End-of-the-year earnings reports were recently released by two of the area’s largest banks, rounded up overall performance and recovery following California’s regional banking crisis, as well as offering perspective for how local institutions will steer forward as the Federal Reserve continues to give mixed signals on interest rates.
Banc of California, the rebranded addition to the Los Angeles landscape after its merger with PacWest, proved just how expensive balance sheet repositioning can be in its fourth-quarter earnings, released on Jan. 25.
The Brentwood-based company reported a net loss of $493 million for the quarter, with costs related to the merger being a main factor, the company said. The quarter included a $442 million loss in Banc of California’s sale of $2.7 billion worth of legacy PacWest securities.
“Since closing our transformational merger with PacWest Bancorp on Nov. 30, 2023, we have made excellent progress on the integration and the balance sheet repositioning action that we indicated at the time of the merger announcement,” said Jared Wolff, the chief executive of Banc of California. Total assets reported increased to $38.5 billion, a rebound from the $36.9 reported last quarter as total loans increased.
Meanwhile East West Bank, the Pasadena-based institution, reported significant asset growth last year in its Jan. 23 earnings call – adding $5.5 billion to its balance sheet to hold $69.6 billion at the end of last year.
The bank saw significant loan growth in the final stretch of last year, though East West stopped short of adding significant new commercial real estate loans to its portfolio as the sector experiences strong headwinds.