El Dorado Savings Bank to remain as buy-out fails
January 29, 2019
For now, the high-contrast signs of El Dorado Savings Bank are here to stay.
Last September PacWest Bancorp announced it intended to acquire El Dorado Savings Bank, pending shareholder approval, but the deal has fallen through.
PacWest Bancorp terminated the merger agreement after a special shareholders' meeting on Jan. 9. At the meeting, the agreement for PacWest to acquire El Dorado Savings Bank did not receive enough affirmative votes legally required to move forward.
"We're very disappointed," El Dorado Savings chairman Tom Meuser said. "Our board of directors and management worked hard on this to get it done. We have a great partnership with PacWest and unfortunately it didn't get the two-thirds vote."
In a press release from PacWest, Meuser said shareholders' support was affected by a recent and unexpected decline in bank stocks, which reduced the cash value of each shareholder's stock.
When the pending acquisition was announced on Sept. 12, the transaction was valued at $466.7 million. Each stockholder was to receive 58.22 shares and $428 in cash.
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Meuser said that in September, each share was around $50. During the merger process, values had fallen as low as $31 a share. As of Tuesday, Jan. 22, they had since climbed to $39 per share, Mueser said, but at the time of the shareholders' vote, it wasn't enough to convince them to move forward with the deal.
Had the transaction gone through, El Dorado Savings Bank CEO George Cook, Jr. said in September that the transition would have begun in spring of this year. Cook did not anticipate branch closures or employee layoffs at that point, and said not much else besides the bank's signs would be changing.
Cook did note that banks have been declining in recent decades, with the country's 5,000 banks down from 15,000 near the turn of the century. In order to survive banks will need to expand, including El Dorado Savings, Cook said in September.
He also noted that increasing regulations are hard on smaller bank operations.
But on Tuesday, Meuser remained confident in El Dorado Savings Bank's future, saying that the bank will return to regular operations like issuing real estate loans and handling deposits.
Without the merger, the road ahead may present some obstacles, but Meuser said the bank has overcome plenty of challenges in its 60 years of operation. If a larger bank presents an opportunity to acquire El Dorado Savings, Meuser said they have a financial responsibility to look into the option, but it is not something the bank will seek out at this point.
"There is a lot of turmoil when you're involved in a merger, letting employees and customers know what's going to happen," Meuser said. "We told employees and customers it's back to business as usual."
El Dorado Savings Bank, headquartered in Placerville, got its start in 1958. It has 31 branches across Northern California and four in Northern Nevada, with three on Lake Tahoe's South Shore.
PacWest Bancorp is a holding company with over $24 billion in assets. Its single subsidiary, Pacific Western Bank, has 74 branches across California and one in Durham, N.C.