PacWest Bancorp is laying off around 200 employees at its Civic Financial Services subsidiary, a residential real estate company it bought as the housing sector boomed in 2021.
The Los Angeles bank, which disclosed the layoffs in a
In addition to the layoffs, PacWest executives are taking over most Civic management functions and reducing the number of loan products that Civic offers, the company said in a securities filing. The goal is to "improve its profitability and risk profile," the filing said.
"This restructuring aligns with the company's strategy to focus on relationship-based community banking and to improve capital, liquidity and operational efficiency," PacWest said in the securities filing.
PacWest did not immediately respond to a request for comment.
The $41.2-billion asset bank
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The move may lead to a 2% decline in PacWest's loans this year, according to estimates from Truist Securities analyst Brandon King, who previously foresaw loans staying flat at the bank this year.
The decline in loans should lead to PacWest building up its capital quicker, which "lowers the probability of a dilutive" action from the bank to raise more capital, King wrote.
"Overall, we are encouraged by the swift changes so far to improve profitability and sharpened focus towards a clear strategy," King wrote in a note to clients.
Investors should stay "on the sidelines for now until there is more clarity around the post restructuring growth profile of the bank," he added.