JPMorgan Chase to buy $1.8B in mortgages from Banc of California

Deal is contingent on bank’s merger with PacWest

JPMorgan Chase's Jamie Diamon and Pacific Western Bank's Paul Taylor (Pacific Western Bank, Getty)
JPMorgan Chase's Jamie Diamon and Pacific Western Bank's Paul Taylor (Pacific Western Bank, Getty)

The pending Banc of California merger with Pacific Western Bank has an East Coast riff: JPMorgan Chase will buy almost $2 billion in mortgages to grease the deal.

The New York-based investment bank has entered into an agreement to buy $1.8 billion of single-family residential loans at a discount, Reuters reported, citing an unidentified source.

The seller is Banc of California, now based in Santa Ana, which will relocate to Los Angeles after the merger.

Banc of California had entered into a “contingent forward asset sale agreement” for its residential mortgage portfolio, the bank said in a presentation this week, without naming the buyer, identified as JPMorgan Chase.

Banc of California and PacWest, based in Beverly Hills, announced an all-stock merger, with a $400 million equity raise from Warburg Pincus and Centerbridge Partners to create a bank with $36 billion in assets.

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The merger is expected to be finished late this year or early next year. The mortgage sale will close at the same time, the source told Reuters 

The merger of both banks marks a rare moment after months of government-negotiated sales of failed banks, with bank mergers held up for months, or killed while waiting for regulatory approval.

The new firm will be based in Los Angeles, with Banc of California CEO Jared Wolff retaining his role at the combined company. The merged firm will keep the Banc of California name and have $36.1 billion in assets under management and $25.3 billion in loans and will continue real estate lending, the firms said.

With the deal, Banc of California will significantly boost its residential mortgage holdings, according to financial reports, as well as its commercial real estate loan book. 

— Dana Bartholomew

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