PacWest Bancorp in Los Angeles reported higher quarterly earnings Wednesday after recouping more covered losses from its failed-bank acquisitions.
PacWest said fourth-quarter earnings rose 4.4%, to $13.9, million from the previous quarter largely due to higher income from the loss-share agreement with the Federal Deposit Insurance Corp. and lower costs relating to foreclosed property inherited from the deals. In the fourth quarter of 2010 PacWest lost $7.7 million.
PacWest's bank acquired the failed Affinity Bank in August 2010 and Los Padres Bank a year earlier. Despite these deals, total assets in 2011 moved slightly lower by .01% to $5.5 billion compared with 2010. PacWest had also increased its provision for the covered loans in the fourth quarter to $4.1 million from $348,000 in the previous quarter.
The company's net interest margin fell to 5% compared with 5.15% in the previous quarter. However, the company said it closed on its acquisition of Marquette Equipment Finance, which is expected to help diversify PacWest's loan portfolio and earning assets.
For the full year, PacWest pulled out of the red, posting $50.7 million in net income for 2011 compared with a net loss of $62 million in 2010. The company attributed most of the earnings gain to a drop in its provision for loan losses year over year.
PacWest's chief executive, Matt Wagner, said in the news release that the company's legacy credit quality remains "stable." Nonperforming assets not covered by the FDIC equaled 3.73% of total loans in the fourth quarter compared to 3.68% in the previous quarter.