Third-quarter profit improved at PacWest Bancorp in Beverly Hills, Calif., largely due to a lower income tax rate and higher gains from loan and securities sales.
The $22 billion-asset holding company for Pacific Western Bank posted net earnings of $100.3 million, an 8% increase compared to the same period a year earlier. Earnings per share of 84 cents were 8 cents better than the average estimate of analysts compiled by FactSet Research Systems.
PacWest’s overall effective income tax rate fell to 27.2% from 34.1% a year earlier. The effective rate was lower because PacWest recorded a $13.6 million reversal on a valuation allowance related to tax credits that are not likely to be utilized before they expire.
PacWest also reported on Tuesday that it has received all regulatory approvals to acquire the $3 billion-asset CU Bancorp in Los Angeles, and it expects to close the deal on Friday.
“We are excited about the exceptional core deposit franchise and opportunities for increased operating efficiencies provided by this transaction,” CEO Matt Wagner said in a news release.
Net interest income after the loan-loss provision in the third quarter was little changed at $226.6 million. The provision nearly doubled to $15.1 million.
Noninterest income rose 17% to $31.4 million, as PacWest recorded an additional $3.5 million in gains on the sale of loans, leases and securities.
Noninterest expense increased 7% to $118.5 million after PacWest recorded a $2.1 million writedown on foreclosed property. Additionally, PacWest booked about $1.5 million in merger costs related to CU Bancorp, compared to none a year earlier. PacWest agreed to pay $705 million to acquire the parent company of California United Bank.