Published on 3 Dec 2023 on Zacks via Yahoo Finance
Banc of California (BANC) Closes Buyout of PacWest Bancorp
The all-stock merger deal between Banc of California, Inc. BANC and PacWest Bancorp wrapped up late last week. Per the terms of the agreement, PacWest merged into Banc of California, and Banc of California, N.A. merged into Pacific Western Bank.Following the completion of the deal, shares of BANC jumped 7.5%.The deal received shareholder approvals in late November. All necessary regulatory approvals for the merger (announced in July) were received in October.The combined company is the third-largest bank based in California. Jared Wolff, CEO and president of BANC said, “By combining the best of two well-respected banks, we have created one of the nation’s premier, relationship-focused business banks. We look forward to sharing our expanded capabilities with clients and all the communities we serve.”Following the completion, the total assets of Banc of California quadrupled to almost $36 million after the previously disclosed balance sheet repositioning. Also, the total loan balance is approximately $25 billion and the total deposits are $30 billion. Further, the total number of branches is now more than 70 from the prior 26.
Balance Sheet Repositioning
As part of the balance sheet repositioning, Banc of California, N.A. and Pacific Western Bank sold roughly $1.9 billion in assets. The strategy includes additional asset sales, which are expected to be completed by the end of the first quarter of 2024.Specifically, Pacific Western Bank sold $1.5 billion of its securities portfolio, which included agency commercial mortgage-backed securities, agency collateralized mortgage obligations (CMO), treasury bonds, municipal bonds and corporate bonds. Likewise, Banc of California, N.A. divested $447.4 million of its securities portfolio, which consisted of agency mortgage-backed securities, CMOs and municipal bonds.Further, BANC sold a $1.8 billion single-family residential mortgage portfolio ("SFR Portfolio").The proceeds from the above-mentioned and future balance sheet repositioning strategy are likely to be largely used for “the repayment of the combined bank’s wholesale borrowings and higher cost funding.”