PacWest Bancorp’s stock jumped 9% Monday after the bank announced the sale of a portfolio of 74 real-estate-construction loans with a principal balance of about $2.6 billion as it moves to refocus on its core community-banking business. The move sparked a broader rally in beaten-down regional-bank stocks, which have been volatile since the March collapse of Silicon Valley Bank and the takeover of First Republic Bank by JPMorgan Chase & Co. in early May.
There was further support for the sector from Hovde Group, which initiated coverage of Zions Bancorp with a bullish outperform rating, the equivalent of buy. PacWest
said it is selling the loans to a unit of real-estate-investment company Kennedy Wilson Holdings. “Kennedy Wilson or its designees will also assume all remaining future funding obligations under the acquired loans of approximately $2.7 billion,” PacWest said in a regulatory filing. The bank has also agreed to sell an additional six real-estate-construction loans with a principal balance of about $363 million to Kennedy Wilson. The sale of the loans is subject to Kennedy Wilson’s satisfactory due diligence. The company will place $20 million into a third-party escrow account that will be refundable. The deal is expected to close in several tranches in the second and third quarters. “There can be no assurance that the transaction will be completed in part or at all,” said the filing. See also: FD …
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