Why PacWest's profit fell in 1Q
Higher deposit costs contributed to a first-quarter decline in profit at PacWest Bancorp in Los Angeles, as did reduced gains from the sale of loans and securities.
The $26.3 billion-asset company’s net income fell 5% from a year earlier to $112.6 million. Earnings per share of 92 cents was a penny better than the mean estimate of analysts compiled by FactSet Research Systems.
Total loans and leases increased 11% to $18.3 billion on higher commercial-and-industrial lending, and loans for commercial and residential real estate construction.
But net interest income after the loan-loss provision dropped 1% to $251 million. Interest expense more than doubled to $49.7 million as the cost of certificates of deposit and other time deposits rose 48% to $2.7 billion. The net interest margin contracted 42 basis points to 4.69%.
“We had one of our strongest first quarters in terms of loan production and net loan growth and will work to continue that momentum into the rest of 2019,” CEO Matt Wagner said in a news release Tuesday.
Noninterest income declined 19% to $31.1 million. PacWest booked no revenue in the quarter from gains on the sale of loans, and its gain on the sale of securities fell 66% to $2.2 million.
Noninterest expense fell 1% to $126.3 million on lower employee compensation costs.
PacWest in January canceled its agreement to acquire the $2.2 billion-asset El Dorado Savings Bank after the Placerville, Calif., thrift failed to gain enough shareholder support for the deal.