Civic Financial Services To Cut 200 Jobs In Q2
Parent firm PacWest Bancorp announces restructuring plans 2 years after acquiring lender.
Two years after acquiring Civic Financial Services LLC, PacWest Bancorp has announced a restructuring that will include eliminating about 200 jobs.
In a document filed Friday with the Securities and Exchange Commission, PacWest said the restructuring “involves reducing the number of loan products offered, reducing loan growth compared to 2022 levels, and transferring the management of most Civic functions to company executives.”
In addition, PacWest said Civic will not originate any new loans for 30 days to reduce loan growth. According to its website, the company funded nearly $3 billion in loans in 2022.
PacWest said it also plans to provide a WARN Act notice to Civic employees next week and "anticipates that approximately 200 Civic positions will be eliminated, effective in the second quarter of 2023.”
The federal Worker Adjustment and Retraining Notification (WARN) Act requires a company planning a mass layoff or facility closing to provide at least 60-days notice to the affected employees.
PacWest, based in Beverly Hills, Calif., acquired Civic in February 2021. Civic Financial Services is located in Redondo Beach, Calif., and specializes in business-purpose residential non-owner-occupied investment properties.
Last month, PacWest announced it had recorded a goodwill impairment of $29 million as part of a strategy to restructure Civic.
The company said eliminating the 200 positions is expected to result in annualized savings of about $30 million to $40 million. It added that the restructuring “aligns with the company’s strategy to focus on relationship-based community banking and to improve capital, liquidity, and operational efficiency.”
According to its website, Civic lends in 30 states and the District of Columbia, and has 15 branches nationwide.
Paul Taylor, PacWest president & CEO, commented on the coming changes for Civic during the company’s fourth-quarter earnings release in January.
“In the fourth quarter, we initiated a new strategic plan designed to maximize shareholder value by strengthening our community bank focus, exiting non-core products, and improving our operational efficiency,” Taylor said.
Among the “strategic steps” he cited was the goodwill impairment “related to Civic as part of a strategy to restructure this lending subsidiary. Goodwill is a non-cash charge and has no impact on our regulatory capital ratios, cash flows, or liquidity position. We believe these actions will result in an improvement in the profitability and risk profile of Civic going forward.”
He added that PacWest also is slowing loan growth “to preserve capital and strengthen our balance sheet, including shutting down our operations in our Premium Finance and Multi-Family lending groups.”
The restructuring follows the departure in January of two of Civic’s top executives — President William Tessar and Executive Vice President and Chief Legal Counsel Alan Dettelbach.
According to published reports, the two executives left after failing to negotiate a deal that would have spun off Civic from PacWest control.