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Banc Funds trims its exposure to US banks in Q1'18

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Banc Funds trims its exposure to US banks in Q1'18

Chicago-based Banc Funds Co. LLC trimmed its exposure to the U.S. banking sector in the first quarter as its portfolio shrank by 9.0% to $1.95 billion as of March 31, according to the company's latest Form 13F. Banc Funds fully exited 17 banks and thrifts during the first quarter, eight of which were due to merger activity.

Paragon Commercial Corp., Banc Funds' single-largest exit at $18.9 million, was acquired by Portsmouth, Va.-based TowneBank on Jan. 26. Banc Funds revealed a new $4.5 million stake in TowneBank at the end of March, its second-largest initiation of the quarter.

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Banc Funds' second-largest exit, Columbia, S.C.-based South State Corp., was the fund manager's largest entry in the fourth quarter of 2017.

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Two of Banc Funds' top 20 positions were further increased after the companies acquired other institutions where Banc Funds was an investor. Sandy Spring Bancorp Inc. became Banc Funds fifth-largest position at $37.9 million as of March 31, after the Maryland-based community bank acquired WashingtonFirst Bankshares Inc. on Jan. 1. Banc Funds held a $6.7 million stake in WashingtonFirst at the end of 2017. Similarly, Richmond, Va.-based Union Bankshares Corp. became the firm's 12th-largest holding at the end of March following the bank's acquisition of Xenith Bankshares Inc. on Jan. 1.

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Grand Rapids, Mich.-based Mercantile Bank Corp. overtook Bedminster, N.J.-based Peapack-Gladstone Financial Corp. as Banc Funds' top holding after the hedge fund sold off 12.5% of its shares in Peapack-Gladstone during the quarter.

Banc Funds' most recent Form 13F revealed 11 new bank and thrift investments worth a combined $25.2 million as of March 31. Chambersburg, Pa.-based Franklin Financial Services Corp. was the largest initiation at $4.9 million as of March 31. The fund manager's seventh-largest entry, Bloomington, Minn.-based Bridgewater Bancshares Inc., completed an initial public offering on March 14. Banc Funds had not previously disclosed a position in Bridgewater.

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Company filings including the 13F can be found through the filings archive tab on a company's briefing book page.