Pacwest Bancorp (PACW) 26 Jul 232023 Q2 Earnings call transcript

Company Profile

Participants

Jared Wolff	President, CEO & Chairman, Banc of California, Inc.
Paul Taylor	CEO, President & Director, PacWest Bancorp
Joseph Kauder	EVP & CFO, Banc of California, Inc.
Kevin Thompson	EVP & CFO, PacWest Bancorp
Matthew Clark	Piper Sandler & Co.
Christopher McGratty	KBW
Robert Terrell	Stephens Inc.
Timur Braziler	Wells Fargo Securities
Timothy Coffey	Janney Montgomery Scott
David Feaster	Raymond James & Associates
Gary Tenner	D.A. Davidson & Co.
Kelly Motta	KBW

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and welcome to the conference call to discuss Banc of California and PacWest Merger and Second Quarter Earnings. [Operator Instructions]. Please note, this call is being recorded.

Today's presentation will include non-GAAP measures. The reconciliation for these and additional required information is available in the earnings press releases, which are available on each company's Investor Relations website. also each is website. Investor presentation reference available company's on Relations The

both and we to on harbor in like we forward-looking press everyone included Before would safe direct begin, today. presentations investor published to the statements the releases statement

to Chairman, I California's call over Banc and Chief Executive the to would turn conference Jared Mr. now Wolff, like President of Officer.

Jared Wolff

to is call can Taylor, the second us. the commentary spend with Good afternoon, a California than going financial Kevin Joe limited today. the of majority discussing Kauder, new provide their the call from brief company of review more we the on quarter and merger PacWest. of and usual that and thank Thompson that Paul With you so announced results Back Bill was today me for of CFO joining Banc Each is

Let are we how me to announce saying off start transaction. thrilled by this

to share that per transaction The accretion bank by We accelerate tremendous California, is the are transformation communities benefits headquartered EPS value bank X and in bring. with The clients, excited will million in day colleagues tangible when to very $XXX very transaction will X capital of third largest of merger book from accompanied combined investors, have been which in company. expense sophisticated XXXX savings significant stockholders, will and the the result realized. discuss this the accretion

transforming in successful, both this the Paul are undertaken. and short I sheet making and have job restructuring of have powerhouse be to a this balance the Paul outstanding team committed initial time they franchise. will know efforts his an done amount a and through I

and deal bring to highly to closely extremely worked be this it's together going have We successful.

to over it Paul. turn me Let

Paul Taylor

bank Jared other known want done at a and short With Jared, he about transformation for everyone. economics, ability for He Thank few makes This years. Having combined job balance I've turned stage been took with over so the saying a me by you, we've banks led to months with each afternoon, around deal Bank, of a on Opus took very I with Banc the a over great a California. time. has before great come to compelling a few with to start of has I institution myself, and off many combination. that the in this what's sheet impressed is set that growth. reposition good backdrop, excited the it period the

better clearly are together. We

products to beneficial merger this set expanded all a of of employees institution. as having for more for part opportunities an clients our believe and larger will of having I be services, advancement access stakeholders, with career

product merger expanded franchise broaden both creates banks. and will and premier to serves the capitalize be through is offerings. a market team an opportunity and increased a This which banking to assemble scale on channels California opportunities customers positioned and world-class well The from

new like all do of years the combined work would and continue year, organization. and thank they've day, through PacWest will so they this to that people come to they I every at to the do in done the in hard

With it that, turn Jared. I will to back

Jared Wolff

to Paul. you pleased I'm much, very introduce our Thank Kauder, CFO. now new Joe

of know him together, have we grateful Fargo many and and of out senior many, period he wholesale for billions on seen have couldn't the search we're to their background of bank, And this come assets. saw third of course, finance just as more in hundreds served CFO in As exciting his you certainly time. you've candidates. bringing very top. a been including job, at which He's started Joe instrumental week here. he a time, positions in had know, a conducted talented on tension Wells long and stood his I national having all at

do really outstanding to I Officer, Before CFO want as a Ray job did our over truly CFO. Chief to Deputy Rindone, Interim thank Joe, Accounting who and turning

Ray. very thank much, you So

turn let it Joe. And now over to me

Joseph Kauder

Jared. you, Thank

Of career impressed to California grounded the at high-quality course, Banc much I'm very I've well fantastic that start. excited entire and at that fundamentals is as spent clients. be It talent highly with the been organizations, caliber larger of Having to here exciting a banking Banc been exists culture of service at and California. of in as well my delivering has

a me financials. about comments few to turn quarter's Let the

as I refer great discussion deal to Our additional limit earnings found areas and on can of feel which Unless Investor performance. to free prior warranted. quarter Presentation with website first all release XXXX. the to our indicated, review so investor comments my our our Relations will of a are where will provide information, period is Investor some Please be I deck, otherwise second quarter comparisons

the was net Our quarter income per for million or $X.XX diluted second $XX.X share.

costs totaled net or the per million net legal of On or income $XX.X for income per diluted common the are adjusted net compared an This quarter. $XX.X share when excluded. prior adjusted basis, to indemnified second diluted common share million $X.XX quarter $X.XX for

straightforward in performance by asset Overall, core and stable. repricing securities rates loan our and and warehouse growth driven second fairly with margins the in our was remained loan balances improved C&I deposit quarter higher and

to carry XX that of to the months the decreased levels higher we from net due in impact points during basis our the largely X The June, response strong basis first the the quarter quarter However, of we associated XX to a FHLB X.XX%, interest of and quarter the cash liquidity and saw the repayment of margin was of in advances. the recent recovery points, banking the in FRB NIM prior subsequent excess cost turmoil.

overall X.XX%. basis to increase Our points XX would by asset earning yield

the on X.XX%, portfolio. line the basis yield increased CLO yielding warehouse average variable production one to portfolio which resets. in points was higher in reprice mainly highest X.XX%, loan XX classes rate points asset loans continuing increased balances, of The portfolio is loan increase to securities to in which basis the largely XX on average the attributable rates to new Our yield to and due

XX funds basis Our total cost X.XX%. to by points of increased

deposits -- cost second points up for the for the of quarter, Our was XX points XXX points. basis basis average

period. basis over the rates, points same to average increased compared which However, time the Fed XX funds

The net presentation investor interest this further deck drivers page information. illustrates in the margin

income from of the timing noninterest including recovery million decreased a acquired inclusion games recognized Our the quarter, Pacific CRA of due primarily nonrecurring to of first in certain transaction in the loan prior $X.X investments. the items and Mercantile on quarters,

quarter. items, the Excluding prior of relatively were consistent the those other noninterest income areas with

offset Our our payments the new adjusted noninterest other savings benefit last such from from headcount of the areas were than expense of continued as business. investment quarter as reduction prior $XXX,XXX quarter in more processing the company full realized the the and cost made decreased

largely to balance $X.X a FHLB and at the the were end in our assets FRP excess prior Total in cash which June due from approximately to held Turning X% sheet. quarter, the reduction XX, billion decrease was liquidity reduction and borrowings. of a in of corresponding

quarter both repurchase by during the second common net our $XX and were million which stock $X.X decreased dividends by equity in total of common billion approximately earnings $XX the Our primarily of as offset actions, million included capital stock.

increased end in to Our approximately increases million due portfolios. C&I the quarter, warehouse core prior primarily of loans total our from and the $XXX

by lower the Our primarily prior deposit. of interest-bearing offset higher end due the deposits, certificates total million partially decreased deposits checking of to from and noninterest-bearing $XX quarter

end-of-period total balances than $XXX in our and after initial balances we million were an average moved decline, increased through the quarter. as However, deposits higher our the quarter

XX% client as balances. we of in substantial new deposits new deposits noninterest-bearing period-end our Importantly, And our were noted inflows had release, of earnings from relationships.

was and Our second this reserved and which loan as due largely for to remained quarter. in view asset nonperforming loans loss our low loans, both have remote. but credit solid delinquent value, borrowed loans, well in we the quality the so increases We had to potential are

$X.X included replenish C&I $X.X for We the Mercantile credit other losses, provision was recorded largely Pacific of loan million a reserve acquired million, provision which losses and for credit small to charge-offs loans. for from a a which of

end Our coverage second to quarter allowance the at stood quarter. to compared X.XX% quarter, ratio end at losses of the prior the million total and at to allowance totaled $XX.X the loss X.XX% $XX.X for million our the compared credit at of

turn will Kevin. over call the to time, this At I

Kevin Thompson

the in noncore quarter these efforts Thanks, light in loans We second Joe. to renewed beginning our plan and of bank core very sale the proud community a year, the We're our announced X.X%. businesses. on focus on Europe's $X.X commitments during the market. the billion of franchise accelerated deemphasize selling banking of turmoil to executed of At by billion we that portfolio, strategic $X.X funded the national and discount the construction of a loan at

loans $X.X sold another time with lender at transferred as over billion of be commitments to unfunded $X.X unfunded also billion finance to funding. and $XXX of buyer commitments a of the discount X% We million

$XX operations. loan quarter. unfunded million also we the wound Since $XXX the beginning of of million and down We portfolio CIVIC sold the funded commitments CIVIC our this year, of

we savings divestiture, As anticipate a this of expense $XX million. of also $XX savings annualized million result compensation and of other

our As We're efficiency, efforts our and number improve of simplifying subleased business facilities. operational a part of processes. have our we closed improving our to and

this the our We are around and in swift consolidating our expenses capital are actions working company. position. to resulted The liquidity we reduce quarter of contracts, improving and team increasing our

begun in We and that has deposit the base are quarter to stabilized our now very pleased grow.

liquidity loan-to-deposit ratio coverage with decreased billion uninsured XXX%. ratio The of deposits immediately $XX available of to XX% a of and

funding. which, to the large quarter. use pay end of plan a amount the of cash wholesale on to sheet holding are balance down We at of the Much we

ratio Our X.XX% CETX quarter. dramatically increased from the capital in XX.XX% to

per diluted per estimates restructuring, been quarter. items earnings for $X.XX loan ahead $X.XX The share Adjusting of the earnings would sales for quarter. onetime analysts' associated the loss is adjusted of with was in just and have which share, a the

day serve customers We PacWest members are work we our team very to bring communities. every proud and loyal passion of who the as

back over Jared. I'll With to the turn that, call

Jared Wolff

We're raise Kevin. this discuss we say now announced Thanks capital the should -- a to and I strategic or this lot, afternoon. merger morning excited highly

of the regarding We've today, on minutes discussing to spend provided highlights deal few and I'm published that of information the transaction the a great the going merger. deck a was investor

opportunity to merger significant all of our PacWest and a The to a value of of and combination is deliver unique transformational stakeholders. Banc California

great years I things: healthy noninterest-bearing prioritize to had a CEO and a two, high many and of build delivering and to core relationship-focused in this businesses deposits had to with deposits, most deposit When level better best-in-class, joined restructuring level California journey credit of our nearly credit footprint. terms that X objectives undertake of of as X being strategies low and set transformation of Banc the We do would X.X business faster expected deposits; we in three, quality. to capital; capital those California own and noise. bank ago, completed First, the our of say out lending We and would and achieved than by Banc results

leading the we a done create us a with work transformational this with liquid and commercial have into in the result, California put bank sheet. that well-capitalized enter a PacWest highly in As strong, to position balance merger will

transaction We believe company's this is for both highly shareholders. compelling

highly capital between to the addition the risk the opportunities has is and combination familiarity value California and creating book cost leading organizations. and bolsters accretive execution results in tangible significant EPS the attractive to profitability In limited that franchise, X savings given and liquidity

on solutions. primary Our will continue with service, combined of of level superior robust strategy customer focus in-market objective a relationship management expertise and providing banking to treasury

California high-quality superior have to paired lending we of and low-cost lending fund commercial treasury to management Banc with both As us enable services deposits expertise providing demonstrated, that attract opportunities. will PacWest utilize

country. the will the of third the bank which in one On we most headquartered commercial basis, California, a be absolutely attractive markets banking is combined in largest

the all dramatically. know, we environment changed over in XX months, As past California the competitive has

either significantly During California. pull exit have we back this banks many completely time from other seen period, or

result, adding on level high capitalize a service this bank a there share. and of to a by As clients commercial is for opportunity sizable and market skilled increasing with disruption, a expertise

the invest X further and our the million elevate enhance And closing continue larger technology, company invest overall with highly talent transaction. will signed will support The commitments combined the to to this. increased do positioned as scale, have more bank to Warburg experience, client concurrently best communities. even $XXX attract have to be with and of institution sophisticated resources efficiencies well we the and Centerbridge, investors a in

of merger pay strategic funding. several designed profile of sheet, liquid balance excess concurrent cash The institution. and utilizing $XX actions to create to the assets advantage selling raise strong enable take liquidity and These wholesale billion to capital combined the us enhance down and of will capital a include actions very and

close. these These derisked a of sheet reduce to number by the of have X% the while through and balance XX% hedges to combined below the protect will institution We XX% ratio funding cash pricing transactions to entering and CETX. actions assets maintaining wholesale

approximately of funding comprised noninterest-bearing and and XX% that XX% with our loan-to-deposit will forma of also pro core profile will deposits. enhance a We a ratio XX% deposit be deposits base

the a savings rate around return opportunities that exceeding This least in company run have EPS run generate to assets we have percent the non-run the achieving tangible does -- execution not expected sheet be immediately is of repositioning XXXX accretive there is most XX% will per X.XX% identified the points additional rate will $X.XX driven XX-plus but expense of upside by EPS risk combined been We and share to and low We XXXX estimate projections transaction return include to and produce of QX of achieved, on balance believe equity model. expenses. tangible annually. upside book at value not $X.XX. capital produce accretable rate XXX This reduction in did as basis these of PacWest when will on on the

aspect of have, believe high which merger execution is particularly the our the of An X important significantly institutions we risk. degree this that and unique minimizes familiarity

One do and this have transaction. high principles to where degree is of case certainly the a the this in of our M&A in the deals is guiding transaction, success confidence only with in we of

more you know, I XX my President lead during as Western of Pacific than most of I helped plus years served and Bank, acquisitions. there, XX As previously to

talent also We Chief worked that roles at leadership that and Chief number who we organization know they at at Accordingly, at other respect Banc Officer for the exists true have and of Pacific have of of the our culture Credit Western tremendous California a including the the Bank. depth or Credit know businesses their employees. PacWest, We Dyck, organization executives operate. of Bob Officer, was who have the

additional will discuss ability a was During deeper the on integration of the on and diligence trust and shareholders company. for and We capitalize believe familiarity the commercial our to transaction, of a synergies degree level combined process the and us that merger projected value enable to evaluation foundation serve the will of of clients very the our high smooth create to issues to enhance effectively this ability lead evident. for

call With that, to let turn Paul. the me over

Paul Taylor

of Jared. there. off Thanks, get I mute couldn't

Sorry about that.

path believe past best our we a shareholders. is time and evaluating Over deal the few forward spent of we our opportunity PacWest, the merger company, clients, great the months, a this for employees for have tremendous and our

profitability. on capital a position while increase last reduce few plan our accelerates we've into combined plan This market. our quarters, out meaningfully merger the Over putting the stand-alone to funding, of the laid company reliance wholesale and improve a strength within

liquidity, to vision project a quickly that be senior a companies, will will of have we from increased combination the team believe that executives we the that robust of scale, both we capital And the serve of similar With and that will clients. cultures, us nature be value the along franchises, we complementary will able to the synergies our better expanded shared enable and given transaction. smooth capabilities for needs and management our with integration this realize

having and career this be stand-alone to all of of and stronger part more will a set having greater than services, importantly, advancement value beneficial believe as to clients most being an create we products stakeholders, could put, extent opportunities created expanded with as we access what PacWest. for long-term believe a institution we for Simply employees merger shareholder a

I'll Jared, it With that, you. back to turn

Jared Wolff

to real anticipate a management pleasure I been it's this excited X team together that we would you begin process, to be we for add, just stakeholders. and organizations collaborative It's our the our like been through a couldn't rest and Thanks, process. all of the bring truly and the with benefits Paul. PacWest to work realizing more at

and colleagues to together. to banking in attracted bringing all to you forward of tremendous look Thank them fortunate work. most the for talented the all colleagues hard have our dedication are We and

up we'd any the happy to open answer be Operator, now questions lines. and

Operator

Instructions]. from [Operator with comes first Matthew Sandler. question Today's Piper Clark

Matthew Clark

Or legacy been give that their thinking the Maybe legacy me, seems is from? have coming it just there the to on on Can it able for legacy basis. bank? coming just might $XXX to from a also through franchises all PacWest? us $XXX just first a stand-alone cost what you where low is a extract saves, little Is out million, PacWest predominantly sense million of some

Jared Wolff

really our buckets savings there's Well, two for assumptions. expense

exited, is of are the exist they've they the some first businesses portfolio little that will expenses higher do PacWest temporary have assessment CIVIC. including including for closing have elevated FDIC there consultants legacy that a and The costs down runoff the that at for identified, while that some with of run to

combined Additionally, identified there's saving we've going overlap expense company a that the lot forward. for of

getting that expense is the X.XX a And believe conservative, modeled we achievable. we XXX believe model, very so on as and we very -- which to ratio, result,

there we that's on like going a but Matthew, there, to felt the conservative basis. what comfortable isn't highly So be that's we in and output modeling more

Matthew Clark

Okay. question, but been you feel kind has PacWest has have you leverage PacWest have to related can billion above cross for investments there that do any been a under a And make you any it -- then you do of are while, done? what $XX you guys $XX like or billion,

Jared Wolff

were $XX billion as over you mentioned We previously.

We organization. really there the large to have infrastructure a that built was

we'll be to us, the between going of organization, And combined integration we're be within I so team going have and think transition a leadership of the folks to X and team we're substantial good I fine. there. think

Matthew Clark

loan that whether business. sales you'll speak not And to you be single It on maybe of in is is assume any with Okay. legacy in volume be fair just like multi-family. left that And will resi, thinking of after you're still and to merits some you not it the all I'm kind strategic looks I this to kind -- or combined? and think once front family lending can is national longer what have are term going this, there once bank

Jared Wolff

of to company heart combined the the is bank franchise. community Yes, the be going

PacWest And a a already. bank they Paul of great of and with building done progress the had the strong and Kevin national a niches, businesses converting couple lending lending job towards community but team has largely into exited other

any don't at a heart California banking We its have national is of franchise. Banc businesses. community lending

these a in are to that strong California we we continue are serve. have that really both There the So together really markets niches partnership make we X franchise that going some like. to in

We deposit side. on the niches have some

that and have too. business loan-to-deposit really Sean a interesting credit. and some have use They're that have that venture business funding low a deposits, they finance they We Lynden that to leads low fund verticals HOA DeTata we They great leads, gather do very strong. Alan businesses are with

And believe loan we and worth concentration. reduce strong so be low to on can live think we as to be holding it's is This very pro forma And those XX% long means very with within that going bank to wholesale funding. it's I going X our deposit day franchise. a businesses as to

look we We're be avoid excess we to I we the sure to banks have, to that well that. the have, low years. positioned going we're to funding over last liquidity, capital the concentration do wholesale that experienced ratio the that make the going think several risk with all And

Matthew Clark

Okay. And then just on the merger...

Jared Wolff

You question had SFR. another about there

as we've likely which the outcome. hedges have they but to to are determined place may the we these ones be, sell, not part we in identified protect the -- of that assets sheet, So put plan not we balance the we will of but restructuring and sell,

Banc and sale billion SFR portfolio California, portfolio billion at Banc multi-family PacWest at And $X.X securities includes $X.X available and our of for for are sale available those are our securities. it California, so of

liquidity originate funding and able the in to funding tremendous institution, at single-family create so with than going close. of at a PacWest ending wholesale be to XX% Neither us doing down so, amount pay today. we're less wholesale on combined of and And

purchases had add in So that just a assets we low done was that rate environment. to

would portfolios we I But performed think really in those down sell pay well. them and this borrowings. design, down

Matthew Clark

deal that of stripped out it what the Okay. the number and the looks capital the relative value? a capital like you would deal-related look and to the Great. merger raise little costs high, and just on it mean hedging of cost And then charge, hedging, the includes raise. if I cost but

Jared Wolff

savings, these being we about and X.X% is of where comparable to end which It's that deals at. up some X% cost things looked

So with it has you're elevated things were combined raise cost associated substantial. as which capital well two right, the it's as substantial. were the costs, the Those hedging because highly

Matthew Clark

is were bidders any Okay. X And there this just it part? then you the other most Or in for process?

Jared Wolff

Well, a get be to the be in about there description I and done. robust is proxy going excited to merger, we're background but to combination this of think going it the the is fantastic,

Operator

The Chris comes KBW. question from McGratty next with

Christopher McGratty

Slide combine getting guess to and slightly I that different core dig to Slide some deposits, second XX starting get NIBs you of for after from what you're into the assuming deposit think just to I X a assumptions the for companies, if quarter. XX give the moment. is, I'm a XX% wanted mix, deposits. point growth noninterest-bearing I the

to start, So I'm interested please. in there commentary

Jared Wolff

there's Yes. to what know do. I be We to going expecting both mean we're a little bit.

to it is we forma QX, are at we, is XX% expecting based approximately to noninterest-bearing that, be the QX pro course. close. This close of close, late we plan . And exceed and because expect X/XX hope We so we on to early to

Christopher McGratty

on X Maybe a on today. a marking how credit And their the sheet. not balance credit. the comment maybe question Okay. portfolio a volatility PacWest or numbers you little bit has you're historically then had see in

like I the quarter, of think but a on second combined banks migration on loss the maybe is basis. bit rates color assumed in there just little a

Jared Wolff

we we're of kind did and forward. happy we I'm on But at diligence Kevin about want Paul, robust all? the the you to guys that, quarter talk do going to comment do before modeling or Sure. what

Kevin Thompson

You bet.

as of loss with those CIVIC part than rules, credit According had sale restructuring accounting on a of selling First, to count we rather lending a to portfolio portfolios sale. some, balance that our had number on little since bit the including I'll on portfolio GAAP mention executed a we of national credit losses sheet initiatives, deterioration. a as loss

shows up in our that So provision.

that of noise those geography. our in but little to in Chris, They're just true be it happen that point, to losses losses on So are that create in bit does sales mind. provision, charge-offs a your

down. perspective Past And some ups a there loans due are then credit quarter, the are from in and downs.

Our nonaccruals of because loans. up are specific

Our throughout. special get down, mentions are classified

So construction some even did But quality. reminder, portfolio, is combined a we our out over bank. which normal think ins that I better see time. very adds a credit sell profile credit it But for and are we'll as national in the

Paul Taylor

And then It They it's the important CIVIC of dues, always a ever we've to portfolio since loan, on a slow of to involvement that push CIVIC. mention they're sloppy more of for lack our in more will seen past just term. It's seem a pace. pay. better

concerned So anything that systemic we're in a or not trend there's that portfolio.

Jared Wolff

let just me in... So jump

Christopher McGratty

That's helpful.

Jared Wolff

Yes, Go ahead, Chris.

Christopher McGratty

No, no, I'm Jared. to interrupt. going, keep sorry

Jared Wolff

I did on course, Yes, of mean, substantial diligence those you diligence got risk. substantial no at of to we make that transactions these on really things very the look sure in of carefully the portfolio. you problem. I because other, potential the but credit are each mean sorts

that were exposure content. the even some that undertook, loans loss has they deposits say balance there done larger their -- was excellent First job portfolios to sheet. of And they sheet on risky, the of generate lending de-risking sales would balance PacWest necessarily didn't I were where but those that not think an the they and had if portfolios through and I all, that pressure the had put no say national

granular it job before they than they've risk, far in that was I an that. engaging is So started of think remaining and reducing loan more done excellent the portfolio

time. seen runoff are it's -- CIVIC, like of seen to we primarily over for we've mentioned, though in are did rental acts delinquency, I deep It's And to more that transactions but some relates diligence. housing. as that consumer loans transaction pays. billion-plus that a have it $X those going we've it portfolio, even not. It very it's And As

parties. We third brought in

about were As of did as of we did been diligence these each they committed, that comfortable And portfolios very both in this other. in that's X a money credit able feel very to deal sophisticated on we well. that put banks, think both substantial lot I leverage investors the came in and

lending both of said, opportunity Like core, more types some but do basis. community this primarily. a in is on portfolio its will footprint going I say to with think do its niche at it's akin I to never going we in is other And bank bank to market the forward, the lending never, lending be that be not to lending

about So that. good we feel

that typically -- PacWest terms we the to perspective, numbers the we In can to but a coverage XXX can't from ratios, a points. to is have this to to numbers basis closer are support of there's tell XX were for going Obviously, prejudge of modeling we closer to XXX And you run there. theirs. what have to CECL, going assumed we be, coverage I ratio us we're going than in ours through the obviously that run to but was plenty extra get

Christopher McGratty

that's a year. a number. And then Great. And think pro full $X.XX, then maybe confirm, that's just X more. The $X.XX I to I just to wanted forma

of of marks So the is color the and Just as me if -- XXXX? And the noise on the accretion that's yield, loan, $XXX kind wrong, you correct accretable million savings. I there? of just get in through any goes interested think, assume the the cadence life I that I'm I'm that

Jared Wolff

marks, advanced let in terms somebody for to else has of the on $X.XX our out going XXXX I'm $X.XX, to the who earnings. an put it comment -- But helpful that estimated degree. would to we be is estimate thought

the getting there, in at are cadence expense the of year, to going terms get year. not benefit year you're earlier the of end of the obviously, full going the savings In to,

costs or the facilities, their charges, XXXX. associated of mature XX% example, XX% end facility their PacWest expire at of with For

like They'll We XXXX. early to at going and savings do pay fee that it's But that, get So until estimate or we're without closed any we termination, terminate realize of estimates wait the we some stuff we'll to to have then. benefit whether through of want to just they expire. assess that we're end the think whole be the by of our out XXXX. end going them

you that Joe numbers So want to guys Joe, figure out for EPS. time the Hopefully, I XXXX do what gave you is to are. or $X.XX estimated to that? accounting enough take $X.XX Kevin.

Joseph Kauder

Yes.

I'd to your clarify like So just question. specifically

Christopher McGratty

$XXX gets accreted of the mark there's timing the guess yes. the usually I earnings And into Slide that? back XX, then, that million, --

Joseph Kauder

a comes years. back Yes. deposit That's over X That's over X in intangible years. core that

Christopher McGratty

Pardon?

Joseph Kauder

then to the we And the portfolios loan of you of Banc about so loan, Cal sell. the it, marks, think if intend loan most

So the into the accretions back earnings, those accretive CDI. will not all be on

Christopher McGratty

The $XXX the is million. only accrual yield

Okay.

Joseph Kauder

Yes.

Jared Wolff

accretable you the had non-PCD loans marks. million $XXX rate be will And and the well, that as

Operator

comes Stephens. Andrew. Terrell from question next The Andrew with

Robert Terrell

you've make close. potential for quickly between you discuss kind asset the assumptions the rate contracts on put asset of volatility forma discount now of just non-rate-related discount? Just place hedged baked can with to the pro sure maybe planned expect And you'd the of the forward any then on just sales, terms in fully into what's comfortability or sales in the of and

Jared Wolff

have is of we we've hedges, The we mention right. I'm rate things. but of he's sales for turn have our risk. within in something And That's a it the Joe interest me variation. couple going over the accounted is to timing hedged to for hedged and control. for because rate model let But interest the on risk, So which expert potential our

it higher to later. to supply what if we've sell Joe, rate in of kind you we Again, So purposes, that don't targeting and dislocation we to we are but our in XX% want wanted if numbers we're walk hit there's to, we We down to done. do at below timing projections. exactly But sure keep value for that wholesale demand, through make the moment. that a funding, getting could could have sell noninterest we

Joseph Kauder

Yes.

entity a so risk largely on interest balance was what the there. to which now credit assets, rest really of survive event, rate about on for deal we mark at but a and terminates It's top on the $X.X then close the no of the there's did if single-family on close, rate right contingent loan or between hedging contingent some doesn't right contract our sale So transaction. spread were sheet, which we billion, the the forward capital was close protect incremental -- agreement. entered now And and the our mark, the in between was of of contract that reason, and is the not portfolio, into that those the

those so sure protected. swaptions, we just rate make we of that we were the interest appropriate calibrated used which that the tenor portfolios could were So to

Robert Terrell

Understood. does here? back for both the assumptions X.X% take just funding any pro and So run another for way, would the planned from Page out increase not And on of XX then deck, restructuring? the companies funding costs, rate cost funding forma on said slide then incremental that modeling costs the account XQ

Joseph Kauder

that's believe perspective any into current curve that? -- do yield We do the correct. Kevin, on have current curve. the does projection using other it account I -- you yield take

Kevin Thompson

question? that missed I apologize. Andrew, the what was I part.

Robert Terrell

forma then the increases the use on any funds, XQ does or of and the for does in deposit it pro Or X.XX% of cost incremental funding cost forma cost assume the that Just half just pro back year? structure.

Kevin Thompson

in does the right, has it it forward yes, No, have curve it. Joe's --

That's So right. there's one expected rate hike.

Robert Terrell

and pro its And then, Jared, in forma assumptions maybe it upside additional sounds like, additional here prepared earnings you and include made I a just some earlier really expenses. the mean, comment don't in that you remarks, the

was areas could saves curious fairly are of I you've you of or that outside about You're the here? that optimistic be that being could expense presentation. of other opportunities achieving identified earnings upside sources talk kind if just

Jared Wolff

With cost in then other the would that both in and that that identified do already stand-alone the the terms was would longer that PacWest all just look, pretty cost core highly handle conservative, rate the done we it look number. terms provider had plan be going your has would go we going achievable. more they easily were run a efficient with savings of thought and run as away Well, a they at normal you great expense job you balance forward. a de-risking sheet were no because that expenses savings has ratio it other in thought to large were how XXX targeting to themselves to of then being merger was a business, way where franchise get they to easy that, a of it and

don't think it's that's I So but I exceptional, XXX good. think and is --

is is think get I longer we below term. XXX would to that like probably where and to

we side, expense think the on a lot. certainly that's So there's

on growth very we side, and assumptions On in the going side revenue our the forward. were conservative

the seeing right the I now where lights like on gas slow. don't ahead, brake pressing economy Looking is I'm and

Powell of he projecting into growth says, hitting going listen we're what a And target doesn't so And to if not XXXX. you XXXX. ton until see inflation

going of as and the but PacWest all be doing. just come trying probably grow. to is has been not think to down, to runoff to We as number not the So rates of that of going because get wondering are they've their mean in economy when things this be done we're the it's been the portfolio. to opportunity been that. -- ahead going demand we're has We'll have much There's that slow. shrinkage I some lending

expansive deposits see have So as combined to think then institution, up economy but going are not be and we're I to the support is XXXX going growth to to picks there And we it's opportunities it. the unless lend, a back when starting. some

with reason our digits, but we growth high there we with would but maybe much digits no that, try growth. historically, there's would low probably -- And run And this project and loan or double bank projected do was why low single probably single-digit end we lower higher. franchise to can't and PacWest

Paul Taylor

is I say would And our mean, had much look forecast that already with we've demand. it there. the our as our -- this plan. I and much, in But below in is economy Jared overall the growth whether is year, than mean, what I the at demand sort it that to liquidity got that's of And just have issues to as PacWest said well There's a we model, decision to you rate do higher due is everything. you

Robert Terrell

Congrats on deal. the

Jared Wolff

Andrew. Thanks,

Operator

D.A. from Tenner Davidson. comes question with next The Gary

Gary Tenner

On earnings. million of the again, effectively you a $XXX pretax, value delta highlight XX, that locked and into closing? million at the sale discount marks, fair goes single-family in points that's where clarification. of that Is multi-family Just Slide $XXX the the couple on

Kevin Thompson

the you're number portfolios because Yes, loan there. selling a of

are the being those are back into laps earnouts. accreted So

Gary Tenner

it. to of I $X billion note generated at cash where wanted clarify an want closing. XX, on Slide Okay. secondly, just And you additional then -- to

with out me help Just the mechanics of that generation? cash

Jared Wolff

So PacWest...

Kevin Thompson

this. Jared. ahead, Go You've got

Jared Wolff

Go it. ahead, take Go Kevin, please ahead.

Kevin Thompson

would some some cash at level as cash, working and side, our to on has of sale available operating excess quite I one we as well this say our after levels securities hold PacWest do both we sheet. of sell as for of plan high balance much closing Okay.

us $X end. leaves the there excess that million at So

Gary Tenner

then And Got I third of -- just the terms it. the in was was answered. had question actually, that question

Operator

The with from next Tim Coffey Janney. comes question

Timothy Coffey

Jared, kind approval, that of can at laid out? happen timeframe received given talk within -- little assurances the the of the have any you timing that you've this bit a merger

Jared Wolff

we in for transaction documents that said we've are looking end the to early or close So the the of QX at QX.

that Of this transaction, based of the this transaction course, on achievable. and And with we previewed we timeframe specifics regulators. is believe those conversations

through is that look, not process, to regulators is we well They achievable. and go their have the but out, down. laid we're that believe So pin going to process that, timeframe

Timothy Coffey

long Okay. how in? Can you on comment bought regulators you ago the

Jared Wolff

made this the a We have aware very process early regulators of phase. from

Timothy Coffey

charge, enough. Okay. $XXX That's to And in does then going back the fair that include control? change on, -- million pretax that includes

Jared Wolff

based normal and paid Most as there's plug for don't be contracts, that to that have part there are severance our So number. numbers parties people people both would a but a have we the in So in deal. double-trigger estimates control. We've severance, who have on terminated got of right? changing

Timothy Coffey

just of are or And planning you of to limits your right. any capital concentration the kind that or things establish then nature? terms on banking Jared, thoughts in That's Okay. business. customers venture of

Jared Wolff

all they on that without bank is level to strong And it these this. that legal concentration is, the of finance, across I customers But they're have above have limit they fund all We a is certain about exactly they an lend percentage lending say, or some every great very limits, know think topic it any way doing, Let me pause single that they're concentration has related concentration. you business think I But the customer group off doing well. venture and way of I very, a cannot let issue do feelings the banks. very your say, generally, more in do start a of what capital. because me banking

on we and to concentrated by the within or make customers the There's either need on no live not overly all deposit corollary that side, and sure liability means asset the side. our we're

makes So I'm can in where reducing sense. a favor it in of And you couple of ways. it do concentration

it You so giving by money contractual time-based, can't notice. that they're some can or pull have their making you obligations without that they sure do

larger with we institutions, more So a are with markets Banc that of at you do something a deposits have can California. acts but convert time-based We in with liquid like stuff the contract that of deposit. some money them. There

it the out was over -- to can if money be to leave we would and leave, it. it So wanted time for scheduled scheduled plan

the or have is I venture not something to manage risk we or concentration bank, believe overall, San L.A. the or But Diego throughout region entire Bank HOA that the just or region just at anywhere. have tell better We they Community overall. to same that it's exact going manage I that's look going at. to would way. And to it And something feel think or PacWest we'll are forward. the manage all have something obviously you, banks that But

Timothy Coffey

me. question then for last Okay. And

Paul Taylor

right on, Jared. You're

Jared Wolff

Sorry, Paul, please.

Paul Taylor

you're right think I Jared. No, Yes. on,

Timothy Coffey

of have Paul, Jared X between your much any institutions? how And for customer you sense and then overlap

Jared Wolff

we market. mean, that massive know I haven't it's this some is -- done we anecdotally, but a Just, the math,

deep work at some really share. the because of a are just again, customers are There we you're overlap I such that there's PacWest, I there history banking, where have and here, So today, we do customers. to of have learned significant and much and but some couple still And not given with left. done share customers I for business course, there those business on going that we've people too together have respect my that

Paul Taylor

call, Jared. of right this one to before our customers spoke I

Jared Wolff

You Well, did? Great. great.

Operator

from comes Kelly with KBW. next The Motta question

Kelly Motta

Congrats on the deal.

Jared Wolff

Kelly. you, Thank

Kelly Motta

your deposits growth. I level. HOA And you're you've think have you some slight on. and kept with and to for that Deepstack know your wanted working do things been a back circle nice focus some DDAs I implies XX% on disclosures deposits a and of I at there. coming for I outlook Jared, on them total know

at your Just DDAs? both any being very in seeing maybe potentially wondering what you bank get that be would you're gives And trends terms able at of level and XX% to growing legacy color to what around PacWest in confidence helpful. those modestly

Jared Wolff

Sure.

treasury, stable. and the deposits. deploy We the and but what magnitude, So both initial California, -- have different strategies we banks both Banc kind first both know of And all, of I of deposits experienced stabilize shock then at obviously experienced are a for highly certainly, primarily been we and looks like. last of customers cost high in serving but are quarter a new are really solutions, high-value from noninterest-bearing brought doing not treasury which management primarily line people And And high-value we deposits. lot this through it with our money quarter.

always they very has And noninterest-bearing high of deposit percentage building core of a had for a PacWest in the deposits. time, terms had base. longest an franchise excellent

to or currently it When I XX% up were we of Banc XX% XX% non-interest-bearing we at to and got now. at California, right came We're XX%.

deposits the we Everything our that the achieve that. greater about low-cost is the franchises, and way just noninterest-bearing way It's in both will that we're and that, up that and growth make set of up DDA. at drive heart set PacWest sure we'll of

at I loaned. HOA is the under I But PacWest fantastic. that to together Some very of they is really pulled the they've business do are community core tools fundamentally strong that well. going have the and think it's business, a mean bank

they're strong some in really deposits L.A. San the but and Coast you're where in have other You Central and they've got under areas loaned. really, Diego, good but great areas or in lending loans, really

this money highly top in is believe to market. something we're this based market to the Based below have standpoint, are I we're at in very have looked we there, be massive first, is you Citizens the Citizens and There to First top many And going do look them, of First in well. an the of we're HSR is banks that back I terms we the the on visible. be deposit X some center of you dominant get in growth that from I to but XXX who chart banks in, not at the if deck, know able But talked well, in dominant the but both not here. think going franchise and banks remember, the they're in too, to going be PacWest, I've leaders with terms is at prospects dominant presence when

larger City think West and if East and so to banks National, center to you well against that us where are based all And deposits able bring us, I at the over. and banks of the to the compete are be money going here, look banks

Operator

The next from question Timur Braziler Wells Fargo. comes with

Jared Wolff

really coverage, Timur. a of was short That suspension

You are back?

Timur Braziler

Back Yes. better than ever. and

for Following the what up guess, you Deepstack kind this and on contribution? that on means rollout this does commentary integration? the the affect how provide deal Deepstack of commentary, of I any can And combination the of magnitude Deepstack

Jared Wolff

Yes.

it said this So of early live that's Deepstack. track and happening. with get of we'd on We first second quarter, the that all, end we're quarter or

customers lined got we've So up.

have pipeline. slow. We our We're going

risk As we I get teams plus build sure would making XX people out so We're up monitoring right, we've the I mentioned, with I'm all do. and to been the we're started to thought we progress that we and of what able seeing. do monitoring transaction but we XX, like

combined PacWest What's to businesses have with going about really this that to Deepstack. really the thread exciting is nicely are opportunity

to a in-house they like So third to to tech the as whether clients of need they And their some and an HOA party. or be clients direct its able to businesses, opposed would love solution solution this. venture

year. great contribute end go a both year. be Again, about, going of continue basis. we so it would as fee slow monitoring, to progress to on right. the we And will We're this And is next we believe earnings to to the combined and to thought transaction But do is sure we to going that it it for get right? Deepstack. accelerate meaningfully And the we going talked got income it get to through make next that plan this

Timur Braziler

you a then given California guess Got of of I And the sale to the the just to trim at bit of side repositioning divest decision of Or that the back PacWest is indication restructuring the then little kind in multi-family standpoint, an like multi-family else the a seems sale there. quite that less is to there? their in is market. look the And of make strength maybe additional anything SFR as that you'd on Southern I'm SFR the was portfolio from kind sense. loan just on sell it. this books, I complete? book, wondering there rationale or more surprised or

Jared Wolff

the the term and easy without banks X would decide and they're factors the multi-family. with transaction-based low -- it deposits. a it's you on. like bank portfolios and it's So they're be those you're allows sell, rate giving back, this this are just transaction sense makes other build that look in to what the the but not to has And -- at Every any them that of at much Multi-family given portfolios really were rate, relationship up looking top both of loan were market, things to fixed to happen. the longer single-family

kind perfect So basis, will. But the would can stuff clients a when with be create bridge little not thing like SFR stand-alone you put on lower-yielding you X and way it's and together, to relationships balance to bit a I it's the it of sheets de-risk on opportunity shed. And delever either going punitive. to portfolios, think affect the the

that, In look already exiting, done really, left terms roadmap. PacWest done of other has the really They've at think the well. and I roadmap things they've to

off. CIVIC running is So

kind lay up, spikes don't pretty been that of a we able to time think every they've there's about, And off is talked and loss close it to got if at party on we there. there's something content As remote, they've it third they, par. that

well. kind I it of think So out that laid they've pretty

Timur Braziler

for just then lastly And Great. me.

else XX, just loan the Is security the number? million sales. Slide the entirety? in Or in the at does there sales, that's that I comprise to $XXX of embedded sure runoff. other want make Looking that adjustments anything

Jared Wolff

it might there. other in I think Kevin? stuff have some

Kevin Thompson

legacy add, some down I'll emphasize wound would that we'll the and would that over portfolios have PacWest PacWest. time. just wind we've some down It have it legacy

Timur Braziler

Congratulations the deal. on

Jared Wolff

you Thank much, Timur. Okay. very

Kevin Thompson

you. Thank

Jared Wolff

coverage, Welcome back to I guess.

Operator

The with Raymond next James. David Feaster from question comes

David Feaster

the Congrats on deal.

Jared Wolff

David. Thanks,

David Feaster

of well, I and a cultural compelling, of both cultures about can you talked you've in done intimately this be but and are tough personnel they transactions, lenders close could just perspective. bit but lot these, M&A maybe types you hoping alluded elaborate a to. was alignment. financially hoping put strategies These then but Jared, the on of guardrails maybe aligned, really know, obviously, a you you minimize that obviously, just know was I And cultural a you as from on integration I seamless ensure help that in up disruption place retain past, on lock And of the kind or and the to the of touch talent, some how

Jared Wolff

Sure.

me half Let the back take that of first.

could of in that involve on So you that is transactions all transaction around retention these what I this unique be at identifying and piece, structured making we would put the it. risk that sure say guardrails that.

stock staying time. over continue will outstanding invest So all restricted to is and

So restricted deal. are of any not accelerating stock either on we this side

have keep And people because initially are so wanted that you were given stock people restricted obviously that the to the them. it

protect sure the franchise and a and tool embedded to others. we on And already basis. we'll that judicious, we're be retention looking feel so that We'll and be about what exists, go-forward an there's sense at we'll smart it do makes make that

I Officer together. him, regional CEO presidents and I that were other Corsini, there. David, we with mean I portfolio overlap the and PacWest Bank; terrific of was of very enough uniqueness mean Bank We But his management. start is a Credit Chief both Officer that this are Blake, the Bob we including a and who's Chief came each He's Chief the the guy. we're capital. well, great say together. Dyck President XX credit cannot Credit Officer He each there doing with on his of of about then Bryan when going there of that familiarity and all work and key very, all can and report have the the Community of management that know I was out who years top are other. PacWest to lieutenants the back job I Chris Bob Credit

different things headlines just that many happened what are go anybody. that did get they a Matt bad a credit couldn't And go I wasn't I have looking and build some it mean can happened us. and out was because at today, It have to very It this while derisked lot the they some I the franchise And had time. of I today, understand the good dramatically. franchise. because long amount for could the that that any bank fit a have down saying, list good on of venture came screen just it's that to was wasn't fundamentally and up can though, generators toward And because on they've changed a to for and an done pieces deposit many, bank think somebody layered sympathetic. the people perspective way It's but going were over individual the I years a to be bolted community exceptional the really liquidity run getting different. also, and is a deposits, really job money John think of shareholders is is I a on exemplary a would And caught problems. look, moved I it to an really because more that are franchise screen I on in down not people, they headlines. say managers. which actual, made and have and could It of lot they And of and

clients. terms I know this relationship because just lending way we're kind culture, a of to with frequently and very serve compete I on deals. we high-touch And day-to-day of on focused them mean, In

Southern they been and have. little have XX% diversify concentration. California estate a XX% is fundamentally do C&I. It's a real bit more bit estate, a able to market. higher C&I They We've little real than

both us better mix the balances out of kind that out. And charts think us deal of that one loans in of it So deposits. overall things of lay I this and terms and gives does the a is

on and deals can't done, on that there's and been because fit I never has that here. there but deal deals been go amount overlap the the of think have I've can say between about all done, one that, institutions. don't that cultural lot this I've commonality a I So in of a seen I X

David Feaster

you in as talk how And office you you need back core do guess do platform? color. technology you I a have support has the But about respective you the just That's appreciate -- entity? big And the there, helpful. and maybe both. technology your see of and much platform been on you infrastructure conversion then quick just Obviously, the platforms think how larger you a a on I kind systems, for to them initiative touch could that the really about do together? the question

Jared Wolff

bank. that look the when services ends an have Their come to broadly October than XXXX. contract that think They're you I in We the both actually you're clients. provides We're as bank. today, a because core timeframes. IT you at to So as up tech looking system at well core with have pretty Fiserv notice contracts FIS in operating April look XXXX similar infrastructure more it at

So as I in of things opportunity mentioned, termination like terms and there, fees that.

give leadership it We're to and both will look organization forward direction leadership integration those organizations which decisions of from of going define our a the key have going be transition to talented be team and to the that we will ground. at up kind doing on made teams,

a look, just you're and deploy how when core, outside second, so APIs big solutions not from because really relying you're for And also integrating core, staying at there clients. But at you're FIS are to Fiserv of it's looking your a us the on good looking opportunity. most beyond services today or from to

no taking and alone. looking that longer the just package -- delivering not as you're out at You're that

bolted things clients. other to that things You've deliver your on

realized faster are than push a And that there So Volante. that There of perhaps they've Fiserv one-stop partner we give through doing hub things better a opened lot credit are to shop. Deepstack, up to have I a things than most we're APIs it's they our because payments away. -- are be and to can't and through

looking And and that really closely is out the so forward. we'll be to at figure try solution best going what

I the on have IT that first. mean the and can right is both us architecture infrastructure in that highly then we support we're changing mobile. be in, side, we're to which cloud make sure environment And that trying the

job in terms to their think providing great solutions to clients. be thinking I forward of of tech how about done they've a

going have We've systems to been delivery sure have they -- we're the of build that that And well. There unique. make that our There's are we there. clients. through on tons sure HOA technology above in system weight we we I to think we're growth and class punch the that going support the I to well make specific terms our it we to for to HOA see think have as keep that growth that's as of deposit

but going ideas, obviously those real of now, begins. be very solutions assessing are to is made as say we initial work and And some we're So some at have technology one the going to obviously very, we've initial decisions that, starting attempts important. they

David Feaster

you institution. about part for about fee think then play And think big how it. especially revenue you become much a institution. generation, that The revenues either fees going of I'm fee. Deepstack haven't me. as a just you to think the last into can larger how just curious, Fee Got curious some about forward. been I'm Obviously, one regard. But

Jared Wolff

had PacWest earning not mean lot job of it side, I a we they making -- did more than fee both And they were. better we're because the than right? a in Yes. having did for were terms up we

it So up for it. made

be. cards some are of fees Deepstack an there. to issuer going I is They and generate think they

to in going of an issuer the beginning fourth We cards are be quarter.

good think I a And going so for degeneration. that's opportunity be to

building through and fee we're around and programs to see we're faster Deepstack, through grow payments other through issuing the the through probably payments the the think where business going I initial going company. partner ecosystem to income parts be, place that is of BaaS than

Operator

presentation. call concludes Thank concluded. attending now This you question-and-answer The today's has our session. for

You may disconnect. now

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.