Earnings call transcript Q1 2023

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Operator

Good day and welcome to the PacWest Bancorp First Quarter 2023 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Bill Black from PacWest Bancorp.

William Black

Thank you. Good morning and welcome to PacWest First Quarter 2023 Earnings Conference Call. Paul and are Thompson, and today CFO. our me Taylor, CEO; President Kevin With

the to call call that hand assumptions. I Before over make to uncertainties statements subject we Paul, forward-looking during are today's that risks, and may note please

discussion company's more risks the website. the afternoon, filed SEC actual filings, complete could any forward-looking which and materially yesterday available company's to including differ For from that on is statements, cause of a uncertainties results see the also our X-K

turn I'd to CEO, to over like the our Paul call Taylor.

Paul Taylor

the Thank like last you, Bancorp. dedication our team everyone. of have Bill, banking to and good for very weeks, their six to clients industry, morning, I'd a including for these thanking start period been by PacWest over which PacWest especially challenging and time

an swift banks, early our banks to regional outflow deposits other two of took immediately in liquidity closure capital many PacWest we following action the response, of the Like positions. large and enhance March. In had

the over deposit liquidity by To increasing million sheet in quarter March, the stabilized in resources. Deposits rebounded and on various community latter that with nicely subsequent balance outflows in focused $XXX have in withstand end April, of our accessing XX% March maximizing we of approximately saw part our to we bank.

now X. as CDs business Bank since deposit in and Venture the campaigns over with Immediately a focused Deposit from benefited savings opened coverage as exceeds accounts accounts deposits liquidity our uninsured the XXX XXX%. community available has ratio March of in growth approximately well on new bank

January including to addressed to expedite balance of a the initiatives these kicked be expenses third focusing franchise Having community which we businesses the our evolution in a deemphasize channels, able quarter focus return on we smaller our core direct-to-consumer depository sheet. and on are pressures, operational intently on further renewed deposit strategic to PacWest bolster To reducing we bank new by our off to to will initiatives noncore announced base, under plan bank XXXX. while now expected launch

begun lender over will finance business actions, increase we steps of moving liquidity position to $XXX completed, Once sheet, the further these de-lever to such, sale balance take XX%. ratio loans. sale our the have approximately including accelerate civic As significantly to million to for and initiating our in the enhance and held our CETX $X.X billion strategy

dynamics caused market a regional decline stocks, quarter during the significant in bank included. ours The

noncash that of we are with $X.XX As these sheet. strength a exceed impairment our $X.XX challenges, balance leverage pleased billion charge. the a estimates EPS are of and analyst result, of results core financial adjusted we Despite to we recorded goodwill our continuing

the to been As have dynamics, years. prioritize for the PacWest customer more relationships success than challenging industry we XX bedrock our which will our of navigate continue

more Kevin to over it turn financials our will I in Now detail. review to

Kevin Thompson

Paul. you, Thank

As you volatility stocks. market bank quarter in in decline mentioned, regional resulted the the in a significant

position. a on that we has billion. flows capital or impairment result, our charge is note and important regulatory ratios, goodwill liquidity is of a no charge As recorded It goodwill noncash impact to cash a $X.XX

In earnings contract per the or these transformation $X.XX diluted share. per resulted and million $XX.X our business. $XX.XX $X.XX loss diluted termination severance expenses incurred for of $X.X to underlying demonstrates items, our billion strategic or have also share of total, We initiatives. of unusual Adjusting related net million strength been our a in this would which

$XXX or non-maturity due in deposits million in and time a by XX.X% the in offset partially billion increase a retail wholesale Total primarily billion deposits $X.X decreased by to in decrease decrease $X.X billion deposits, deposits. a non-maturity quarter $X.X

year-end. community quarter total end, XX% million bank. mid-April at deposits from $XXX in deposits mostly approximately increased insured of up deposits in represented XX% mentioned, Paul Total to the As subsequent approximately

sheet balance We at $X bringing weeks. levels are holding next billion on that the balance of of cash normalized to quarter a over down higher than more We usual anticipate end. amount

$XX.X decreased billion as sheet, lender leases expedite of held transferred for de-levering slightly of excess us finance part and We've pay giving loans $X.X this portfolio Total sale ability sheet our quarter to the to billion to to down management the borrowings. the continuing strategy. balance the balance

million. quarter $XXX fourth asset losses Between earnings increased also this improved, the quarter the and to this With declined CETX ratio company's on already expect the the X.XX% investment in ratio the $XXX few other solid XX% XX sales, points to we to above quarter, underlying months. next CETX over end. increase at Unrealized portfolio from million to basis our

Interest our the interest rate XX% income terms. variable in million or increased quarter, of with X% $XX loans having

points continue was basis positive yields This loan to of see X.XX% by points quarter. X.XX% deposits, increasing XX beta a to basis XX the in offset with in increasing the loan We the cost period. trend same to

from to our on-balance latter we and our funding program bank borrowings in of enhance the Reserve actions part the Federal part temporarily the FHLB, discount quarter, As utilize sheet from of the window. term liquidity the

$XX fully decreased high-quality We facility, in an resulting also senior Partners net quarter, in manner. prudent These interest expeditious which assets to a financing impacted The billion secured in million. $X.X new the to liquidity through our cash interest unlocked margin actions SP Atlas increased proceeds from million expense asset-backed which X.XX%. funded from $XXX by unencumbered

business to quarter. related in mentioned in was a that force the is our civic The in earlier severance initiated expense first reduction

facilities an execute to beginning of as We engaged these optimize profitability. strategy already the across $XX million cost on these and annualized in were and we expenses in to an a improve other operational our and savings now approximately vendors, expect business processes of in result efficiency are order in May We efforts actions. reduce business decrease expediting

asset to severance points. nonperforming ratio by the and termination million assessment lower in basis contract compensation mainly Credit $X.X expense was goodwill due basis expense three noninterest customer-related $XXX impairment declining expenses. insurance This points steady offset the and by quarter. the Excluding decreased items, remained higher million and to metrics with to XX

to for credit slightly increased allowance X.XX%. Finally, ratio loss the

This concludes please prepared Operator, could remarks. you line for open questions. the our

Operator

Thank question with Woods. McGratty you. comes first Our [Operator from Keefe, Instructions] & Chris Bruyette,

Christopher McGratty

The during dividend for today? also interested, color Understand And made to out XX on thinking the number elevated sale XX? the the on we what's view -- current is an that broadly, right even XX% seems thanks you're relative [indiscernible]. -- deck. capital quarter? slide laid good obviously I attempt Thanks. question, to morning. going of lender like the finance portfolio. being said How your you've with peers maybe in guess, the of you I'm the about Paul, think have I is there how previously, it the philosophical of capital? Hey, get then more to are bogey a broadly capital just the some raise your

Paul Taylor

Yes.

I to XX% first, always threshold me, the the continue has few we've most from of So but mean, exceed about. to will some I we XX% next for sales been mean talked I mean likely once we we're address capital. But a asset build XX% sort here on to going of will the to months continue finalize in we there. go

today more capital I is better. think

grow So capital. we'll continue to

first -- look in industry. you What we We did time look we do? this happened at first really happened, banking looked at event is the capital. we did everything. more can mentioned, at of we positive as looked the What be at, -- then the you at raising We when smaller event -- should options? options do? the the strategic we sheet were also that to profitable. we our plan, what do Even we balance Capital one looking but would balance about What in was we a had at sheet. talked our are could As operating

balance the balance get the has was of the goal some sheet. the of our shrink ballooning balance to balance of out wrong shrunk. the sheet, but shrink, So sheet sheet Unfortunately, side the

these also more some in of off the And portfolios selling and balance. get doing liquidity. sheet capital, that, we're creating we're we're to So by creating balance

we've what after So will the we're X.XX. after portfolios. end sell quarter, far, the especially we we we're very -- done at at so happy But the of with

pretty had vision of that we has the been accelerated dramatically. sort So

Kevin Thompson

ratios increasing important ratio all I'll focused important. are to CETX that well. as add very And on but that, our that, is capital We're

ratio capital actually actually you'll is number that's peers. of very our and strong XX.XX% above a total Our at see

want happy It's important common CETX an the proud just So it. we're get in very I that. the equity of line well. with as that with element in and to

Christopher McGratty

that color. the -- for And all on Thanks yeah.

Paul Taylor

better Yeah, and as situation for it much shareholders. seems economic our we looked a like at shrinking,

Christopher McGratty

shake map Okay. are $X billion a I'm a that of the that your referenced billion to Paul. you asset total earning where asset $XX just in liquidity assets that portfolio? an is Thanks trying is normalizing going for sense press to get to with The earning of number? the comments in trying out? I'm release, Or earning asset number? the

Paul Taylor

a total number. asset that is So

Christopher McGratty

then normalized our goodwill, civic out position need about of So our bringing portfolio to portfolio, million $XXX take level. there, get some you finance to down and portions a more our to cash lender

Paul Taylor

Yes.

at at deep to look in there's quarter, We become the didn't event. liquid end $X I mean, We our the you has billion billion the a chose amount very along through steps down. billion. to the Balance billion, how about that it. Fed mean sort $XX going cash. event brings of As account mentioned I tremendous start going sheet is this know sit cash down through $XX sheet would out, go, balance it of but that about can as taking of pulling those now we cash we with levels and $XX Kevin the

Christopher McGratty

pre-COVID or normal And what or thinking is I'm about Is right you're X% on sorry that $XX Okay. X% so? cash your kind -- pre of now. billion

Kevin Thompson

become focus in forward may I in think a We going more right. that's Obviously, banking big deposits little the a conservative ways. various entire uninsured be industry.

we treatment stress cash have stress may probably as severe a and of testing look balances. uninsured at more hold so we little will testing liquidity the And because that that our more

Paul Taylor

insured our XX% our of now. right balances deposits about are Again,

Christopher McGratty

all for appreciate I that Thanks it. Got it. color.

Paul Taylor

Thanks.

Operator

from go Clark next Please Our ahead. question Piper comes with Sandler. Matthew

Paul Taylor

morning. Good

Matthew Clark

how is are quickly Thank expenses The first Can you. for quantify much around business. might expenses you lender those Hey, tied how that come morning. the of good finance one the business? you Hey, have And me you way how to in out? doing?

Paul Taylor

Yes.

Chicago. quantified of the right a little So team we have is $X.X over It's small in and are those balance not process billion in now. the a expenses. it And we very selling

Matthew Clark

sales if you did, at then any have quarter? loan And the price? civic what And Okay. in you did

Paul Taylor

dollar Yes, do you the sir? we did. want to Bill, exact take amount,

William Black

a gain. one at about $XXX point Yes. roughly sold million We

Matthew Clark

Okay. in Atlas plan that or then pay the for you months assets to you in able or Got here the to timing sense repo? of on trying off us terms Repo. loans are And get be pledged underlying sell update might just that coming Can a those when it. to you and the And not whether against quarters?

Paul Taylor

Yeah.

the all So it sheet of now. with something settle the we're considering it's we're actions terminates in through, a trauma sort that's needs but to And considering and balance December. loan been that letting that. be paid. little down right The absolutely We're bit

Matthew Clark

Okay. sheet we And then I just you're you as have down do next year think to to to to here come going but on of an do it billion knowing going next continues get the into ROA order. size assume next get in I short you And $XX little year, is the kind this year, subdued? sounds be sheet what for stabilizes? it balance a balance like mean year. target

Paul Taylor

Yes. that that into of mean, go right year. will type is that to that, we're our now. We working We're lead I recession into on here prediction next some think going

So into next flattish going sheet of we're sort at type looking year. balance more

Matthew Clark

we fair by or in or should then mean, And down billion, here in minus? come quarter. billion of borrowings Is upcoming the just Okay. plus that assume I $X the terms $X borrowings,

William Black

I $X billion, more billion. $X think like it's

Kevin Thompson

Yeah.

and have sales. I benefit also we'll but think civic by cash our much, we'll down finance the lender of bring that then our

use to our do As time. sheet time. we'll pay that we over anticipate those wholesale some of those get deposits some and happen, Also, repatriation balance funding down over of

really working hard team is Our on that.

campaigns and from could is outflow on. initiatives some be for there there. of And deposit working and of different SVB customers some the we're have upside there us We some potential

lower our also balance of terms could in borrowings. benefit that sheet So

Paul Taylor

million $XXX Yes. new brought successful But fund. we're around XXX money We're but moved XXth think, the lot we've -- I as of, we're them accounts, out on to talking to talking It back lot up customers, been new predominantly, takes of deposits. customers. opened that little somewhere there. new a to their venture And have And also side, we've to in a accounts. somewhere a while for around talking customers we're we've new the of

Matthew Clark

it. you. Got Thank

Paul Taylor

you. Thank

Kevin Thompson

you. Thank

Operator

of And we'll next go our line the take Wells Shaw with Jared Securities. question ahead. Fargo from Please

Paul Taylor

morning. Good

Jared Shaw

good Hey, morning.

the margin echo was you in quarter? March the end If sorry -- what the What at look the the was of -- for at the here.

Kevin Thompson

the as quarter, schedule was quarter. came borrowings half look low at course of the actually, here, and the in End latter even it the I dipping And XXXs. obviously, my of in the the into of XXXs

So we'll see quarter. next pressure some into the

Jared Shaw

Yes.

about down answered expect you think the in. rapid then growing the end What's should cash the to proceeds spoke see growth And come deposits that about at down what as some Okay. initiatives and expectation from loan comes here borrowings a we that pace as thinking deposit come sales of we year? the be with you should through of about, how to those the dollars from or

Paul Taylor

that. That we've hard to is that, happened what predict. it's incredibly to as There's figure a we hard out -- at with. sort to That look lot about talked of begin

at been press read run, We've pervasive deposit shocked back I it pretty If industry. at pretty it pervasive was people's was I you successful pretty million. the look bringing how was $XXX throughout at I was. as -- releases, the

the billion to I to over probably few but going hope, dollars, a it's year, think see. mean, we'll we I be that have

Jared Shaw

And on the commitments what's in most at looking of new for Thanks. loan disbursements. the was quarter, loan Okay. And loan appetite additional unfunded How here? side? about then should on side, remaining think the growth production we -- the growth the this

Paul Taylor

Yes.

were want demand downturn became So balance couple we've it feel but as this a commitments, in very even event, -- before lending. that And moved our deposit decline to we're Kevin, whatever in for some we wanted that there, trying selective future not-so-distant wanted reasons also sheet, seen shrink, a and call we also. a also of you we of year. recession, prepare we to -- But to the and this shrink The in to kind we into unfunded there's there we've

Kevin Thompson

They we're finance that also new the quarter. we're just $X just to of is dropped moving loans. to from held Part of lender about the million billion funding that of above in -- for lender finance $XX about $XXX to But moving sale. billion not

portion. unfunded of to kind the we restructured. have do in are pencil There grow through happening time. you terms on anticipate coming are we plan commitments. were loans forward anymore now The right fundings that the We get unfunded correct. that the Some books the are balance get previous don't down over sheet But not going the We of our portions. recession, of as

Jared Shaw

opportunity you at appetite maybe outflow guess, then the little just in Okay. right And potentially a see a that sheet future? what's me, you customers the the think an pull the funds there's support Is and at keep finally -- for equity back the maybe loans or look market when that when balance of don't as more to well? the do we maybe that area lending to you philosophically, look the to the actually with faster I Or could the an there side of deposits sentiment disruption? there.

Paul Taylor

Yeah.

opportunity think there's there. huge I a So

I differently. similar a clearly, bank commercial to deposits. manage community normal to business deposits I have that think mean, very we aren't

analyzing of and board. outflows where spent deposit floor keep figure the we those a understand on base to out that working of something will sheet. a now, stay as for the side business. on the as That's and right right we we're the We a in left both -- balance see great but opportunity So question. deposit is lot trying your But where in got they've time we've it to

Mark Yung

I maybe can Yung is This complement. Mark Paul And here.

just has I mean, of program a banks. as of us terms funds, to sure, equity other for So depository-focused opposed in been to kind always this make

one-to-one today, if we're even you kind terms and so outs of there deposits. in at of still And look

And to equity strongly private capital venture that So funds continues focused forward. opposed programs that depository funds. as on very going focus

Jared Shaw

you. Thank Great.

Kevin Thompson

includes have time And our new add, side. us base I our -- the There with here, lot and a and number banking am and process. PacWest. interest their deposits fairly with with didn't this and I love Paul that I'll penny spent through just are client of speaking the clients banking impressed that a so banking to and venture move community loyalty of a

PacWest. People banking love with

have reciprocal of treatment clients, a our We white relationship. great a glove

clients very before, been those time. safe move just accounts, have be focused those to balances loyal we're we've on anticipate who've as us and I operating some of during balances loyal that And to relationship mentioned and temporarily who clients to them been repatriating, to this so

Jared Shaw

color. Thanks that for Great.

Operator

comes next from Please the Our with question Andrew Stephens. line of Terrell go ahead.

Paul Taylor

morning. Good

Andrew Terrell

you're Does the Hey, dividend. loss? good you morning. that the preclude the on dividend to roles short all? building or a I internal GAAP just for realize questions. pretty Thanks start preferred and But not focus why I in capital it path remind us taking could to just capital. order. And glide then forward? the If common dividend kind the moving you I lower with dividend that from help does affect Can at out be guess CETX paying of going a on XX% just the after

Paul Taylor

Yeah.

like take the very dividend. to process taken, just Obviously a an have look you meeting we and dividend, we So approve a we've that's a regulators pay regularly forward scheduled agenda if the to as get so to once And from that's it's next Board -- about you permission at that's first perfunctory, you've But week. will. But a And talk for decision. a in quarter. got hit item that. a board

Kevin Thompson

and not rules is dividends, state rules regulators various of threat that reserve are what but of their have operational the can to understand in in regulators we different regular of federal there event and underlying states different rules add write-down a different just a the noncash their necessarily I'll in pay And terms the FDIC, company. different goodwill income

Andrew Terrell

it. Got

quick. really expenses to over move can I If Okay.

are million the sounds annual rate. this the -- $XX about improvement quarter in actions run like the So taken

about into XQ, finance quarter. or as quarterly around way off expenses the a of operating see $X million expense lender of good initiative. think commentary decline? a expenses? think efficiency sale, the $X run I is before some we a into so expedition to the improvement obviously, just given an guess than the could just rate on I million million we about basis further XQ the $X So Or guess

Paul Taylor

Yes.

then So finish. smaller I'll sheet. start with a let I'll balance got that But we've Kevin and

country, reduction need across of are been at accelerate duplicative. that. particular. headcount. had the at looking been looking a We've we started facilities in So the lot has that to already We've expense PacWest absolutely We some plan. facilities

So we're significant remainder see expense year, to will those, this continue but reductions. very throughout you of the aggressively attacking

Kevin Thompson

It agree. expense reductions for take time I takes to effect.

the So retirements. quarter in we our in over quarter, the benefit fourth done multifamily entity. our quarter. people of businesses. quarter, We'll first We the did early In latter end starting May. benefits those first the some and in had reduction million finance a start second on of XXX a premium had we $XX annualized in We really seeing wound start course and that to of seeing civic

And over and reiterate, mentioned long-term and on But more next to so working on, we while. our strategy sheet the I do earnings working balance again, place want focused on the less are short-term efficiency that things will operational we've we're profitability. take we're we're expeditiously long-term our

Andrew Terrell

$XXX $XXX about still of of referenced like deposits? clarify the Is okay. so. are billion brokered insured net the the uninsured a clarification insured movement maybe just in it in in could, any so there looks balances you totally growth And growth? from that date, $X.X that the million outflows you seeing XQ, around all I any Was million. or guys on to presentation, far uninsured uninsured quarter-to-date four quarter quarter deposit the is to to or if up quarter, included second graph Yeah, are I date page in then deposit then And think understood, for but

Paul Taylor

Yeah.

kind. $XXX are wholesale So, any we've customer no we've Those the has that deposits grown brokered, deposits that brought in. million of

Kevin Thompson

fairly number few right uninsured a and balance fairly and been has That's -- uninsured -- over has the weeks. past insured been steady of

Andrew Terrell

step for back. Okay, very questions. good. the I'll Thanks taking

Paul Taylor

you. Thank

Operator

of Janney with question Marinac Our Please comes from line Christopher go the ahead. Montgomery next Scott.

Paul Taylor

morning. Good

Christopher Marinac

can granularity Paul, quarters? how Good as morning. what of to I next about wanted some this the morning. community that out and Hey, few can just ask extent core and play more over thanks, information your give you you the bank, through us lending about the go to recession good scenario

Paul Taylor

bank. side. deposit look We do this great bank. mind at California, in nicely when a bank you some $XX mean I billion the bank It's there, accounts I bank. $XX community balanced and core the have a community Southern in and mostly smaller mean, venture and So, in it's of It's granularity. a in amount both the deposit predominantly on billion, really side in got It's And PacWest, it it's bank. located bigger of loan lots in was keep outflows, the the on that a

months years I longevity very first board came XX to of community is and the PacWest the bank in customers PacWest. was loyalty is space shocking when about old. -- of ago, It's thing the got customers mean I several on that

of As bank, Kevin field taking mentioned, at community he glove they're at the our service, called guys in business, care a the in out producing they're but great customers. white great

So, customers there's some there. some there granularity, is larger also definitely in but

Kevin Thompson

also And of look And XX% that, I unfortunately low you XX% Very experience look you look is LTVs of book coming you good the asset add, comes then in with California. at FICOs. classes. mortgage, yields, high recessions our multifamily, worst of there at our sheet, if performance. terms extremely in but quality in balance low that single-family our it at is mostly Then historically low-risk will loan multifamily very

business, XX% recessions. this finance, portfolio, finance fund history lender through our business, finance premium they've our Our of great is

Christopher Marinac

if we the and you classified similar bank that community fact would disclosed, in they they or be And Great. be criticized better? would the at looked ratios at

Paul Taylor

believe. would be They similar, be would similar. I They

Christopher Marinac

questions. the taking Thank Paul. Great, for you

Paul Taylor

you. right. All Thank

Operator

line comes Securities. with Please question King Brandon go from Truist next ahead. of Our the

Paul Taylor

morning. Good

Brandon King

Hey, good morning.

in, and CDs time was elaborate able deposits customers. or wanted and checking what it accounts? more quarter-to-date accounts in I to you're kind you relationship up it driven of more driven to that how Could on achieve grew on a rate follow So, growth was if deposit or you growth

Paul Taylor

Yeah.

existing it driven of accounts CD of and did CDs in and a by a partly deposit nice very We market partly say, new rate out growth would majority the on it's accounts. And also combination the some get which to balances in growth. to the and the high we've deposit attention, rate having order market amount lowering still a to very everybody's those the by money that of rate, we're worked, money encouraged and with We out and relationship. customers. drive bank. now, was growth, went by been back was continued I go customers So so of rate the with but

Kevin Thompson

we but people haven't paying this see talked quarter also, deposits. that. of generally, period And about a outflow much, things bonuses seasonal the taxes, paying we first are That's are and when like people

start deposits expect we'll we quarter. So, to seasonal some see and that inflow starting the during second down see in to period

Paul Taylor

Good point. Yeah.

Brandon King

Got -- spot not rate the disclose but end sure on you of it. you And was this the I'm could quarter? deposits Got at it. what the

Kevin Thompson

on The deposits. end was the spot X.X%, rate right quarter about of at total the

Brandon King

then And Got question. last it. Got it. Okay.

bank of a kind that philosophically, payout Just a ratio Paul? normal kind what of the envision strategically, is in target you for environment,

Paul Taylor

a forward, balance reconstruction. As we're do just look we little to looking sheet -- we've got it, at we're

we at So meeting. that's next that something are Board week the exploring

Brandon King

answering Okay. questions. Thanks for my

Paul Taylor

you. Thank

Operator

Davidson. next comes of go Please Tenner with Gary from Our ahead. line the question D.A.

Paul Taylor

Good morning.

Gary Tenner

contractual to finance sale in Should says to is Good two Question place read transaction we is Good morning. underway? a that that sale. within months. is in process or expected lender the deck the that the still one as though pending Thanks. morning. on there close It

Paul Taylor

have not place. sale contractual do in a we So

the there We're process. appear conducted to of process a does We real And middle in right some there. be the interest genuine have now.

Gary Tenner

that like And mark there on no was Okay. those looks transferred, it correct? placed is loans

Paul Taylor

mark. was There no

Kevin Thompson

expecting bid. a or better That's We're correct. par

Gary Tenner

your initiatives are you give that you kind when range. a been 'XX you any or back XXX over updated And longer your Could the you at then current And plans to on opposed be were great. I in planning ROA in could talked through XXX last on several thoughts about shifts all what trajectory? of balance of the number might iterations January, so sheet long-term you target Okay, what wise based the where maybe and us previously? month and that announced look in the like. that 'XX, term, strategic as have imagine

Paul Taylor

Yeah.

event, levels a bit. this the to of those We're after clearly going difficult a down, forecast our that on is but still through to We're time. we're get balance settling and point of extended settle still do, the guidance sales settling now, plans it's forward of to it's this needs So sort through in have releasing got but that some everything, even market looking get I sheet types middle modeling at. these those and to But at right mean not XXXX. in to forecasting down

Gary Tenner

All you. right. Thank

Paul Taylor

Thank you.

Operator

Instructions] next Arfstrom Jon Our line with ahead. of Please Markets. question from the [Operator go comes Capital RBC

Paul Taylor

morning. Good

Jon Arfstrom

to backward ask Hey, morning. morning. question, of assets. I good guess kind wanted a Good in a question I on reduction the

to looks And repurchase it the that in agreement. this you release reduce borrowings, $XX.X billion can where quarter? $XX ask that how reduce Funding much the billion that question press you increase, do Bank That it by? like increase think what the shows in is, you another a do way maybe and your in And borrowings. FHLB that in table borrowings a shows You've Term

Paul Taylor

down the least it's And this the sales. without then So, as to at loan When decided go loan absolutely going you by be there. we probably could billion factor to event, if further $X go sales, from down we in entered it but as in through of going could. go, this We didn't process didn't -- have to this want the month event was to of we we're any right idea how we backing the deep possibly liquid liquidity now. didn't -- down we go

Kevin Thompson

in the will, very FHLB. The that start that Bank In fantastic program Term we'd in, Federal it which is with with would is approach, terms be it favorable. Funding impressed Very a of place. probably order Reserve Program put

the for and balance to And there lower par overtime. the also over can there the will and we rate use flexibility But well to deleverage sheet. makes us as that bring so the it you ability we utilize as sense down see time

Paul Taylor

deposits we And got is, as to as know, quick we've all rebuild here can. the possibly as secret we

Jon Arfstrom

stands agreement that repurchase the do you out mean start I to down? bring -- to down bringing at to on need do restrictions What X.X%. Any

Paul Taylor

Jon. It in December, matures

Jon Arfstrom

Okay.

early a like So any -- there on down -- bringing there anything restriction that? is or or is that that prepayment penalties

Paul Taylor

a prepayment as as Yeah, a prepayment Yeah, penalty. penalty.

Jon Arfstrom

Okay.

should we assume So that hangs around?

Kevin Thompson

It's out de-lever and math. we We'll the balance figure it sheet. we as there get as

Jon Arfstrom

it to to then run unwind fully start difficult. margin me I your incremental to a is margin. second figure we And fair, you it's a think into some one I know I probably to rate the but really back want for know margin like this the you the quarter. that feels of in the a margin type dips these lot know expenses of but But to incredibly load borrowings, this the linchpin if for maybe Okay. I that when level low-Xs, interest mid-Xs for the doesn't that it's you're out? difficult, just

Paul Taylor

over Well, basically the with April. -- what we're already

So will a Xs I you'll in more. think second the it in lot quarter mid-Xs. you're lower going see And that below mid-Xs and be think improve to I see between the the and margin somewhere the third quarter, then the

Kevin Thompson

were already we the things over an cuts, asset and many working we're on strategy expense we, We so timing execute The we're we and and do a on It sales other hard of lot the sheets, balance mentioned, very actions. depends working sales, able it but on in of that of loan on depends that our to time. and expeditious this, of manner. course, rebalancing

Jon Arfstrom

Okay.

see is, message and then guess low fair? very QX. in improvement so lower helpful. we're the of some QX we that's some unwind profitability you as should I to going this, have Is expectations, for that Okay, -- And

Paul Taylor

it's fast Yeah, sort of as think We're But we market that's I as fair. moving crazy a can. today.

William Black

can maximize put number we're what forth to on more trying focused we than in think any I quarterly in 'XX 'XX. Yeah,

Jon Arfstrom

Yeah.

understand. I Okay.

William Black

sheet the Protect balance the the sheet, for balance protect -- sheet balance prepare more. 'XX

Jon Arfstrom

Okay.

And anything in one Are at seeing helpful. you're about, All on asked very Okay. that know on least more then you've just anything the or credit. about you concerned term credit? I been near a lot, but worried this changing?

Paul Taylor

impressed Officer. at held very mean But really Credit the new credit. Chief our up. of I'm and has I a mean, I guy. is Credit I'm sort with credit process incredible PacWest

of interest have a with clearly mean any change, don't So very be rates changed. time, mean in out I going there. interest rising, see period short I to some there's dramatically just I rates stress

So we but there's in pretty as we good sure, for to out some here today, stress sit be were going there shape.

Jon Arfstrom

right. All guys. you, Okay. Thank

Paul Taylor

you. Thank

Operator

go of the with question ahead. Stephens. Terrell line Our next Please from comes Andrew

Andrew Terrell

Hey, yields thanks coming cash especially follow-up there surpass you the number. is portions guess CETX flows more you I of quarters? quarterly if book? book capital upwards bond in kind the reposition opportunities, Do from of then here. If to the have the for like pulling XX% as back some bond you with And work

Paul Taylor

the that's it quarter. Well, we're It's I would looking a declined portfolio. It's something we at although sell -- we costly we love in point loans, yeah, again, to bond that. But AOCI that in this thing. at. daily, reposition looking something look this the almost today, was at can that time, costly but pretty look pretty absolutely asset at any at we're

Kevin Thompson

cetera maturities, about is And the $XX quarterly portfolio accretion million. flow cash bond on the et paydowns, between

Andrew Terrell

you. Thank it. got Okay,

Kevin Thompson

you. Thank

Operator

question-and-answer for remarks. today's any call back closing additional concludes session. This or turn will I the

Paul Taylor

We'd at through you gone I've through PacWest. XX career, thank very here. We number as we your rest about on fruition as a But calling we've great back those assured, for appreciate profitability bring We're of about fairly really all back here. talked you event as not things in excited a here my we like year calling to possible. should We've that of in level. to been PacWest. And in. are to will this in very type PacWest interesting of humanly come quickly. interest working deposit And quick and

Operator

Thank call. disconnect. you participation for This may today's now and concludes you your

Pacwest Bancorp (PACW) 26 Apr 232023 Q1 Earnings call transcript