NOTE 3—ACQUISITIONS

We completed the FCAL acquisition during the time period of January 1, 2013 to March 31, 2014, using the acquisition method of accounting, and accordingly, the operating results of FCAL have been included in our condensed consolidated financial statements from its May 31, 2013 date of acquisition.

The following table presents the balance sheet of FCAL at estimated fair value as of its acquisition date:

	May 31, 2013

	(In thousands)
Assets Acquired:
Cash and due from banks	$	6,124
Interest-earning deposits in financial institutions		266,889
Investment securities available-for-sale		4,444
FHLB stock		9,518
Loans and leases		1,049,613
Other real estate owned		13,772
Premises and equipment		15,322
FDIC loss sharing asset		17,241
Cash surrender value of life insurance		13,265
Goodwill		129,070
Core deposit and customer relationship intangibles		7,927
Other assets		47,671


Total assets acquired	$	1,580,856




Liabilities Assumed:
Noninterest-bearing deposits	$	361,166
Interest-bearing deposits		739,713
Subordinated debentures		24,061
Discontinued operations		184,619
Accrued interest payable and other liabilities		19,729


Total liabilities assumed	$	1,329,288




Total consideration paid	$	251,568




Summary of consideration:
PacWest common stock issued	$	242,268
Cancellation of FCAL common stock owned by PacWest (at acquisition date fair value)		9,300


Total	$	251,568

First California Financial Group Acquisition

On May 31, 2013, we completed the acquisition of First California Financial Group, Inc., or FCAL. As part of the acquisition, First California Bank or FCB, a wholly-owned subsidiary of FCAL, merged with and into Pacific Western.

In the FCAL acquisition, each share of FCAL common stock was converted into the right to receive 0.2966 of a share of PacWest common stock. The exchange ratio was calculated based on the volume-weighted average share price of PacWest common stock for the 20 consecutive trading days ending on the second full trading day prior to the receipt of the last of the regulatory approvals required under the merger agreement. PacWest issued an aggregate of approximately 8.4 million shares of PacWest common stock to FCAL stockholders. In addition, 1,094,000 shares of FCAL common stock previously owned by PacWest at a cost of $4.1 million were cancelled in the transaction. These shares were carried in our securities available-for-sale portfolio at their estimated market value with their unrealized gain of $5.2 million included in stockholders' equity at May 31, 2013. Under acquisition accounting, this unrealized gain was recognized in earnings. Based on the closing price of PacWest's common stock on May 31, 2013 of $28.83 per share, the aggregate consideration paid to FCAL common stockholders, including the 1,094,000 shares of FCAL common stock owned by us and cancelled in the merger, was $251.6 million.

The FCAL acquisition has been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the May 31, 2013 acquisition date. The application of the acquisition method of accounting resulted in goodwill of $129.1 million. All of the recognized goodwill is expected to be non-deductible for tax purposes.

FCB was a full-service commercial bank headquartered in Westlake Village, California. FCB provided a full range of banking services, including revolving lines of credit, term loans, commercial real estate loans, construction loans, consumer loans and home equity loans to individuals, professionals, and small to mid-sized businesses. FCB operated 15 branches throughout Southern California in the Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura, and San Luis Obispo Counties. We made this acquisition to expand our presence in Southern California. We completed the conversion and integration of the FCB branches to Pacific Western's operating platform in June 2013 and as a result, we added seven locations to our branch network.

See Note 18, Subsequent Events, for information regarding the completion of the CapitalSource Inc. merger on April 7, 2014.