Caliber Home Loans is purchasing essentially all of the assets related to Banc of California’s mortgage origination business, Banc Home Loans, for about $25 million, plus about another $2.7 million at closing, according to an SEC filing.
In addition, Caliber Home Loans is purchasing mortgage servicing rights (MSRs) on a portfolio of conventional agency mortgages with an unpaid principal balance of approximately $3.8 billion from Banc of California for about $36 million.
Although Banc of California will realize a net loss of $3.5 million as a result of the MSR sale, the deal will help it “reduce earnings volatility going forward,” according to the 8-K filing.
As per the filing, Caliber Home Loans, as part of the deal, is acquiring “the leases relating to [Banc of California’s] dedicated mortgage loan origination offices and the bank’s ‘pipeline’ of residential mortgage loan applications for loans.”
In addition, Caliber Home Loans may pay Banc of California up to an additional $5 million in cash in order to retain the bank’s loan officers who work in its origination offices.
The deal will reduce the number of locations Banc of California operates by more than 60% and will shrink its total headcount from over 1,800 to less than 950. It will also decrease Banc of California’s annual run-rate, non-interest expenses by over $150 million.
Banc of California expects to realize one-time expenses of approximately $4 million related to the transaction, which is still subject to the usual approvals and is expected to close on March 30.
According to the filing, Banc of California “expects to continue to originate portfolio jumbo residential mortgage loans following the completion of the transaction.”