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In what would be its largest acquisition in more 15 years, UnionBanCal Corp. in San Francisco is buying Pacific Capital Corp. in Santa Barbara, Calif., for about $1.5 billion in cash.
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UnionBanCal Corp. is taking the unusual step of marking up the value of Pacific Capital Corp.'s loan portfolio as part of its $1.5 billion deal for the Santa Barbara, Calif., lender.
Though a pre-tax increase of $27 million on Pacific Capital's $3.6 billion portfolio would be small, it is the first major deal in at least a year in which the seller's loans would be marked up instead of being devalued.
The main reason is that Pacific Capital sharply lowered the face value of its loans, liabilities and equity when it
The
Credit markdowns in mergers have been getting smaller as the industry recovers.
PNC Financial Services Group Inc. included a markdown of 12.5%, or nearly $2.2 billion, in its agreement last year to buy RBC Bank USA for $3.45 million.
Prosperity Bancshares Inc. in Houston plans to mark down by roughly 2%, or $24.5 million, the loan book of American State Financial Corp. Prosperity agreed last month to
Under the deal announced Monday, UnionBanCal would make two positive adjustments to Pacific Capital's tangible book: a $248 million reversal of a deferred tax asset valuation allowance, as well as an after-tax credit write-up of $20 million.
The deal is worth about 160% of Pacific Capital's current $941 million tangible book value.
