The stock of PacWest Bancorp. increased by 3% premarket on Monday after the bank disclosed asset sales that would allow it to focus on its primary local banking service.
The regional bank PACW, +10.03% announced that it has entered into an agreement to sell a system of real estate investment company Kennedy Wilson Holdings a portfolio of 74 property building loans with a primary amount of around $2.6 billion.
Kennedy Wilson or its designees will also assume all remaining future financing obligations under the obtained loans, totaling around $2.7 billion, according to a regulatory filing by PacWest.
The bank has also agreed to provide Kennedy Wilson with an additional 6 real estate construction loans, totaling approximately $363 million in principal.
Kennedy Wilson conducts appropriate due diligence before selling the loans. The company will deposit $20 million into a refundable third-party escrow account.
In the second and third quarters, the offer is expected to close in a number of tranches. There can be no assurance that the sale will be completed, in whole or in part, according to the filing.
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After getting caught up in the regional bank stock rout that followed the demise of Silicon Valley Bank in March, PacWest shares are down 75% year to date.
The bank reported that during the market turbulence that followed JPMorgan’s JPM, +0.43% bailout of First Republic Bank during the week ending May 5, it lost 9.5% of its deposits.
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Other neighbourhood banks also increased premarket. KeyCorp increased 1.7%, while Western Alliance Bancorp increased by 0.4%.
The S&P 500 SPX, +0.10% has gained 9% so far this year.