Banc of California in Irvine has agreed to sell its mortgage business to Caliber Home Loans in Irving, Texas.

The $11.2 billion-asset company disclosed in its annual report that it will sell the business, which operates as Banc Home Loans, along with offices and a pipeline of residential mortgage loan applications. The sale is expected to close at the end of this month.

Caliber will pay Banc of California $25 million in cash, plus $2.7 million to cover the net book value of certain assets. The company could receive another $5 million in cash based on Caliber’s retention of loan officers.

Banc of California will also receive quarterly payments based on the performance of the mortgage operations over a 38-month period after the deal closes. The company could also receive up to $35 million based on certain conditions.

Banc of California reached a separate agreement to sell Caliber $36 million of mortgage servicing rights, or 47% of its MSRs at Dec. 31. The MSR sale will likely result in a $3.5 million loss for Banc of California in the first quarter.

The sale should reduce Banc of California’s headcount from more than 1,800 employees to less than 950, Andrew Liesch, an analyst at Sandler O’Neill, wrote in a note to clients. The move will also lower the company’s annual run-rate operating expenses by more than $150 million and likely improve its efficiency ratio, Liesch wrote.

Banc of California absorbed harsh criticism last year that included claims of improper dealings involving directors and senior executives. An anonymous blogger claimed in mid-October that the company had ties to Jason Galanas, a Los Angeles financier who was charged last year with defrauding investors.

PL Capital, an activist investor, took issue with alleged conflicts of interest tied to the company’s decision to spend $100 million for the naming rights to a soccer stadium.

Banc of California issued a press release in October stating that an independent investigation found the blogger’s claims to be groundless.

The problem, the company disclosed in January, was that the release had “inaccurate” information, notably that management — not the board — had authorized the probe. The release also characterized the investigation as independent when the law firm involved had previously represented the company and then-CEO Steven Sugarman.

Banc of California also announced in January that Sugarman had resigned as chairman and CEO. Robert Sznewajs, a veteran banker who was once CEO of West Coast Bancorp in Lake Oswego, Ore., was named chairman, while Hugh Boyle, Banc of California’s chief risk officer, became interim CEO.

The company also unveiled a series of corporate changes, including the adoption of a policy to tighten controls on the outside business activities of officers and employees. The policy bars nonemployee directors from engaging in outside business activities that “create an actual or apparent conflict of interest.”

Banc of California also added two investors — Kirk Wycoff of Patriot Financial Partners and Richard Lashley of PL Capital — to its board.

Those moves were highlighted in the annual report, which also noted that the company planned to implement new training activities and enhance its risk and fraud assessment processes, among other things, to “ensure appropriate resources and controls are in place.”

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