Banc of California in Los Angeles reported a staggering $251.3 million loss after repositioning its balance sheet.
The $34.3 billion-asset company said in a press release that it sold $2.3 billion of lower-yielding securities and began the process of selling $827 million of commercial real estate and multifamily construction loans. The company also retired $385 million of subordinated debt ahead of “a significantly higher interest rate reset.”
“We made a strategic decision to reallocate capital toward opportunities that we believe will enhance long-term returns for our shareholders,” Jared Wolff, Banc of California’s chairman and CEO.
The quarter’s actions “create a more efficient balance sheet and position the company for even stronger long-term financial performance,” Wolff added. “They allow us to focus our capital on the businesses, clients and markets where we see the greatest opportunities to create shareholder value.”
The securities were sold at a $256.7 million pretax loss. Proceeds were partially redeployed by buying $1.7 billion of higher-yielding securities.
The pending loan sales contributed to the decision to set aside $161.8 million for potential loan losses. Nonperforming loans totaled $220 million at June 30, an increase from $203.8 million a quarter earlier.