PacWest Bancorp in Los Angeles reported higher quarterly profit that reflected increased activity with construction lending and mortgages.
The $24.5 billion-asset company said in a press release Tuesday that its second-quarter earnings rose 24% from a year earlier to $115.7 million. The results included PacWest's October purchase of the $3.1 billion-asset CU Bancorp.
Net interest income rose 8%, to $262.3 million. Total loans increased by 8%, to $16.9 billion, while the net interest margin narrowed by 3 basis points, to 5.18%. Real estate construction loans rose by 61% to $1.9 billion, and mortgages increased by 23% to $7.6 billion.
The loan-loss provision increased by 52% to $17.5 million, mainly because of higher charge- offs.
“While the credit provision was higher than expected, we were pleased with the increase in loan and lease production and net loan growth in the second quarter,” Matt Wagner, PacWest's president and CEO, said in the release.
Noninterest income increased by 12% to $39.6 million, as service charges on deposit accounts rose more than 21%. Other commission and fees increased by 11%.
Noninterest expenses increased by more than 7% to $126.4 million. Compensation costs rose by 7% to $69.9 million, while intangible asset amortization nearly doubled, to $5.6 million.