PacWest Bancorp (PACW) in Los Angeles doubled its profits in the third quarter thanks to its purchase of First California Financial Group (FCAL).
That acquisition, completed in May, paid off in higher loan income and a $5.2 million securities gain.
Meanwhile, PacWest has a deal pending for another L.A. company, CapitalSource (CSE), which reported solid quarterly results thanks to improvements in credit quality and higher noninterest revenue.
The $6.6 billion-asset PacWest reported earnings of $24.2 million in the third quarter, a 50% increase from the same period in 2012. PacWest's net interest income rose 16%, to $82.3 million, thanks to organic loan growth and higher securities revenue as well as loans acquired from First California. Its net interest margin was 5.46%, down 12 basis points.
PacWest's noninterest income fell 11%, to $5.1 million. The $5.2 million securities gain related to the First California acquisition was partially offset by FDIC loss-sharing expenses of $7 million. Noninterest expenses rose 9%, to $56.2 million, as the company saw increases in overhead from the First California acquisition and took on costs associated with its deal for CapitalSource.
PacWest recovered $4.2 million from loan-loss provisions, compared with a recovery of $2.1 million in the third quarter of 2012. Net chargeoffs totaled $2.1 million, an increase of 100%.
PacWest announced plans to buy CapitalSource for $2.3 billion in stock and cash in July. The deal, set to close in the first quarter, would create a $15.4 billion-company with 96 branches throughout California.
CapitalSource, with $7.9 billion of assets, on Wednesday reported that third-quarter profit rose 13% from a year earlier, to $38.4 million. Noninterest income climbed 69%, to $15.7 million, on revenue from loan fees, investments, leased equipment and other sources.
Meanwhile, CapitalSource's net interest income fell 2% to $94 million. Lower revenue from loans and leases and higher deposit expenses contributed to the decline. Its net interest margin fell 11 basis points to 4.86%.
Noninterest expenses stayed relatively flat at $47.6 million, a 1% increase.
CapitalSource recovered $1 million from its loan-loss provision, compared with an $8.9 million loan-loss provision in the third quarter of 2012. Net chargeoffs fell by 53% to $1.7 million.