PacWest Bancorp (PACW) posted a 21% jump in second quarter earnings from a year earlier as significant expense reductions and acquisitions took hold.
The Los Angeles company's net income of $15.6 million also reflected a lower loan-loss provision tied to loans covered by the Federal Deposit Insurance Corp. The FDIC loss-share coverage added $3.5 million in pretax income during the second quarter.
The second quarter was a busy period for PacWest. The $5.3 billion-asset company completed its purchase of Celtic Capital, successfully trumped a competitor for an agreement to buy American Perspective Bank (APBA) and agreed to sell several branches to Opus Bank. It has placed a bid for First California Financial Group (FCAL).
These actions, paired with lower funding costs "will enhance our product offerings, expand our market presence in California's Central Coast, augment our net interest margin and lower overhead costs relative to revenues," Matt Wagner, PacWest's chief executive, said in a Wednesday press release.
The net interest margin widened by 19 basis points from a quarter earlier, to 5.6%. PacWest said the expansion was primarily because of lower interest expenses instead of higher-yielding loans. Wagner cautioned of "relatively flat" near-term loan growth because of the economy and competitive pricing.
"The economy remains uncertain and loan growth at this point would involve underpricing competitors, in many cases at margins that are not significantly above the securities portfolio yield," Wagner said. "We prefer to selectively make quality loans to good customers at appropriate margins and build relationships rather than focus on attracting customers at low prices."
