CapitalSource, a Maryland commercial lender that became a California bank to survive the financial crisis, is being purchased by PacWest Bancorp for $2.3 billion.
The move creates one of the largest commercial banks in California, with more than $15 billion in assets.
Los Angeles-based CapitalSource, which still has around 175 employees at its Chevy Chase, Md. office, was founded in 2000 by John K. Delaney, an entrepreneur now a Democratic member of Congress from Maryland.
CapitalSource was a high-flying finance company that specialized in lending to small and mid-size companies with revenues of $50 million or less. It flourished in the early and mid part of the decade but was laid low by the financial crisis. Delaney bought an ailing California-based bank because of its easy access to deposits, essentially turning his company into a bank.
CapitalSource’s subsidiary, CapitalSource Bank, has approximately $8.7 billion in assets and 21 branches throughout southern and central California, according to a news release issued as part of the purchase.
Pacific Western Bank has $6.7 billion and 75 branches in California.
CapitalSource shareholders will receive $2.47 in cash and 0.2837 shares of PacWest common stock for a share of CapitalSource common stock, the news release said. CapitalSource shareholders will own 55 percent of the merged bank, once the deal closes by the first quarter of 2014.
Bank analyst Todd L. Hagerman of Sterne Agee analysts said in a report that the potential economic value made the acquisition compelling.
“The critical mass achieved by combining two top-tier banks creates a formidable competitor in the (California) market,” Hagerman wrote.
CapitalSource chief executive James J. Pieczynski said he will stay with the new company.
Delaney said in an e-mail that he applauded the strategy of the transaction.