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PacWest (PACW) Bolsters Balance Sheet With $3.54B Asset Sale
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PacWest Bancorp has announced the divestiture of a portfolio of Lender Finance loans to the alternative investment manager, Ares Management Corporation (ARES - Free Report) . Per the regulatory filing, the sale involves a portfolio with an aggregate commitment amount of $3.54 billion, including an outstanding principal balance of $2.21 billion.
The first tranche of the sale, amounting to $2.07 billion, was closed on Jun 22, with Ares Management assuming $187.14 million of the $1.33 billion of unfunded commitment. This initial transaction resulted in cash proceeds of $2.01 billion (before transaction costs) for PACW. The remaining portion of the portfolio will be sold in subsequent tranches, subject to customary closing conditions.
The sale is part of PacWest's ongoing efforts to optimize its balance sheet, strengthen financial position and focus on core community banking business. This development boosted the company's stock, which rallied 4% yesterday. The positive response from investors reflects growing confidence in the company's strategic direction.
The proceeds from the sale of the loan portfolio, combined with the cash proceeds from the previous sale of National Construction loans amounting to almost $2.36 billion, will further enhance PACW's liquidity and capital ratios. In May, the company announced the divestitures of its property lending division – Civic Financial Services ("CIVIC") – and real estate construction loan portfolio worth $2.6 billion.
The CIVIC unit was sold to Roc Capital Holdings LLC, an integrated platform for residential real estate investors and a leading originator of business-purpose loans across the United States. Further, PACW signed an agreement with a wholly-owned subsidiary of Kennedy-Wilson Holdings, Inc. (KW - Free Report) to sell 74 real estate construction loans worth $2.6 billion. As part of the deal, the company will sell another six real estate construction loans with an outstanding principal balance of nearly $363 million to KW.
These strategic initiatives will enable PacWest to enhance its financial stability, streamline operations and better allocate resources to the core community banking operations. These efforts position the company for long-term success in the market.
The recent sale comes as PacWest continues to navigate the challenges faced by the regional banking sector. The industry turmoil earlier this year had a significant adverse impact on many regional banks, including PacWest. The banking turmoil led to concerns about deposit stability and profitability for regional banks. But in recent weeks, investors are gradually turning bullish on the regional bank stocks, signaling that the worst may be over.
As the regional banking industry recovers from recent challenges, PacWest's proactive actions demonstrate its commitment to adapting to changing market conditions and positioning itself for future growth and success.
Over the past three months, shares of PacWest have lost 19.8% compared with industry’s decline of 14.5%.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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PacWest (PACW) Bolsters Balance Sheet With $3.54B Asset Sale
PacWest Bancorp has announced the divestiture of a portfolio of Lender Finance loans to the alternative investment manager, Ares Management Corporation (ARES - Free Report) . Per the regulatory filing, the sale involves a portfolio with an aggregate commitment amount of $3.54 billion, including an outstanding principal balance of $2.21 billion.
The first tranche of the sale, amounting to $2.07 billion, was closed on Jun 22, with Ares Management assuming $187.14 million of the $1.33 billion of unfunded commitment. This initial transaction resulted in cash proceeds of $2.01 billion (before transaction costs) for PACW. The remaining portion of the portfolio will be sold in subsequent tranches, subject to customary closing conditions.
The sale is part of PacWest's ongoing efforts to optimize its balance sheet, strengthen financial position and focus on core community banking business. This development boosted the company's stock, which rallied 4% yesterday. The positive response from investors reflects growing confidence in the company's strategic direction.
The proceeds from the sale of the loan portfolio, combined with the cash proceeds from the previous sale of National Construction loans amounting to almost $2.36 billion, will further enhance PACW's liquidity and capital ratios. In May, the company announced the divestitures of its property lending division – Civic Financial Services ("CIVIC") – and real estate construction loan portfolio worth $2.6 billion.
The CIVIC unit was sold to Roc Capital Holdings LLC, an integrated platform for residential real estate investors and a leading originator of business-purpose loans across the United States. Further, PACW signed an agreement with a wholly-owned subsidiary of Kennedy-Wilson Holdings, Inc. (KW - Free Report) to sell 74 real estate construction loans worth $2.6 billion. As part of the deal, the company will sell another six real estate construction loans with an outstanding principal balance of nearly $363 million to KW.
These strategic initiatives will enable PacWest to enhance its financial stability, streamline operations and better allocate resources to the core community banking operations. These efforts position the company for long-term success in the market.
The recent sale comes as PacWest continues to navigate the challenges faced by the regional banking sector. The industry turmoil earlier this year had a significant adverse impact on many regional banks, including PacWest. The banking turmoil led to concerns about deposit stability and profitability for regional banks. But in recent weeks, investors are gradually turning bullish on the regional bank stocks, signaling that the worst may be over.
As the regional banking industry recovers from recent challenges, PacWest's proactive actions demonstrate its commitment to adapting to changing market conditions and positioning itself for future growth and success.
Over the past three months, shares of PacWest have lost 19.8% compared with industry’s decline of 14.5%.
Image Source: Zacks Investment Research
Currently, PACW stock carries a Zacks Rank # 5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.