong market position, franchise strength, and superior level of service.

Management Comments

• 'This last year was an exceptional one for our franchise,' stated John M. Eggemeyer, Chair of the Board.
• Jared M. Wolff, Vice Chair of the Board, President and Chief Executive Officer, highlighted the transformation of the company through the merger with PacWest Bancorp.

Industry Context

The merger positions Banc of California to capitalize on market changes, with competitors exiting or significantly pulling back from the California banking market.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards beyond mentioning the KBW NASDAQ Regional Banking Index.
• The document does not provide specific comparisons to comparable companies.

Management Changes

Related Party Transactions

• The Company is a party to a services agreement with IntraFi Network LLC (IntraFi) whereby IntraFi provides the Bank with certain insured cash sweep services from time to time.
• Affiliates of funds managed by Warburg Pincus LLC hold a material investment interest in IntraFi.
• For the year ended December 31, 2023, the amount paid to IntraFi for certain insured cash sweep services was approximately $10 million.

Stakeholder Impact

• The merger is expected to generate strong results for stockholders and enhance the long-term value of the franchise.
• The company is committed to supporting the communities in which it operates through its CRA Program and a $4.1 billion, three-year Community Benefits Plan.
• The company aims to provide a supportive and inclusive workplace environment for its employees.

Next Steps

• The company will continue to integrate the ESG programs of both legacy organizations into a cohesive framework.
• The company will finalize plans for integration in 2024 including the core system conversion and office consolidation.
• The company will meet with Native American leaders in 2024, leading to the development of a plan in 2024 to serve the Native American community in the combined institutions assessment area.

Key Dates

Keywords

Banc of California, PacWest Bancorp, Merger, Annual Meeting, Proxy Statement, Executive Compensation, Board of Directors, Stockholders, Financial Performance, Warburg Pincus, Centerbridge Partners, Equity Raise, Deposits, Loans, California Banking