Core Argument - The loophole in the GENIUS Act poses a significant threat to financial inclusion by allowing stablecoin issuers to operate without the same regulations as traditional banks, potentially draining resources from underserved communities [1][2][3]. Group 1: Impact on Underserved Communities - Underserved communities have historically faced barriers to credit and opportunity, and the current loophole in the GENIUS Act could exacerbate these issues by diverting essential credit away from these areas [3][9]. - The potential migration of $6.6 trillion from insured bank deposits to stablecoins could lead to fewer mortgages for first-time homebuyers and minority-owned businesses, as well as increased borrowing costs in vulnerable communities [9][12]. Group 2: Regulatory Concerns - Stablecoin issuers are attempting to replicate traditional banking functions without adhering to the necessary regulations that ensure financial stability, such as capital requirements and deposit insurance [4][10]. - The workaround that allows cryptocurrency companies to offer rewards structured as interest-bearing accounts undermines the intent of the GENIUS Act and poses risks to the financial system [5][11]. Group 3: Call to Action - Congress has the opportunity to prevent a financial crisis by closing the stablecoin loophole, ensuring that entities acting like banks are subject to the same regulations [10][12]. - The ongoing existence of this loophole increases systemic risk and threatens to deepen the financial struggles of already marginalized communities [12][13].

Core Insights - The U.S. government intervened during the regional banking crisis in 2023, promising to protect uninsured depositors and limit contagion risks [1][2] - The resolution of PacWest Bancorp involved a private-sector rescue, with significant capital injections from private equity firms [3][12] - The Federal Reserve played a crucial behind-the-scenes role in facilitating the sale of PacWest, incentivizing private equity firms to invest [4][10] Government Intervention - Following the failures of Silicon Valley Bank and Signature Bank, the government took actions to protect depositors and stabilize the banking sector [1] - The Federal Deposit Insurance Corporation (FDIC) provided 80% loss coverage on loans during the First Republic Bank acquisition by JPMorganChase [2] PacWest Bancorp's Situation - PacWest faced rapid deposit flight and liquidity issues, leading to its eventual sale to Banc of California [3][19] - The bank had sold $1 billion in securities at a loss and experienced significant deposit outflows following the collapse of SVB [19][20] Role of the Federal Reserve - Comments from banking lawyer Randall Guynn revealed that the Fed expedited the approval process for the TIAA bank sale, which was unrelated to the banking crisis, to facilitate a private-sector solution for PacWest [4][10][11] - The Fed's general counsel indicated readiness to approve the TIAA transaction quickly, influenced by private equity firms' willingness to invest in troubled banks [11][12] Private Equity Involvement - Warburg Pincus and Centerbridge Partners committed a combined $400 million to the PacWest deal, demonstrating the viability of private-sector solutions amid liquidity crises [3][23][25] - The involvement of private equity firms was complicated by regulatory scrutiny, as they cannot control banks under current regulations [9] Regulatory Environment - The approval process for bank mergers and acquisitions slowed under the Biden administration compared to previous administrations, impacting the timeline for TIAA's bank sale [8][9] - The rapid approval of the TIAA transaction highlighted that regulatory processes can be expedited when there is a perceived need for urgency [15][16] Industry Implications - The events surrounding PacWest and the role of the Fed may reignite discussions about the appropriateness of the Fed's involvement in private-sector deals during crises [10][37] - Concerns have been raised about the potential for conflicts of interest and the revolving door between government and private sectors, particularly involving former officials like Tim Geithner [32][36]

Good morning. Welcome to Banc of California's first quarter earnings call. Joining me on today's call are Joe Kauder, our CFO; and our Bill Black, our Head of Strategy. I'm sorry sir, it seems like its breaking up on your side. I'm going to place the music into the call, and I will pick-up your line privately. Just a moment please. [Technical Difficulty] Excuse me, this is the conference operator. Mr. Wolff. Please recommence the opening of your speech. Thank you. Jared Wolff In the first quarter, we realiz ...

1/21/24 Factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to: (i) changes in general economic conditions, either nationally or in our market areas, including the impact of supply chain disruptions, and the risk of recession or an economic downturn; (ii) changes in the interest rate environment, including the recent and potential future changes in the FRB benchmark rate, which could adversely affect our revenue and expenses, th ...

Banc of California, Inc. (NASDAQ:PACW) Q4 2023 Earnings Conference Call January 25, 2024 1:00 PM ET Company Participants Jared Wolff â President and Chief Executive Officer Joe Kauder â Chief Financial Officer Bill Black â Head-Strategy Conference Call Participants Matthew Clark â Piper Sandler Brandon King â Truist Gary Tenner â D.A. Davidson Andrew Terrell â Stephens Timur Braziler â Wells Fargo Kelly Motta â KBW Tim Coffey â Janney Operator Hello, and welcome to Banc of California's Fourth Quarter Earnin ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or For the quarterly period ended September 30, 2023 Commission File No. 001-36408 PACWEST BANCORP (Exact name of registrant as specified in its charter) Delaware 33-0885320 (State of Incorporation) (I.R.S. Employer Identification No.) 9701 Wilshire Blvd., Suite 700 Beverly Hills, CA 90212 (Address of Principal Executive Offices, Including ...

Financial Performance - The company reported a net loss of $197.41 million for Q2 2023, compared to a net income of $122.36 million in Q2 2022[13]. - For the three months ended June 30, 2023, PACWEST BANCORP reported a net loss of $197,414 thousand compared to net earnings of $122,360 thousand for the same period in 2022, representing a significant decline[14]. - The comprehensive loss for the six months ended June 30, 2023, was $1,375,738 thousand, compared to a comprehensive loss of $468,230 thousand for the same period in 2022, indicating a worsening financial position[14]. - PACWEST BANCORP's net loss for the six months ended June 30, 2023, was $1,392,838 thousand, a stark contrast to net earnings of $242,488 thousand for the same period in 2022[14]. - The company incurred a goodwill impairment of $1.38 billion in Q2 2023, significantly impacting overall financial performance[13]. Asset and Deposit Changes - Total assets decreased to $38.34 billion as of June 30, 2023, down from $41.23 billion at the end of 2022, representing a decline of approximately 6.9%[11]. - Total deposits fell to $27.90 billion, a decrease of 17.8% from $33.94 billion at the end of 2022[11]. - Total stockholders' equity decreased to $2,533,195 thousand as of June 30, 2023, down from $3,950,531 thousand at the end of 2022, reflecting a decline in retained earnings and comprehensive income[17]. - The balance of common stock shares decreased to 120,169,012 as of June 30, 2023, from 120,244,214 shares at the end of the previous quarter[17]. Income and Expenses - Net interest income after provision for credit losses was $184.08 million for Q2 2023, down from $312.43 million in Q2 2022, reflecting a decline of 41.1%[13]. - Interest income from loans and leases increased to $408.97 million in Q2 2023, up 39.4% from $293.29 million in Q2 2022[13]. - Total interest expense surged to $353.81 million in Q2 2023, compared to $26.59 million in Q2 2022, indicating a significant increase due to rising interest rates[13]. - Noninterest expense rose to $320.44 million in Q2 2023, up from $183.65 million in Q2 2022, reflecting a year-over-year increase of 74.4%[13]. Loan and Lease Performance - The total gross loans and leases held for investment as of June 30, 2023, is $22,311,292,000, down from $28,726,016,000 as of December 31, 2022[71]. - The total performing loans and leases held for investment reached $22.15 billion as of June 30, 2023, compared to $28.51 billion at December 31, 2022[75]. - The total amount of loans and leases past due (90 days or more) was $62.3 million as of June 30, 2023[75]. - The total amount of loans and leases classified as substandard or doubtful was not specified, but the company continues to monitor credit risk closely[78]. Borrowings and Liquidity - Total borrowings as of June 30, 2023, reached $6,357,338,000, significantly higher than $1,764,030,000 at December 31, 2022[138]. - The Bank's participation in the FRBSF Bank Term Funding Program resulted in an outstanding balance of $4,910,000,000 as of June 30, 2023[142]. - The company aims to increase customer deposits to replace higher-cost brokered deposits and reduce operating expenses[44]. Merger and Strategic Initiatives - PacWest entered into a definitive merger agreement with Banc of California, Inc. on July 25, 2023[45]. - The merger is expected to close in Q4 2023 or Q1 2024, subject to regulatory approvals and stockholder approvals[203]. - The merger includes an investment of $400 million from Warburg Pincus LLC and Centerbridge Partners, which will also receive warrants for approximately 18.9 million shares of Banc[201]. Regulatory and Compliance - The company is evaluating the impact of recently issued accounting standards on its consolidated financial statements[201]. - The company anticipates potential risks related to the merger, including regulatory approval delays and impacts on business operations[209].

Financial Performance - The company reported a net loss of $1.20 billion for Q1 2023, compared to net earnings of $120.13 million in Q1 2022, indicating a significant downturn in profitability[14]. - For the three months ended March 31, 2023, the company reported a net loss of $1,195,424 thousand compared to net earnings of $120,128 thousand for the same period in 2022, indicating a significant decline in performance[22]. - Basic and diluted loss per common share was reported at $(10.22) for Q1 2023, compared to earnings of $1.01 per share in Q1 2022, indicating a substantial decline in shareholder value[14]. - Total revenue for the three months ended March 31, 2023, was $554,179 thousand, a significant increase from $343,722 thousand in the same period of 2022, driven by a rise in interest income to $517,788 thousand[180]. - The company reported net charge-offs of $9.2 million in Q1 2023, compared to net charge-offs of $1.2 million in Q1 2022[114]. Asset and Liability Management - Total assets increased to $44.30 billion as of March 31, 2023, compared to $41.23 billion at the end of 2022, reflecting a growth of approximately 5.03%[12]. - Total liabilities rose to $41.5 billion, compared to $37.3 billion at the end of 2022, driven by a $10.1 billion increase in borrowings, while total deposits decreased by $5.7 billion or 16.9%[207][210]. - The company experienced a net increase in borrowings of $10,119,680 thousand in Q1 2023, compared to $991,000 thousand in Q1 2022, reflecting a strategic shift in financing[22]. - Total deposits decreased to $28.19 billion as of March 31, 2023, down from $33.94 billion at the end of 2022, a reduction of approximately 17.1%[12]. - The percentage of insured deposits increased from 48% at December 31, 2022, to 71% at March 31, 2023, due to a significant outflow of uninsured deposits[210]. Income and Expense Analysis - Net interest income after provision for credit losses decreased to $276.27 million in Q1 2023, down from $308.72 million in Q1 2022, representing a decline of about 10.5%[14]. - Total noninterest expense surged to $1.57 billion in Q1 2023, compared to $167.43 million in Q1 2022, representing a dramatic increase attributed to goodwill impairment and acquisition costs[14]. - Noninterest income increased to $36.39 million in Q1 2023, compared to $20.82 million in Q1 2022, reflecting a growth of approximately 74.8%[14]. - Interest income from loans and leases rose to $430.69 million in Q1 2023, up from $267.76 million in Q1 2022, marking an increase of about 60.8%[14]. Goodwill and Impairment - The company recognized a goodwill impairment of $1,376,736 thousand during the first quarter of 2023, which contributed to the net loss[22]. - Goodwill impairment charge of $1.4 billion was recorded in Q1 2023, resulting in a total goodwill balance of $0 as of March 31, 2023[118][119]. Loan and Lease Portfolio - Total loans and leases held for investment decreased from $28,726,016 thousand as of December 31, 2022, to $25,770,912 thousand as of March 31, 2023, representing a decline of approximately 10%[68]. - The total amount of loans under internal risk rating 3-4 (Pass) amounted to $3,653,116, with a significant increase from previous periods[86]. - The total performing loans and leases held for investment reached $25.6 billion, with $25.6 billion in total loans and leases as of March 31, 2023[72]. - Nonaccrual loans and leases totaled $87.1 million as of March 31, 2023, down from $103.8 million at December 31, 2022[74]. - The company recorded $49.9 million of loans and leases 90 or more days past due as of March 31, 2023, compared to $70.9 million at December 31, 2022[74]. Capital and Equity - The company’s total stockholders' equity decreased to $2.77 billion as of March 31, 2023, down from $3.95 billion at the end of 2022, a decline of approximately 30.0%[12]. - Consolidated common equity Tier 1 (CET1) ratio increased to 9.21% as of March 31, 2023, due to positive adjusted earnings and a decrease in risk-weighted assets[208]. - The company reduced its common dividend from $0.25 to $0.01 in Q2 2023 to improve liquidity and capital ratios[41]. Strategic Initiatives - The company plans to complete strategic asset sales in Q2 2023 to enhance liquidity and capital ratios[41]. - The company is focused on enhancing its technology infrastructure and managing liquidity effectively amid changing economic conditions[201]. - The company has increased customer enrollment in reciprocal deposit programs to enhance FDIC insurance coverage and retain customers[41]. Securities and Investments - The total fair value of securities available-for-sale was $4.848 billion, with $2.249 billion in agency residential MBS and $685.436 million in U.S. Treasury securities[49]. - The company transferred $2.3 billion in fair value of various securities from available-for-sale to held-to-maturity, retaining $218.3 million of unrealized losses[44]. - The total fair value of securities held-to-maturity was $2.157 billion, reflecting gross unrealized losses of $117.408 million[54]. - The company concluded that unrealized losses were not credit-related, attributing them to market interest rates and supply-demand dynamics rather than credit rating downgrades[49].

Financial Performance - The Bank had a cumulative net loss of $195.4 million during the three fiscal years of 2022, 2021, and 2020 due to a $1.47 billion goodwill impairment in Q1 2020 [106]. - The Bank's retained deficit was $790.9 million as of December 31, 2022, requiring DFPI and FDIC approval for any further cash dividends to the Company [106]. - For the year ended December 31, 2022, the Company incurred $19.7 million of FDIC assessment expense [118]. Capital Requirements - The Company is subject to the comprehensive capital framework known as "Basel III," which mandates increased capital levels and introduces the CET1 capital measure [108]. - The Company must maintain minimum ratios of Common Equity Tier 1 capital, Tier 1 capital, and total capital to total risk-weighted assets [97]. - As of December 31, 2022, the Company and the Bank met all capital adequacy requirements under Basel III, with minimum capital ratios of 4.5% CET1, 6.0% Tier 1, and 8.0% Total capital to risk-weighted assets [109]. - The capital conservation buffer of 2.5% of CET1 is required, resulting in minimum ratios of at least 7% CET1, 8.5% Tier 1, and 10.5% Total capital to risk-weighted assets [110]. - The carrying amount of subordinated debt totaled $867.1 million at December 31, 2022, with $131.0 million included in Tier 1 capital and $721.9 million in Tier 2 capital [113]. Regulatory Compliance - The Company and the Bank are subject to extensive regulation under federal and state banking laws to protect customer interests and minimize risk to the banking system [92]. - The Dodd-Frank Act requires the Company to act as a source of financial strength to the Bank, committing resources even when the Company may not be financially positioned to do so [94]. - The ability to pay dividends is restricted by various factors, including covenants in subordinated debt agreements and regulatory authority of the FRB, DFPI, and FDIC [101]. - The Company is required to notify the FRB prior to declaring dividends if net earnings are insufficient to fund the dividend amount [104]. - The Company is required to obtain prior approval from the FRB for acquisitions that would result in owning more than 5% of the voting shares of any bank [95]. Cybersecurity and Privacy Regulations - The Company is subject to the USA PATRIOT Act, requiring the establishment of policies for anti-money laundering and suspicious activity reporting [128]. - The Anti-Money Laundering Act of 2020 mandates FinCEN to adopt a more stringent system for identifying legal entities, which may increase compliance obligations for the Bank [131]. - The Company has adopted a customer information security program to comply with guidelines for safeguarding confidential customer information [135]. - The Gramm-Leach-Bliley Act of 1999 mandates financial institutions to implement policies for disclosing non-public personal information, with strict adherence to privacy policies distributed to customers [137]. - Federal regulators issued statements in March 2015 emphasizing the need for multiple layers of security controls and business continuity planning to mitigate risks from cyber-attacks [138]. - A joint rule established in November 2021 requires banking organizations to notify relevant parties of computer-security incidents, effective from April 1, 2022, with compliance required by May 1, 2022 [139]. - State regulators are increasingly implementing privacy and cybersecurity standards, with California's Consumer Privacy Act and Colorado's Privacy Act imposing significant requirements on financial institutions [140]. - The California Consumer Privacy Act took effect on January 1, 2020, and was followed by the California Privacy Rights Act, effective January 1, 2023, enhancing consumer privacy rights [140]. - Colorado's Privacy Act, modeled after the CCPA, is set to take effect on July 1, 2023, indicating a trend towards comprehensive data privacy legislation across states [140]. CRA Rating - The Bank received a CRA rating of "Outstanding" as of its most recent examination, which is crucial for undertaking certain activities, including acquisitions [133]. SEC Recommendations - The SEC has recommended enhancing its examination authority over investment advisers, which may impact the company's subsidiary PWAM [141].

Financial Performance - Total assets increased to $41.40 billion as of September 30, 2022, compared to $40.44 billion at December 31, 2021, reflecting a growth of 2.36%[11] - Net interest income for the three months ended September 30, 2022, was $335.18 million, up 21.5% from $275.84 million in the same period of 2021[13] - Net earnings available to common stockholders decreased to $122.22 million for the three months ended September 30, 2022, down 12.7% from $139.99 million in the same period of 2021[13] - Comprehensive loss for the three months ended September 30, 2022, was $71.85 million, compared to a comprehensive income of $93.34 million in the same period of 2021[14] - Net earnings for the nine months ended September 30, 2022, were $374,104,000, compared to $150,406,000 for the same period in 2021, reflecting a significant increase[20] - The company reported a net earnings increase of approximately 148% from the previous year for the nine months ended September 30, 2022[20] - For the three months ended September 30, 2022, net earnings were $131,616,000, resulting in basic earnings per common share of $1.02, down from $1.17 in the same period of 2021[162] - Total revenue for the three months ended September 30, 2022, was $448,663,000, compared to $341,427,000 for the same period in 2021[166] Deposits and Loans - Total deposits decreased to $34.20 billion as of September 30, 2022, from $34.99 billion at December 31, 2021, a decline of 2.3%[11] - Total loans and leases held for investment as of September 30, 2022, amounted to $27,470,714,000, representing a 20% increase from $22,740,984,000 as of December 31, 2021[62] - The total amount of loans classified as "Special mention" across all segments was $68.6 million, suggesting some loans are under closer scrutiny[78] - The total amount of loans classified as special mention (5 rating) is $463.994 million, indicating potential credit quality concerns[80] - Total loans and leases amounted to $27.66 billion, with a gross charge-off of $10.685 million for the current year-to-date period[80] Interest and Noninterest Income - Total interest income on investment securities for the three months ended September 30, 2022, was $53,135,000, an increase of 30% from $40,780,000 in the same period of 2021[59] - Total interest income for the nine months ended September 30, 2022, was $1,083,466, an increase of 28.4% from $843,924 in 2021[169] - Noninterest income for the three months ended September 30, 2022, was $38,619,000, a decrease from $51,345,000 in the same period of 2021[166] - Total noninterest income decreased to $93,783 for the nine months ended September 30, 2022, from $136,545 in 2021, representing a decline of 31.2%[169] Credit Losses and Provisions - Provision for credit losses was $3.00 million for the three months ended September 30, 2022, compared to a reversal of $20.00 million in the same period of 2021[13] - The allowance for loan and lease losses was $189.33 million as of September 30, 2022, down from $200.56 million at December 31, 2021[11] - The allowance for credit losses increased to $284,398,000 as of September 30, 2022, from $273,635,000 at the beginning of the period, reflecting a provision of $3,000,000[105] - The company reported net charge-offs of $2,378,000 for the three months ended September 30, 2022[99] Securities and Investments - The total fair value of securities available-for-sale as of September 30, 2022, was $5.89 billion, with gross unrealized losses amounting to $878.7 million[44] - The company transferred $2.3 billion in fair value of debt securities from available-for-sale to held-to-maturity, impacting its investment strategy[30] - The total amortized cost of securities available-for-sale is $6,769,941,000, with a fair value of $5,891,328,000, indicating a decrease in value of approximately 13%[50] - The fair value of agency residential MBS as of September 30, 2022, was $2.29 billion, with gross unrealized losses of $469.4 million[48] Capital and Equity - As of September 30, 2022, the total stockholders' equity was $3,875,945,000, a decrease from $3,999,630,000 at the end of 2021[17] - The Series A preferred stock issuance in June 2022 generated net proceeds of $498.5 million, contributing to the increase in consolidated Tier 1 capital ratio to 10.46%[202][204] - The consolidated common equity Tier 1 capital ratio decreased to 8.56% due to risk-weighted assets growing at a higher percentage than Tier 1 capital[202] Risk Management - The company has noted potential risks including weaker than expected economic conditions and the impact of interest rate changes on net interest margin[196] - The company emphasizes maintaining strict credit standards to achieve net loan growth while managing portfolio concentrations through loan purchases[208] - The company actively seeks new lending opportunities across various products, including real estate mortgage loans and commercial loans, emphasizing credit quality in its loan origination process[207][208]