El Dorado Savings Bank, recognizable by its high-contrast signs, will continue its independent operations as the planned merger with PacWest Bancorp has been called off.
The acquisition, initially announced in September of the previous year, was dependent on shareholder approval. However, at a special shareholders’ meeting held on January 9th, the agreement for PacWest Bancorp to acquire Eldorado Savings Bank did not secure the necessary affirmative votes to proceed. Consequently, PacWest Bancorp officially terminated the merger agreement.
“We’re very disappointed,” stated El Dorado Savings chairman Tom Meuser. “Our board of directors and management team dedicated significant effort to finalize this merger. We value our partnership with PacWest, and it’s unfortunate that we didn’t receive the required two-thirds vote.”
According to a press release from PacWest, Mr. Meuser explained that shareholder support was negatively impacted by an unforeseen downturn in bank stock values. This decline diminished the cash value associated with each share of stock, influencing the shareholder vote.
El Dorado Savings Bank Sign
When the acquisition was initially announced on September 12th, the deal was valued at $466.7 million. The terms stipulated that each stockholder would receive 58.22 shares and $428 in cash. Mr. Meuser noted that while in September the stock price was approximately $50 per share, it had decreased to as low as $31 during the merger process. Although values had recovered to $39 per share by Tuesday, January 22nd, according to Mr. Meuser, it was insufficient to convince shareholders at the time of the vote.
El Dorado Savings Bank CEO George Cook, Jr. had previously indicated in September that the transition process was anticipated to commence in the spring of this year, had the transaction been successful. At that time, Mr. Cook did not foresee branch closures or employee layoffs, suggesting that the primary visible change would be the bank’s signage.
Mr. Cook had also commented on the trend of bank consolidation, noting the significant reduction in the number of banks in the U.S. from 15,000 around the start of the century to approximately 5,000. He emphasized the necessity for banks, including Eldorado Savings Bank, to expand to remain competitive. Furthermore, he highlighted the increasing burden of regulations on smaller banking operations.
Despite the merger termination, Mr. Meuser expressed confidence in the future of El Dorado Savings Bank. He affirmed that the bank would resume its standard operations, including originating real estate loans and managing deposits, serving the financial needs of its customers.
While acknowledging potential challenges ahead without the merger, Mr. Meuser emphasized El Dorado Savings Bank’s long history of overcoming obstacles throughout its 60 years of operation. Regarding future acquisition offers from larger banks, Mr. Meuser stated that while they would consider such opportunities due to their financial responsibility, actively seeking a merger is not currently on their agenda.
“Mergers involve considerable disruption, requiring communication with both employees and customers about the implications,” Mr. Meuser explained. “We have reassured our employees and customers that it is business as usual at Eldorado Savings Bank.”
Established in 1958 and headquartered in Placerville, Eldorado Savings Bank operates 31 branches across Northern California and four in Northern Nevada, including three branches in the Lake Tahoe area.
PacWest Bancorp, the acquirer in the terminated deal, is a bank holding company with assets exceeding $24 billion. Its primary subsidiary, Pacific Western Bank, manages 74 branches in California and one in Durham, North Carolina.
