On October 24, 2023, PacWest Bancorp (PACW, Financial) released its third-quarter earnings report for 2023. Despite reporting a net loss, the company showed signs of improvement and strategic growth, particularly in relation to its upcoming merger with Banc of California, Inc.
Financial Performance and Challenges
PacWest Bancorp (PACW, Financial) reported a net loss of $33.3 million for the third quarter of 2023, a significant improvement from the $207.4 million loss reported in the second quarter of the same year. The company's diluted loss per common share was $0.28, compared to $1.75 in the previous quarter.
Merger with Banc of California, Inc.
Paul Taylor, President and CEO of PacWest Bancorp, commented on the company's upcoming merger with Banc of California, Inc. He stated,
The integration planning for our merger with Banc of California, Inc. continues to progress very well. We expect the closing of the merger to occur on or about November 30, 2023."Taylor expressed optimism about the merger's potential to drive significant value for PacWest's stockholders, customers, communities, and employees.
Income Statement Highlights
Net interest income decreased by $55.3 million to $130.7 million for the third quarter of 2023, primarily due to lower interest income on loans and leases and higher interest expense on deposits. However, noninterest income increased by $171.9 million to an income of $43.8 million for the third quarter of 2023, primarily due to a decrease in the loss on sale of loans and leases and an increase in other income.
Balance Sheet Highlights
The company's total assets decreased by $1.5 billion to $36.9 billion, while total deposits decreased by $1.3 billion to $26.6 billion. The decrease in total deposits was primarily due to the strategic reduction of higher-cost brokered deposits, partially offset by growth in customer deposits.
Looking Ahead
Despite the net loss, PacWest Bancorp (PACW, Financial) remains optimistic about its future, particularly in light of its upcoming merger with Banc of California, Inc. The company's strategic initiatives, including reducing higher-cost brokered deposits and improving customer service, are expected to enhance its profitability in the coming quarters.
