NOTE 4. ACQUISITIONS

The following assets acquired and liabilities assumed of the acquired entities are presented at estimated fair value as of their respective acquisition dates:



	Acquisition and Date Acquired
	Square 1 Financial, Inc.		CapitalSource Inc.		First California Financial Group
	October 6, 2015		April 7, 2014		May 31, 2013
	(In thousands)
Assets Acquired:
Cash and due from banks	$	24,867	$	768,553	$	6,124
Interest‑earning deposits in financial institutions	236,069		60,612		266,889
Investment securities available‑for‑sale	2,193,538		382,797		4,444
FHLB stock	2,787		46,060		9,518
Loans and leases	1,553,720		6,877,427		1,049,613
Equipment leased to others under operating leases	—		160,015		—
Premises and equipment	1,927		12,663		15,322
Foreclosed assets	—		6,382		13,772
FDIC loss sharing asset	—		—		17,241
Income tax assets	—		304,856		33,360
Goodwill	447,911		1,526,282		129,070
Core deposit and customer relationship intangibles	45,426		6,720		7,927
Other assets	106,757		582,985		27,576
Total assets acquired	$	4,613,002	$	10,735,352	$	1,580,856
Liabilities Assumed:
Noninterest‑bearing deposits	$	2,549,000	$	4,631	$	361,166
Interest‑bearing deposits	1,240,635		6,236,419		739,713
Other borrowings	—		992,109		—
Subordinated debentures	—		300,918		24,061
Discontinued operations	—		—		184,619
Accrued interest payable and other liabilities	25,934		124,087		19,729
Total liabilities assumed	$	3,815,569	$	7,658,164	$	1,329,288
Total consideration paid	$	797,433	$	3,077,188	$	251,568

Summary of consideration:
Cash paid	$	—	$	483,118	$	—
PacWest common stock issued	797,433		2,594,070		242,268
Cancellation of FCAL common stock owned by PacWest (at acquisition date fair value)	—		—		9,300
Total	$	797,433	$	3,077,188	$	251,568

Square 1 Financial, Inc. Acquisition

We acquired Square 1 Financial, Inc. ("Square 1") on October 6, 2015. As part of the acquisition, Square 1 Bank, a wholly-owned subsidiary of Square 1, merged with and into Pacific Western and we formed the Square 1 Bank Division of the Bank. The Bank provides a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors nationwide marketed under the Square 1 Bank Division brand.

Under the terms of the definitive agreement, Square 1 stockholders received 0.5597 of a share of PacWest common stock for each share of Square 1 common stock and holders of stock options and restricted stock units received cash consideration as described in the agreement. PacWest issued an aggregate of approximately 18.1 million shares of PacWest common stock to Square 1 stockholders and caused to be paid a total of $17.8 million to Square 1 equity award holders in satisfaction of all outstanding equity awards. Based on the closing price of PacWest's common stock on October 6, 2015 of $43.97 per share, the aggregate deal value paid to Square 1 common stockholders and holders of equity awards to acquire Square 1 common stock was approximately $815 million. Former holders of Square 1 common stock as a group received shares of PacWest common stock in the acquisition constituting approximately 15.0% of the outstanding shares of PacWest common stock immediately after the acquisition.

We completed the acquisition to improve our core deposits, expand our nationwide lending platform, and increase our presence in the technology and life-sciences credit markets. The Square 1 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 merger date. We made significant estimates and exercised significant judgment in estimating fair values and accounting for such acquired assets and liabilities. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. The application of the acquisition method of accounting resulted in goodwill of $448 million. All of the recognized goodwill is expected to be non-deductible for tax purposes.

CapitalSource Inc. Merger

We acquired CapitalSource Inc. on April 7, 2014. As part of the merger, CapitalSource Bank (“CSB”), a wholly-owned subsidiary of CapitalSource Inc., merged with and into Pacific Western Bank and we formed the CapitalSource Division of the Bank. We completed the merger in order to increase our loan and lease generation capabilities and to diversify our loan portfolio. The application of the acquisition method of accounting resulted in goodwill of $1.5 billion. All of the recognized goodwill was non‑deductible for tax purposes.

First California Financial Group Acquisition

On May 31, 2013, we acquired First California Financial Group, Inc. As part of this acquisition, First California Bank ("FCB"), a wholly-owned subsidiary of FCAL, merged with and into Pacific Western. The application of the acquisition method of accounting resulted in goodwill of $129.1 million. All of the recognized goodwill was non‑deductible for tax purposes.

Acquisition, Integration and Reorganization Costs

For each acquisition, we developed an integration plan for the Company that addressed, among other things, requirements for staffing, systems platforms, compliance-related activities, branch locations and other facilities. Based on these plans, we incurred charges which included severance, acceleration of stock-based compensation, systems integration and facilities-related charges including contract termination fees. These charges, along with legal, accounting, investment banking, valuation and other professional fees necessary to effect a business combination, were charged to acquisition, integration and reorganization costs on the consolidated statements of earnings. We incurred and charged to expense $21.2 million, $101.0 million and $40.8 million of such costs in 2015, 2014 and 2013.

The following table presents acquisition, integration and reorganization costs by major category for the years indicated:



	Year Ended December 31,
	2015		2014		2013
	(In thousands)
Acquisition, Integration and Reorganization Costs:
Severance and employee-related⁽¹⁾	$	10,550	$	57,868	$	21,497
System conversion and integration	4,246		1,868		3,829
Asset write-downs, lease terminations and other facilities-related	125		6,353		3,212
Asset financing segment reorganization	—		10,073		—
Investment banking deal costs	1,050		16,117		5,309
Other (legal, accounting, insurance, consulting)	5,276		8,737		6,965
Total acquisition, integration and reorganization costs	$	21,247	$	101,016	$	40,812

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(1)	Amount includes $26.1 million in 2014 and $12.4 million in 2013 for accelerated vesting of restricted stock awards.