ReportWire

Tag: signaturebank

  • PacWest stock rockets nearly 40% after Banc of California confirms plan to buy troubled bank

    PacWest stock rockets nearly 40% after Banc of California confirms plan to buy troubled bank

    [ad_1]

    PacWest Bancorp’s stock jumped more than 38% in after-hours trading Tuesday after the company said it had agreed to be acquired by Banc of California Inc. in an all-stock merger backed by two private-equity firms. The merger comes as PacWest looks to put a rocky period behind it.

    Under the terms of the merger agreement, PacWest
    PACW,
    -27.04%
    stockholders will receive 0.6569 of a share of Banc of California common stock for each share of PacWest common stock. Based on closing prices on Tuesday, the deal values PacWest at $9.60 a share, a premium over its closing price of $7.67 a share on Tuesday.

    Warburg Pincus and Centerbridge will provide $400 million in equity.

    PacWest stockholders will own 47% of the outstanding shares of the combined company, while the private-equity investors will own 19% and Banc of California shareholders will have 34%.

    PacWest said that it is the company being acquired and that it will change its name to Banc of California. PacWest said it will be the “accounting acquirer,” with fair-value accounting applied to Banc of California’s balance sheet at closing.

    Banc of California CEO Jared Wolff will retain the same role at the combined company.

    The combined company will repay about $13 billion in wholesale borrowings to be funded by the sale of assets, “which are fully marked as a result of the transaction, and excess cash,” the companies said.

    The merged company is currently projecting about $36.1 billion in assets, $25.3 billion in total loans, $30.5 billion in total deposits and more than 70 branches in California.

    John Eggemeyer, the independent lead director at PacWest, will be chair of the board of the combined company following the merger.

    The board of directors of the combined company will consist of 12 directors: eight from the existing Banc of California board, three from the existing PacWest board and one from the pair of private-equity firms led by Warburg Pincus.

    Citing sources close to the deal, the Wall Street Journal had reported earlier that a tie-up was imminent.

    In regular trading Tuesday, PacWest’s stock ended 27% down; trading was halted for volatility following the report of the deal.

    Banc of California’s stock rose 11% but was later halted for news pending as well. The stock rose more than 9% in after-hours trading on Tuesday.

    At last check, PacWest’s market capitalization was about $1.2 billion, while Banc of California’s was about $764 million. Combined, the business would be worth about $2 billion.

    PacWest’s big share-price move on Tuesday marks the latest in a volatile few months for the Beverly Hills, Calif., bank, which was founded in 1999.

    Investors had speculated that the bank could be the next to fail after Silicon Valley Bank and Signature Bank failed in March and First Republic Bank was taken over by JPMorgan.

    Also on Tuesday, PacWest said it lost $207.4 million, or $1.75 a share, in its second quarter, as it got a hit from items related to loan sales and restructuring of its lending unit Civic. The loss contrasts with earnings of $122 million, or $1.02 a share, in the year-ago period.

    Analysts polled by FactSet expected the bank to report a loss of 58 cents a share in the quarter.

    PacWest disclosed in recent months that it was exploring strategic alternatives while it sold off parts of its business to raise cash to strengthen its balance sheet. It sold a loan portfolio to Ares Management Corp.
    ARES,
    +0.92%
    in a move to generate $2 billion.

    Also read: PacWest sells loan portfolio to Ares Management in deal that generates $2 billion ‘to improve liquidity’

    It also sold a portfolio of loans to Kennedy-Wilson Holdings Inc.
    KW,
    -1.70%    ,
    which then sold part of the portfolio to Canada’s Fairfax Financial Holdings Ltd.
    FFH,
    +1.07%    .

    Also read: PacWest sparks regional-bank rally after unveiling plan to sell loans worth $2.6 billion

    In May, PacWest sold its real-estate lending portfolio to Roc360.

    Also in May, PacWest’s stock dropped more than 20% after it said it had lost 9.5% of its deposits amid market volatility.

    [ad_2]

    Source link

  • Jamie Dimon discourages use of term credit crunch on call with analysts

    Jamie Dimon discourages use of term credit crunch on call with analysts

    [ad_1]

    “‘It’s not like a credit  crunch.’”


    — Jamie Dimon

    While it will be more expensive for banks to deploy capital this year, talk of a possible credit crunch tied to higher interest rates remains overblown, JPMorgan Chase & Co. CEO Jamie Dimon said Friday.

    Although Dimon acknowledged that more challenging lending conditions are already being seen in the real-estate sector, he said bank credit overall will continue to flow despite concerns about a credit crunch voiced by Chicago Fed President Austan Goolsbee on Friday.

    “Obviously, there’s going to be a little bit of tightening, and most of that will be around certain real-estate things,” Dimon said, according to a transcript of JPMorgan’s first-quarter earnings call with analysts. “You’ve heard it from real-estate investors already, so I just look at that as a kind of thumb on the scale. It just [means] the fast conditions will be a little bit tighter, [which] increases the odds of a recession. That’s what that is. It’s not like a credit crunch.”

    In real estate, banks have been hit both by a drop in mortgage demand due to higher interest rates as well as a looming wall of debt from office properties affected by slack demand for space. For its part, JPMorgan said Friday that its office-sector exposure is less than 10% of its portfolio and is focused in dense urban markets.

    Also read: JPMorgan Chase stock moves positive for the year after it blasts past earnings and revenue estimates

    On the call, analyst John McDonald of Autonomous Research asked, “There’s a narrative out there that the industry could see a credit crunch. Banks are going to stop lending, and even [Federal Reserve Chair] Jay Powell mentioned that as a risk.”

    Dimon responded: “Yeah, I wouldn’t use the word ‘credit crunch’ if I were you.”

    Dimon was also asked about the regulatory landscape for banks after the collapse of Silicon Valley Bank and Signature Bank in March.

    “Look, we’re hoping that everyone just takes a deep breath and looks at what happened and the breadth and depth of regulations already in place,” Dimon said. “Obviously, when something happens like this you should adjust, think about it.”

    Down the road, Dimon said, he could see potential limitations on held-to-maturity assets and perhaps more total loss-absorbing capacity for certain banks, as well as more scrutiny around interest-rate exposure.

    “It doesn’t have to be a revamp of the whole system — just recalibrating things the right way,” Dimon said. “The outcome you should want is very strong community and regional banks. And certain [drastic] actions … could actually make them weaker. So that’s all it is.”

    JPMorgan is also expecting to absorb higher capital requirements under the so-called Basel IV international banking measures, as well as an assessment to banks of the costs of the collapse of Silicon Valley Bank and Signature Bank by the Federal Deposit Insurance Corp., he said.

    Also read: JPMorgan Chase CEO Jamie Dimon says looser rules did not cause recent bank failures

    [ad_2]

    Source link

  • First Republic gets $30 billion in deposits from 11 major U.S. banks, but stock resumes slide as it suspends dividend

    First Republic gets $30 billion in deposits from 11 major U.S. banks, but stock resumes slide as it suspends dividend

    [ad_1]

    Bank of America BAC, Citigroup C, JPMorgan Chase JPM and Wells Fargo WFC said Thursday that they are each making $5 billion in uninsured deposits into First Republic Bank FRC as part of a $30 billion backstop by 11 banks against the ravaged banking landscape of the past week.

    However, First Republic stock fell 14.7% in after-hours trading after the bank said it would suspend its dividend to conserve cash. The bank last paid a quarterly dividend of 27 cents a share on Feb. 9 to shareholders of record as of Jan. 26.

    It…

    [ad_2]

    Source link

  • U.S. bank stocks end with solid gains as 11 banks pledge $30 billon to First Republic

    U.S. bank stocks end with solid gains as 11 banks pledge $30 billon to First Republic

    [ad_1]

    U.S. bank stocks ended regular trading with solid gains on Thursday, as banks announced a $30 billion deposit capital infusion for First Republic Bank and as Treasury Secretary Janet Yellen cited the strength of the financial system.

    The 11 banks confirmed a report from the Wall Street Journal and others about providing financial support for First Republic Bank FRC.

    U.S….

    [ad_2]

    Source link

  • First Republic and Western Alliance pace big rebound in regional-bank stocks after huge losses

    First Republic and Western Alliance pace big rebound in regional-bank stocks after huge losses

    [ad_1]

    Shares of regional banks posted big gains on Tuesday as they regained their footing after huge losses in the previous session, but volatility continued in the sector following the demise of Silicon Valley Bank, Signature Bank and Silvergate Capital in the past week.

    While the rise in some cases is eye-popping, most stocks have yet to recover fully from losses in the past few days. Most stocks are trading well below their levels from a week ago, even with Tuesday’s gains.

    Among…

    [ad_2]

    Source link