PacWest Bancorp (PACW) Wednesday reported a lower profit for the first quarter, hurt mainly by one-time debt termination costs. Nonetheless, both net interest income and margin for the quarter improved, aided mostly by the PWE Finance acquisition completed during the quarter.
PacWest results for the quarter were hurt by debt termination costs of $22.6 million related to the prepayment of of fixed-rate term FHLB advances and the early redemption of trust preferred securities.
Chief Financial Officer Vic Santoro said, "The first quarter prepayment of FHLB advances and trust preferred securities, although negatively impacting our net earnings with an after-tax cost of $13.1 million, provides for significant interest savings and margin improvement beginning in the second quarter."
Santoro said the debt repayments are likely to add about 25 basis points to the net interest margin beginning in the second quarter. He also said that Celtic Capital Corp., which was acquired earlier this month, may chip in with another 13 basis points.
Los Angeles, California-based PacWest Bancorp reported first-quarter net income of $5.3 million or $0.14 per share, compared to $10.7 million or $0.29 per share last year.
On average, 9 analysts polled by Thomson Reuters expected earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items.
Net interest income for the quarter was higher at $67.7 million, compared to $65.7 million in the prior year. Net interest margin improved to 5.41 percent from 5.34 percent last year. Non-interest income for the quarter fell to $3.3 million from $4.8 million a year ago.
Analysts expected revenue of $71.20 million for the quarter.
The company during the quarter recorded a negative provision for credit losses of $6 million, compared to a provision of $10.7 million last year. The negative provision in the first quarter 2012 was composed of a $10 million negative provision for credit losses on non-covered loans and a $3.9 million provision for credit losses on covered loans.
As at March 31, 2012, PacWest's deposits totaled $4.56 billion, compared to $4.58 billion as at December 31, 2011. Total net loans and leases at the end of the quarter were $3.45 billion, compared to $3.42 billion in the sequential quarter.
PACW is trading at $22.89, down $0.50 or 2.14%, on the Nasdaq. In the past year, the stock traded in the range of $13.00 to $24.79.
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