Banc of California unloading $2B in resi investor mortgages

LA-based bank had bought the business-purpose loans through merger with PacWest

Banc of California Selling $2B in Resi Loans
Banc of California's Jared Wolff and Banc of California branch at 800 Wilshire Boulevard, Los Angeles (Loopnet, Banc of California)

Banc of California is unloading $2 billion in residential real estate loans, which it acquired after its merger with Pacific Western Bank last year. 

The Brentwood-based bank is selling the business-purpose mortgage loans picked up after it bought the Beverly Hills bank in a rescue deal, Bloomberg reported, citing unidentified sources. The sale is being handled by Morgan Stanley.

Banc of California announced it was acquiring PacWest last summer after fears of bank failures led to a run on deposits at regional lenders. The deal closed in November.

Before the deal, PacWest sold off Civic Financial Services, the lending unit that made the loans, but retained the $2 billion pool of business-purpose loans. 

The loans up for sale are known as debt-service coverage loans, which are given to investor owners who rent out properties. The loans are underwritten based on expected rental revenue rather than bank statements or personal income. 

Bids for the loans were due on June 28, a source told Bloomberg.

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Earlier this year, Banc of California reported it had sold some of the Civic-originated loans it acquired from PacWest, according to a first quarter earnings call with CEO Jared Wolff. 

Wolff added the bank may look to sell larger parts of the portfolio in the coming quarter as part of the bank’s push to boost profits. 

Regional banks such as Banc of California have looked to trim their balance sheets ahead of the implementation of revamped bank-capital regulations known as Basel III Endgame, according to Bloomberg.

Many of the assets being shed by banks are purchased by private credit lenders who do not have to worry about risk-capital requirements.  

Banc of California, formerly based in Santa Ana, moved its hub to Los Angeles after the merger with PacWest. At the time, the business bank had $36.1 billion in assets under management and $25.3 billion in loans.

— Dana Bartholomew

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