PacWest Bancorp (PACW) of Los Angeles reported a steep decline in quarterly earnings after it took a large charge tied to stock awards.
The $6.5 billion-asset company's fourth-quarter earnings fell 84% from a year earlier, to $3.1 million. Earnings per share of 6 cents missed the average estimate of analysts polled by Bloomberg by 15 cents.
PacWest recorded a previously disclosed $12.2 million after-tax charge for accelerating vesting stock awards tied to its pending $2.3 billion acquisition of CapitalSource (CSE). CapitalSource is a commercial finance company that has spent recent years trying to evolve into a bank. According to a regulatory filing, PacWest vested restricted stock awards for certain executives and paid them a portion of incentive compensation set for distribution next year.
The decision to accelerate the vesting "saved the company $21 million in compensation and tax expense that would have been recorded" when the acquisition closes, PacWest Chief Executive Matt Wagner said in a press release Thursday. He said PacWest received shareholder approval for the acquisition last week, adding that he expects to close the transaction by the end of March.
Net-interest income increased 17% from a year earlier, to $81.3 million. Interest income on loans and leases increased $12.5 million, as lower yields offset higher loan volume. The net interest margin compressed by 8 basis points from a year earlier, to 5.41%.
PacWest reported a noninterest loss of $3.9 million, compared to a $2.1 million gain a year earlier, largely because of an increase in loss-sharing expenses tied to the company's purchase of failed banks.
Noninterest expense rose 52% from a year earlier, to $66.1 million, largely because of the accelerated vesting.