PacWest Bancorp will lay off 200 employees at its Civic Financial Services division. This is a residential real-estate company that it purchased as the housing market boomed in 2021. According to a Securities filing, the Los Angeles bank disclosed the layoffs on Friday. It estimates that the cuts will save it between $30 million and $40 million each year. These layoffs are the latest in a sector that has been slowing down due to rapidly rising mortgage rates. They are part of a larger restructuring at PacWest. The company stated in a securities filing that PacWest executives will be taking over most Civic management functions, as well as reducing the number loan products Civic offers. According to the filing, the goal is to “improve its profitability & risk profile.” The filing stated that the restructuring is in line with PacWest’s strategy to “improve its profitability and risk profile” and to focus on community banking. It also aims to improve capital, liquidity, and operational efficiency. PacWest bought Civic Financial in 2021 at an undisclosed cost. Civic lends to residential investors and accounted for around 10% of PacWest’s earnings assets last year. Paul Taylor, PacWest CEO, stated that the company intends to “shrink” this figure through potential loan sales and that there was “a lot of overhead than it should be at Civic.” As part of the Civic restructuring, PacWest took a $29million impairment charge in its earnings. Taylor has since been named the bank’s CEO and laid out several steps to improve the bank’s capital and profitability. That includes winding down its premium finance and multifamily lending divisions, which Taylor said last month were “low-yield, no-relationship-type” businesses. According to Truist Securities analyst Brandon King’s estimates, the move could lead to a 2% drop in PacWest’s loan portfolio this year. King previously predicted that loans would remain flat at the bank this fiscal year. King wrote that the decline in loans should allow PacWest to build up its capital faster, which “lowers” the likelihood of the bank taking dilutive action to raise capital. King wrote that “Overall, we are encouraged to see the swift changes so far in profitability and sharpened focus towards the implementation of a clear strategy,” in a note to clients. He advised that investors should remain “on the sidelines” until more clarity is available about the bank’s post-restructuring growth profile.