PacWest Bancorp in Los Angeles reported a quarterly loss that reflected a goodwill impairment charge and expenses tied to an efficiency effort.
The $44.3 billion-asset company also announced plans to reduce its asset size by roughly 20% by selling loans and planned portfolio reductions. The effort comes after PacWest’s deposits fell by nearly 17% in the first quarter from yearend 2023.
PacWest said it has initiated the sale of its lender finance business, which has $2.7 billion of loans. A sale is expected to take place in one to two months.
The company lost $1.2 billion in the first quarter, a reversal from the $120 million it earned a year earlier. The results included a noncash goodwill impairment charge of nearly $1.4 billion that reflected the decline in its stock price tied to recent market volatility.
PacWest also incurred $8.5 million of severance and contract termination expenses during the first quarter. It closed two branches in the quarter.
“We are … expediting our operational efficiency strategy to reduce facilities and vendors, optimize business processes, and execute on other cost savings across the business to improve our profitability,” Paul Taylor, the company’s president and CEO, said in a press release.
“We will continue to prioritize our customer relationships, which have been the bedrock of our success for more than 20 years,” he added.
Total deposits fell by 16.9% from Dec. 31, to $28.2 billion. PacWest said deposit levels rebounded at the end of the quarter, rising by $1.1 billion, or 4.1%, between March 20 and March 31. The company has added another $700 million of deposits in April.
PacWest said it had about $5.5 billion of FHLB advances and $4.9 billion in borrowings from the Bank Term Funding Program on March 31.