When Banc of California Inc. announced in July it would buy PacWest Bancorp in a $1.1 billion deal, it also said its headquarters would shift from Santa Ana to Los Angeles, closer to PacWest’s Beverly Hills headquarters.
Banc of California Chairman and Chief Executive Jared Wolff wants to be very clear that the shift won’t result in the bank reducing its presence in Orange County.
Wolff, who has a home in Newport Beach, intends to keep the Banc of California’s South Coast Metro office as a dual headquarters where top executives and other employees will continue working.
“We are committed to Orange County,” Wolff told the Business Journal on Oct. 24.
“My heart is in Orange County. This is where I spent the last four years building the company into one of the premier franchises in the state. There are a lot of people sitting in this building who are incredibly talented.”
Banc of California ranks No. 2 on the Business Journal’s annual list of OC-based commercial banks, reporting $9.4 billion in assets as of June 30, a 1.5% decline from a year ago (see the Oct. 30 print edition for more).
Last month, Banc of California received regulatory approval for the acquisition of PacWest, which is set to occur around Nov. 30.
When the deal is completed, it will create a bank with $36 billion in assets, $25 billion in total loans, $30 billion in total deposits and more than 70 branches in California.
About a third of those deposits, $9.8 billion, will be in Orange County when the two banks are merged. Combined, these two will likely grab the No. 4 spot on the Business Journal’s annual list of banks with operations in Orange County, which is published every February.
The two banks combined will have about 750 employees in Orange County.
“PacWest has a sizeable presence in Orange County,” Wolff said.
4 Incredible Years
Banc of California traces its history to 2013 when two banks merged, and then its executives went on an acquisition spree that in about five years quadrupled its assets to $11 billion, becoming the biggest bank headquartered in Orange County.
It ran into problems with a Securities and Exchange Commission investigation and a proxy battle that ended with a shake-up of the board of directors. It dumped its residential mortgage unit, cutting its workforce in half.
When Wolff took the CEO job in 2019, he cut pet projects of a previous CEO and focused the bank on commercial real estate and health industries. He went on a recruitment spree.
“The first thing we had to do was bring over a talented leadership team,” Wolff said. “We recruited from the best.”
He reduced assets from more than $11 billion to under $8 billion, shedding the less profitable.
“Before I came, the bank focused on growth before profitability,” Wolff said. “We engineered a strategy to focus on profitability. We shrunk the bank before we started growing it again.
“It’s been just an incredible four years,” he added. “We achieved a significant number of our goals and have been able to become a nimble bank that gets things done.”
Q3 ResultsÂ
Wolff spoke with the Business Journal on the same day the bank announced third quarter adjusted net income of $17.1 million, a 36% drop from the same quarter a year ago.
“I think we had a very strong quarter against a mediocre economic backdrop,” Wolff said.
“We had positive credit trends across the board.”
He noted that loan origination is down at Banc of California.
“It’s not of our choosing,” he said. “The market is making that decision. The Fed’s rate raises have had the intended effect.”
The bank’s stock has fallen about 15% in the past three months, in line with the KBW Regional Bank Index as investors worry about the effect of troubled mortgages on office buildings.
At press time, the stock traded around $12 and a $680 million market cap.
Wolff attributed part of the downward trend to arbitrage involved in the acquisition and said once the deal is complete, investors will get a better sense of a bank that will be one of the largest in the state.
Wolff, who also has an office in Brentwood, said Orange County will continue to be part of his strategy.
“Orange County has been an engine and a significant portion of our business,” Wolff said.
