In a restructuring plan that involves temporarily halting new loan originations and major leadership changes, the California-based private lender CIVIC plans to lay off approximately 200 employees.
It was announced Friday that PacWest Bancorp (PWB), CIVIC’s parent company, plans to eliminate 200 job positions at CIVIC by the end of the second quarter. It is expected that the job cuts will result in annualized savings of $30 million to $40 million.
PacWest said in a statement that as part of the restructuring, the company is committed to focusing on relationship-based community banking and improving operational efficiency, liquidity, and capital.
The company also announced that it would not originate any new loans for a period of 30 days to reduce loan growth. Merced Cohen, executive vice president of operations at CIVIC, confirmed the company will continue to operate and fund loans.
In addition to improving capital, liquidity, and operational efficiency, PacWest pauses originating new loans as part of its plan to focus on relationship-based community banking. As part of its efforts to improve the profitability and risk profile of CIVIC, PWB recorded a goodwill impairment of $29 million last month.
This restructuring follows the departure of William Tessar, CEO and president, and Alan Dettlebach, general council, on January 18. It is reported that the executives left the company after months of negotiations with PWB that were supposed to “spin CIVIC out from under PWB.”
Two days later, PWB announced CIVIC is entering into a shared services arrangement that will be fully integrated under the bank’s current management. The role of PWB chief executive Mark Yung as president of CIVIC has been added to his existing responsibilities as a result of this integration.
According to the group, the new CEO will be responsible for leading CIVIC day-to-day and evaluating the business in line with PWB’s overall strategy in the coming weeks and months.