BANC OF CALIFORNIA, INC. (NYSE:BANC) Files An 8-K Termination of a Material Definitive AgreementItem 1.02 Termination of a Material Definitive Agreement
Effective December28, 2017, Banc of California, Inc. (the “Company”) terminated the Banc of California Capital and Liquidity Enhancement Employee Compensation Trust (the “SECT”). The SECT was established on August3, 2016 as an intra-company mechanism to fund employee compensation and benefit obligations of the Company using shares of the Company’s common stock, par value $0.01 per share (“Common Stock”). As further described below, all of the shares of Common Stock that were originally sold to the SECT have been repurchased by the Company, and the Company expects there to be no impact on earnings from the termination of the SECT.
As previously reported by the Company in PartII, Item5 of the Company’s Quarterly Report on Form10-Q for the quarterly period ended September30, 2017, on November3, 2017, the Company’s Board of Directors authorized the Company’s management to begin taking steps to terminate the SECT. The SECT was established to the Trust Agreement, dated as of August3, 2016 (the “Trust Agreement”), between the Company and Newport Trust Company, as trustee (as successor trustee to Evercore Trust Company, N.A.) (the “SECT Trustee”), to fund employee compensation and benefit obligations of the Company using shares of the Company’s Common Stock. On August3, 2016, the Company sold 2,500,000shares of Common Stock to the SECT at a purchase price of $21.45 per share (the closing price per share of the Common Stock on the New York Stock Exchange on August2, 2016), or $53.6million in the aggregate, in exchange for a cash amount equal to the aggregate par value of the shares and a promissory note (the “Loan”) for the balance of the purchase price. The SECT was to terminate on January1, 2032 unless terminated earlier in accordance with the Trust Agreement, including by the Company’s Board of Directors.
On December28, 2017, in order to effectuate the early termination of the SECT authorized by the Company’s Board of Directors, the Company purchased from the SECT all 2,500,000shares of Common Stock held by the SECT at a purchase price of $21.00 per share (the closing price per share of the Common Stock on the New York Stock Exchange on December27, 2017), or $52.5million in the aggregate (the “Termination Sale”). Following the Termination Sale, such shares of Common Stock were cancelled. Of the proceeds from the Termination Sale, $2.7million will be utilized from the SECT for the purpose of funding obligations under certain of the Company’s benefit plans to which 126,516.9shares of Common Stock had been allocated prior to the Termination Sale, and $49.8million was remitted by the SECT Trustee to the Company, which was deemed to be in satisfaction and termination of all remaining obligations of the SECT under the Loan, which had an outstanding principal balance of $50.9million plus accrued interest.
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About BANC OF CALIFORNIA, INC. (NYSE:BANC)
Banc of California, Inc. provides banking services to California’s diverse businesses, entrepreneurs and homeowners. The Bank was formed through the merger of four of Southern California’s community banking franchises. The Bank offers a range of financial services to meet the banking and financial needs of the communities it serves, with operations conducted through over 100 banking offices across California and across the West. The Bank’s deposit product and service offerings include checking, savings, money market, certificates of deposit, retirement accounts, as well as online, telephone and mobile banking, automated bill payment, cash and treasury management, master demand accounts, foreign exchange, interest rate swaps, trust services, card payment services, remote and mobile deposit capture, Automated Clearing House (ACH) origination, wire transfer, direct deposit and safe deposit boxes.