UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 11, 2017 (December 7, 2017)
PACWEST BANCORP
(Exact name of registrant as specified in its charter)
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Delaware |
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001-36408 |
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33-0885320 |
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(State or other jurisdiction |
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(Commission File Number) |
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(IRS Employer Identification No.) |
9701 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90212
(Address of principal executive offices)
(310) 887-8500
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) of Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 1.01. Entry into a Material Definitive Agreement.
On December 7, 2017, Pacific Western Bank, a California-chartered commercial bank (“Pacific Western Bank”) and wholly-owned subsidiary of PacWest Bancorp, a Delaware corporation (“PacWest”), on behalf of itself and certain of its affiliates (together with Pacific Western Bank, “Pacific Western”), entered into a binding agreement with the loan trading desk of Morgan Stanley, a Delaware corporation (“Morgan Stanley”) under which Pacific Western would sell substantially all of its portfolio of healthcare, technology and general cash flow loans to Morgan Stanley Bank, N.A. an affiliate of Morgan Stanley (“MSBNA”). Upon consummation of the sale, which is anticipated to take place on or before December 31, 2017, MSBNA will pay Pacific Western approximately $1.48 billion for the portfolio. In connection with the sale of the portfolio, Pacific Western will exit its commercial lending origination operations related to its healthcare, technology and general cash flow lending groups. The portfolio of loans subject to the loan sale transaction had an outstanding principal balance of approximately $1.49 billion as of November 30, 2017.
The loan sale will be consummated pursuant to a master trade confirmation substantially in the form most recently published by The Loan Syndications and Trading Association, Inc. (“LSTA”) for par/near par trades, as well as an appropriate LSTA form assignment agreement. Pacific Western expects to receive the proceeds for substantially all sold loans by December 31, 2017.
Item 7.01. Regulation FD Disclosure.*
On December 11, 2017, PacWest issued a press release announcing the loan sale transaction, a copy of which is attached as Exhibit 99.1 of this Form 8-K.
Item 9.01 Financial Statements and Exhibits.*
(d) Exhibits.
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Exhibit No. |
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Description |
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99.1 |
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* The information furnished under Item 7.01 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of PacWest under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PACWEST BANCORP | ||
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Date: December 11, 2017 |
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By: |
/s/ Kori L. Ogrosky |
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Name: |
Kori L. Ogrosky |
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Title: |
EVP, General Counsel & Corporate Secretary |
PRESS RELEASE
PacWest Bancorp
(Nasdaq: PACW)
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Contact: |
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Donald D. Destino |
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Executive Vice President |
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Corporate Development and Investor Relations |
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Phone: |
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310-887-8521 |
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FOR IMMEDIATE RELEASE |
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December 11, 2017 |
PACWEST BANCORP ANNOUNCES LOAN PORTFOLIO SALE
Sale of $1.49 Billion Cash Flow Lending Portfolio Expected to be Completed by December 31, 2017
Los Angeles, California . . . PacWest Bancorp (Nasdaq: PACW) (“PacWest”) today announced it has agreed to sell cash flow loans with an aggregate carrying value of $1.49 billion as of November 30, 2017 and expects to recognize a pre-tax gain of approximately $13 million. In connection with the sale of this portfolio, PacWest is exiting its commercial lending origination operations related to Healthcare, Technology and General Cash Flows, while retaining and continuing to grow its Security Cash Flow business. PacWest will consider options for redeploying the liquidity generated by this transaction, including partially offsetting the anticipated negative impact to earnings per share by reducing the balance of wholesale deposits and potentially replacing the current $150 million share repurchase program with a larger authorization.
Matt Wagner, President and CEO commented, “For both cyclical and competitive reasons we have deemphasized growth in our cash flow lending except for our Security Cash Flow business. Today’s action substantially completes that process and allows management to focus attention and resources on profitably growing our other businesses. We believe the definitive nature of today’s action will enhance shareholder value in a number of ways including lowering our credit risk profile, decreasing earnings volatility and significantly mitigating the margin and growth headwinds resulting from incrementally shrinking the cash flow portfolio over time. We anticipate this action will also improve our funding mix by allowing the majority of our wholesale deposits to run off.”
The loan portfolio sale transaction, which was approved by PacWest’s Board of Directors, is expected to close in the fourth quarter of 2017. PacWest also expects to sell an additional portfolio of performing Technology Cash Flow loans with an aggregate principal balance of approximately $152 million prior to year-end at pricing similar to the aforementioned transaction.
PacWest will retain nine non-Security related Cash Flow lending relationships with an aggregate carrying value of approximately $100 million, of which four relationships with an aggregate carrying value of $39 million are classified. The classified loan aggregate carrying value net of associated reserves represents approximately 50% of the aggregate legal balance.
ABOUT PACWEST BANCORP
PacWest Bancorp (“PacWest”) is a bank holding company with over $25 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 76 full-service branches located throughout the state of California and one branch in Durham, North Carolina. We provide commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses. We offer additional products and services through our CapitalSource and Square 1 Bank divisions. Our CapitalSource Division provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis. Our Square 1 Bank Division offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovation hubs across the United States. For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.
FORWARD LOOKING STATEMENTS
This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results and metrics and including statements about the pending sale of our Healthcare, Technology and General Cash Flow loan portfolios (“Sale”) and this discontinuance of future loan originations in those categories. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. These risks and uncertainties include, but are not limited to, our ability to complete the proposed Sale subject to the terms of the definitive agreement, to generate future loan growth in the Security Cash Flow other types of loans, to improve the credit risk profile, to successfully implement potential share repurchases to offset the reduction in EPS expected as a result of the Sale and to reduce the amount of wholesale deposits as well as our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including the Annual Report on Form 10-K for the year ended December 31, 2016, and particularly the discussion of risk factors within that document.
All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.