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PacWest Bancorp Announces Results for the Second Quarter of 2021

Company Release - 07/19/2021

LOS ANGELES, July 19, 2021 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) -

SECOND QUARTER 2021 RESULTS

$180.5M   $ 1.52   $154.9M   29.25 %
Net Earnings   Diluted Earnings per Share   PPNR   ROATE

SECOND QUARTER 2021 HIGHLIGHTS

  • Net Earnings of $180.5 Million or $1.52 Per Diluted Share
  • Core Deposits Up $1.5 Billion or 22.9% annualized in 2Q21; Represents 91% of Total Deposits
  • Loan Growth of $527.0 Million or 11.1% annualized, Excluding PPP Loan Activity, Growth of $997.1 Million or 22.3% annualized
  • Civic Loan Production of $423 Million in 2Q21, Compared to $231 Million for Two Months in 1Q21
  • Provision for Credit Losses Benefit of $88.0 Million in 2Q21 Compared to Benefit of $48.0 Million in 1Q21
  • Net Interest Income (TE) of $270.1 Million, Compared To $264.6 Million in 1Q21
  • Noninterest Income of $40.4 Million With Continued Strength in Warrant Income
  • Noninterest Expense of $151.8 Million, Up 1% From 1Q21, Driven By Three Months of Civic Financial Services (“Civic”) Operations Compared to Two Months in 1Q21 and Higher Variable Compensation From Strong Growth Across the Company
  • Classified and Special Mention Loans Fell $15.9 Million and $96.9 Million, Respectively, From 1Q21
  • ACL Ratio of 1.54% and ALLL Ratio of 1.16%; Excluding PPP Loans, ACL Ratio of 1.59% and ALLL Ratio of 1.19%
  • Net Recoveries of $5.2 Million (11bps of Average Loans and Leases)
  • Cost of Deposits Decreased 1 bp to 10 bps
  • Loan and Lease Production of $1.7 Billion Up From $1.6 Billion in 1Q21; WAC of 4.55% vs. 4.36% in 1Q21
  • Strong Capital Position – CET1 Ratio of 10.41%
  • Total Capital Ratio Increased From 13.60% at 1Q21 to 14.99% at 2Q21
  • Tangible Book Value Per Share Increased From $20.39 at 1Q21 to $21.95 at 2Q21

CEO COMMENTARY
Matt Wagner, President and CEO, commented, “We continued to experience strong deposit growth in the second quarter driven by outstanding growth from our venture banking as well as our commercial banking clients resulting in increased liquidity. The excess liquidity at the Fed continues to be a drag on our net interest margin, which had a negative impact of approximately 73 basis points in the second quarter, however, net interest income is growing as we continue to deploy the excess liquidity.”

“We had significant loan growth in the second quarter as the economy begins to re-open after the pandemic. This loan growth was despite a $470 million reduction in the PPP loan portfolio due to increased forgiveness activity by the SBA. Excluding PPP loan activity, our loans grew by $997 million or 22.3% annualized.”

“The continued improvement in credit quality as evidenced by the net recoveries for the first half of the year and continued decreases in nonaccrual, special mention and classified loans and leases along with improved economic conditions related to the CECL forecast resulted in a provision benefit for the second consecutive quarter. Our ACL ratio, excluding PPP loans, decreased from 2.14% in the first quarter to 1.59% as of the end of the second quarter. Our second quarter results produced a return on average assets of 2.11% and a return on average tangible equity of 29.25%.”

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/0623d789-0178-417f-bc6c-55dc09803da8

FINANCIAL HIGHLIGHTS

  At or For the       At or For the    
  Three Months Ended       Six Months Ended    
  June 30,   March 31,   Increase   June 30,   Increase
Financial Highlights (1)   2021       2021     (Decrease)     2021       2020     (Decrease)
  (Dollars in thousands, except per share data)
Net earnings (loss) $ 180,512     $ 150,406     $ 30,106     $ 330,918     $ (1,399,907 )   $ 1,730,825  
Diluted earnings (loss)                      
per share $ 1.52     $ 1.27     $ 0.25     $ 2.78     $ (11.98 )   $ 14.76  
Pre-provision, pre-goodwill                      
impairment, pre-tax net                      
revenue ("PPNR") (2) $ 154,929     $ 155,962     $ (1,033 )   $ 310,891     $ 327,049     $ (16,158 )
Return on average assets   2.11 %     1.94 %     0.17       2.03 %     (10.48 )%     12.51  
PPNR return on average                      
assets (2)   1.81 %     2.01 %     (0.20 )     1.91 %     2.45 %     (0.54 )
Return on average                      
tangible equity (2)   29.25 %     25.67 %     3.58       27.51 %     6.64 %     20.87  
                       
Yield on average loans and                      
leases (tax equivalent)   5.18 %     5.20 %     (0.02 )     5.19 %     5.27 %     (0.08 )
Cost of average total                      
deposits   0.10 %     0.11 %     (0.01 )     0.11 %     0.41 %     (0.30 )
Net interest margin ("NIM")                      
(tax equivalent)   3.40 %     3.69 %     (0.29 )     3.53 %     4.26 %     (0.73 )
Efficiency ratio   47.9 %     46.4 %     1.5       47.2 %     41.8 %     5.4  
                       
Total assets $ 34,867,987     $ 32,856,533     $ 2,011,454     $ 34,867,987     $ 27,365,738     $ 7,502,249  
Loans and leases held                      
for investment,                      
net of deferred fees $ 19,506,257     $ 18,979,228     $ 527,029     $ 19,506,257     $ 19,694,631     $ (188,374 )
Noninterest-bearing                      
demand deposits $ 11,252,286     $ 11,017,462     $ 234,824     $ 11,252,286     $ 8,629,543     $ 2,622,743  
Core deposits $ 27,038,161     $ 25,576,348     $ 1,461,813     $ 27,038,161     $ 19,535,814     $ 7,502,347  
Total deposits $ 29,647,034     $ 28,223,291     $ 1,423,743     $ 29,647,034     $ 22,928,579     $ 6,718,455  
                       
As percentage of total                      
deposits:                      
Noninterest-bearing                      
demand deposits   38 %     39 %     (1 )     38 %     38 %     -  
Core deposits   91 %     91 %     -       91 %     85 %     6  
                       
Equity to assets ratio   11.03 %     11.12 %     (0.09 )     11.03 %     12.62 %     (1.59 )
Common equity tier 1                      
capital ratio   10.41 %     10.39 %     0.02       10.41 %     9.97 %     0.44  
Total capital ratio   14.99 %     13.60 %     1.39       14.99 %     13.18 %     1.81  
Tangible common equity                      
ratio (2)   7.80 %     7.68 %     0.12       7.80 %     8.93 %     (1.13 )
Book value per share $ 32.17     $ 30.68     $ 1.49     $ 32.17     $ 29.17     $ 3.00  
Tangible book value per                      
share (2) $ 21.95     $ 20.39     $ 1.56     $ 21.95     $ 19.80     $ 2.15  
                       
(1) The operations of Civic are included from its February 1, 2021 acquisition date.            
(2) Non-GAAP measure.
                       

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income increased by $5.0 million to $266.3 million for the second quarter of 2021 compared to $261.3 million for the first quarter of 2021 due mainly to higher income on investment securities and loans and leases, partially offset by higher interest expense resulting from the $400 million of subordinated debt issued on April 30, 2021. The tax equivalent yield on average loans and leases was 5.18% for the second quarter of 2021 compared to 5.20% for the first quarter of 2021. The decrease in the tax equivalent yield on average loans and leases was primarily due to lower amortized loan fee income of $1.4 million and lower loan discount accretion of $0.4 million.

The tax equivalent NIM was 3.40% for the second quarter of 2021 compared to 3.69% for the first quarter of 2021. The decrease in the NIM was primarily due to the change in the earning assets mix driven by the increase in the investment portfolio and cash at the Federal Reserve as a percentage of earning assets. The average balance of deposits in financial institutions increased by $1.6 billion to $6.3 billion, the average balance of investment securities increased by $1.1 billion to $6.5 billion, and the average balance of loans and leases increased by $130.1 million in the second quarter of 2021. This excess liquidity had a negative impact on the second quarter tax equivalent NIM of approximately 73 basis points.

The cost of average total deposits decreased to 0.10% in the second quarter of 2021 from 0.11% for the first quarter of 2021. The lower cost of average total deposits was due primarily to the increased average balance of noninterest-bearing deposits.

PROVISION FOR CREDIT LOSSES

The following table presents details of the provision for credit losses for the periods indicated:

  Three Months Ended    
  June 30,   March 31,   Increase
Provision for Credit Losses   2021       2021     (Decrease)
  (In thousands)    
(Reduction in) addition to allowance for loan          
and lease losses $ (72,000 )   $ (53,000 )   $ (19,000 )
(Reduction in) addition to reserve for          
unfunded loan commitments   (16,000 )     5,000       (21,000 )
Total provision for credit losses $ (88,000 )   $ (48,000 )   $ (40,000 )
                       

The provision for credit losses decreased by $40.0 million to a benefit of $88.0 million for the second quarter of 2021 compared to a $48.0 million benefit for the first quarter of 2021. This reduction reflected improvement in both macro-economic forecast variables and loan portfolio credit quality metrics along with decreased provisions for individually evaluated loans and leases and for unfunded commitments.

NONINTEREST INCOME

The following table presents details of noninterest income for the periods indicated:

  Three Months Ended    
  June 30,   March 31,   Increase
Noninterest Income 2021   2021   (Decrease)
  (In thousands)    
Service charges on deposit accounts $ 3,452   $ 2,934   $ 518  
Other commissions and fees   10,704     9,158     1,546  
Leased equipment income   10,847     11,354     (507 )
Gain on sale of loans and leases   1,422     139     1,283  
Gain on sale of securities   -     101     (101 )
Other income:          
Dividends and gains on equity investments   5,394     10,904     (5,510 )
Warrant income   5,650     6,123     (473 )
Other   2,902     4,116     (1,214 )
Total noninterest income $ 40,371   $ 44,829   $ (4,458 )
                   

Noninterest income decreased by $4.5 million to $40.4 million for the second quarter of 2021 compared to $44.8 million for the first quarter of 2021 due primarily to a decrease of $5.5 million in dividends and gains on equity investments and a $1.2 million decrease in other income, offset partially by increases of $1.5 million in other commissions and fees and $1.3 million in gain on sale of loans and leases. The decrease in dividends and gains on equity investments was due primarily to a $10.1 million gain on one equity investment in the first quarter of 2021, offset partially by higher net fair value gains on equity investments still held. The decrease in other income was due primarily to lower foreign currency translation gains and negative fair value adjustments related to servicing assets. The increase in other commissions and fees was due primarily to higher foreign exchange transaction fees and customer success fees. The increase in the gain on sale of loans and leases resulted from the sales of $52.2 million of loans for gains of $1.4 million in the second quarter of 2021 compared to sales of $72.6 million for gains of $0.1 million in the first quarter of 2021. Warrant income decreased slightly in the second quarter of 2021, but remained at elevated levels and was the third highest quarter ever.

NONINTEREST EXPENSE

The following table presents details of noninterest expense for the periods indicated:

  Three Months Ended    
  June 30,   March 31,   Increase
Noninterest Expense   2021     2021   (Decrease)
  (In thousands)    
Compensation $ 90,807     $ 79,882   $ 10,925  
Occupancy   14,784       14,054     730  
Data processing   7,758       6,957     801  
Other professional services   5,256       5,126     130  
Insurance and assessments   3,745       4,903     (1,158 )
Intangible asset amortization   2,889       3,079     (190 )
Leased equipment depreciation   8,614       8,969     (355 )
Foreclosed assets (income) expense, net   (119 )     1     (120 )
Acquisition, integration and reorganization costs   200       3,425     (3,225 )
Customer related expense   4,973       4,818     155  
Loan expense   4,031       3,193     838  
Other   8,812       15,729     (6,917 )
Total noninterest expense $ 151,750     $ 150,136   $ 1,614  
                     

Noninterest expense increased by $1.6 million to $151.8 million for the second quarter of 2021 compared to $150.1 million for the first quarter of 2021 due primarily to an increase of $10.9 million in compensation expense, offset partially by decreases of $6.9 million in other expense, $3.2 million in acquisition, integration and reorganization costs and $1.1 million in insurance and assessments expense. The increase in compensation expense was mostly due to compensation expense related to the Civic operations as a result of three months of activity in the second quarter of 2021 compared to two months of activity in the first quarter of 2021, in addition to increases in loan production across the Company which contributed to an increase in variable compensation during the second quarter of 2021. The decrease in other expense was largely due to a legal settlement accrual in the first quarter of 2021. The decrease in acquisition, integration and reorganization costs was due to lower advisory services and integration expenses related to the closed Civic acquisition and the pending acquisition of MUFG Union Bank’s Homeowners Association Services Division. The decrease in insurance and assessments expense was primarily due to lower FDIC assessment expense resulting from a lower assessment rate partially offset by a higher assessment base.

INCOME TAXES

The effective income tax rate was 25.7% in the second quarter of 2021 compared to 26.3% for the first quarter of 2021. The decrease in the effective tax rate is due mainly to tax benefits resulting from the vesting of restricted stock and return-to-provision adjustments recorded in the second quarter of 2021. The effective income tax rate for the full year 2021 is estimated to be in the range of 25% to 27%.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

The following table presents the composition of our deposit portfolio as of the dates indicated:

  June 30, 2021   March 31, 2021   June 30, 2020
    % of     % of     % of
Deposit Composition Balance Total   Balance Total   Balance Total
  (Dollars in thousands)
Noninterest-bearing demand $ 11,252,286 38 %   $ 11,017,462 39 %   $ 8,629,543 38 %
Interest checking   7,394,472 25 %     6,862,398 25 %     4,858,168 21 %
Money market   7,777,199 26 %     7,112,610 25 %     5,498,150 24 %
Savings   614,204 2 %     583,878 2 %     549,953 2 %
Total core deposits   27,038,161 91 %     25,576,348 91 %     19,535,814 85 %
Non-core non-maturity deposits   1,122,971 4 %     1,162,590 4 %     1,217,266 5 %
Total non-maturity deposits   28,161,132 95 %     26,738,938 95 %     20,753,080 90 %
Time deposits $250,000 and under   913,371 3 %     940,340 3 %     1,522,928 7 %
Time deposits over $250,000   572,531 2 %     544,013 2 %     652,571 3 %
Total time deposits   1,485,902 5 %     1,484,353 5 %     2,175,499 10 %
Total deposits $ 29,647,034 100 %   $ 28,223,291 100 %   $ 22,928,579 100 %
                             

At June 30, 2021, core deposits totaled $27.0 billion or 91% of total deposits, including $11.3 billion of noninterest-bearing demand deposits or 38% of total deposits. Core deposits increased by $1.5 billion or 22.9% annualized in the second quarter of 2021 driven by continued strong deposit growth from our venture banking clients.

In addition to deposit products, we also offer alternative, non-depository cash investment options for select clients. These alternative options include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds at June 30, 2021 were $1.3 billion, of which $1.0 billion was managed by PWAM.

LOANS AND LEASES

The following table presents roll forwards of loans and leases held for investment, net of deferred fees, for the periods indicated:

  Three Months Ended   Six Months Ended
Roll Forward of Loans and Leases Held June 30,   March 31,   June 30,
for Investment, Net of Deferred Fees (1)   2021       2021       2021  
  (Dollars in thousands)
Balance, beginning of period $ 18,979,228     $ 19,083,377     $ 19,083,377  
Additions:          
Production   1,663,151       1,612,777       3,275,928  
Disbursements   1,662,644       1,022,986       2,685,630  
Total production and disbursements   3,325,795       2,635,763       5,961,558  
Reductions:          
Payoffs   (1,969,118 )     (1,635,264 )     (3,604,382 )
Paydowns   (802,222 )     (1,067,418 )     (1,869,640 )
Total payoffs and paydowns   (2,771,340 )     (2,702,682 )     (5,474,022 )
Sales   (26,610 )     (72,641 )     (99,251 )
Transfers to foreclosed assets   -       (647 )     (647 )
Charge-offs   (816 )     (3,988 )     (4,804 )
Transfers to loans held for sale   -       (25,554 )     (25,554 )
Total reductions   (2,798,766 )     (2,805,512 )     (5,604,278 )
Loans acquired through Civic acquisition   -       65,600       65,600  
Net increase (decrease)   527,029       (104,149 )     422,880  
Balance, end of period $ 19,506,257     $ 18,979,228     $ 19,506,257  
           
Weighted average rate on production (2)   4.55 %     4.36 %     4.46 %
           
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees.  Amortized fees added approximately 41 basis points to loan yields in 2021.
     

Loans and leases held for investment, net of deferred fees, increased by $527.0 million or 11.1% annualized in the second quarter of 2021 to $19.5 billion at June 30, 2021. Excluding PPP loan activity, loans grew by $997.1 million or 22.3% annualized. The increase in the loans and leases balance for the second quarter of 2021 was primarily due to increases in the income producing and other residential, asset-based and venture capital portfolios partially offset by a reduction in the other commercial portfolio due to increased PPP loan forgiveness. The PPP forgiveness in the second quarter of 2021 was $506 million, up from $354 million in the first quarter of 2021. Remaining PPP loans total $609 million as of June 30, 2021 with $15.6 million of net fees to amortize over the remaining life of the loans. The weighted average rate on the $1.7 billion of new production for the second quarter of 2021 increased to 4.55% from 4.36% in the first quarter of 2021 due mainly to a lower amount of PPP loan originations in the second quarter compared to the first quarter.

The following table presents the composition of loans and leases held for investment by loan portfolio segment and class, net of deferred fees, as of the dates indicated:

  June 30, 2021   March 31, 2021   June 30, 2020
    % of     % of     % of
Loan and Lease Portfolio Balance Total   Balance Total   Balance Total
  (In thousands)
Real estate mortgage:                
Commercial $ 3,792,198 19 %   $ 3,941,610 21 %   $ 4,222,075 22 %
Income producing and other                
residential   4,620,822 24 %     4,045,603 21 %     3,733,659 19 %
Total real estate mortgage   8,413,020 43 %     7,987,213 42 %     7,955,734 41 %
Real estate construction and land:                
Commercial   930,785 5 %     990,035 5 %     1,167,609 6 %
Residential   2,574,799 13 %     2,575,788 14 %     2,172,919 11 %
Total real estate construction                
and land   3,505,584 18 %     3,565,823 19 %     3,340,528 17 %
Total real estate   11,918,604 61 %     11,553,036 61 %     11,296,262 58 %
Commercial:                
Asset-based   3,550,903 18 %     3,383,403 18 %     3,412,431 17 %
Venture capital   1,749,432 9 %     1,495,798 8 %     1,814,341 9 %
Other commercial   1,921,909 10 %     2,206,639 11 %     2,760,278 14 %
Total commercial   7,222,244 37 %     7,085,840 37 %     7,987,050 40 %
Consumer   365,409 2 %     340,352 2 %     411,319 2 %
Total loans and leases held for                
investment, net of deferred fees $ 19,506,257 100 %   $ 18,979,228 100 %   $ 19,694,631 100 %
                 
Total unfunded loan commitments $ 7,891,875     $ 8,127,999     $ 7,745,921  
                       

ALLOWANCE FOR CREDIT LOSSES

The following tables present roll forwards of the allowance for credit losses for the periods indicated:

  Three Months Ended June 30, 2021
  Allowance for   Reserve for   Total
Allowance for Credit Loan and   Unfunded Loan   Allowance for
Losses Rollforward Lease Losses   Commitments   Credit Losses
  (In thousands)
Beginning balance $ 292,445     $ 90,571     $ 383,016  
Charge-offs   (816 )     -       (816 )
Recoveries   5,971       -       5,971  
Net recoveries   5,155       -       5,155  
Provision   (72,000 )     (16,000 )     (88,000 )
Ending balance $ 225,600     $ 74,571     $ 300,171  
           
  Three Months Ended March 31, 2021
  Allowance for   Reserve for   Total
Allowance for Credit Loan and   Unfunded Loan   Allowance for
Losses Rollforward Lease Losses   Commitments   Credit Losses
  (In thousands)
Beginning balance $ 348,181     $ 85,571     $ 433,752  
Charge-offs   (3,988 )     -       (3,988 )
Recoveries   1,252       -       1,252  
Net charge-offs   (2,736 )     -       (2,736 )
Provision   (53,000 )     5,000       (48,000 )
Ending balance $ 292,445     $ 90,571     $ 383,016  
                       

The following table presents allowance for credit losses information as of and for the dates and periods indicated:

  June 30,   March 31,   Increase
Allowance for Credit Losses   2021       2021     (Decrease)
  (Dollars in thousands)
Allowance for loan and lease losses $ 225,600     $ 292,445     $ (66,845 )
Reserve for unfunded loan commitments   74,571       90,571       (16,000 )
Allowance for credit losses $ 300,171     $ 383,016     $ (82,845 )
           
Provision for credit losses (for the quarter) $ (88,000 )   $ (48,000 )   $ (40,000 )
Net (recoveries) charge-offs (for the quarter) $ (5,155 )   $ 2,736     $ (7,891 )
Net (recoveries) charge-offs to average loans and leases          
(for the quarter)   (0.11 )%     0.06 %    
Allowance for loan and lease losses to loans          
and leases held for investment   1.16 %     1.54 %    
Allowance for loan and lease losses to loans          
and leases held for investment, excluding PPP loans   1.19 %     1.63 %    
Allowance for credit losses to loans and leases          
held for investment   1.54 %     2.02 %    
Allowance for credit losses to loans and leases          
held for investment, excluding PPP loans   1.59 %     2.14 %    
                   

The allowance for credit losses decreased by $82.8 million in the second quarter of 2021 to $300.2 million at June 30, 2021. The decrease in the allowance for credit losses during the second quarter of 2021 was attributable to a provision for credit losses benefit of $88.0 million partially offset by $5.2 million in net recoveries. The allowance for credit losses ratio, excluding PPP loans, of 1.59% remains robust and significantly higher than the pre-pandemic level of 0.97% as of the January 1, 2020 CECL adoption date.

Net recoveries were $5.2 million for the second quarter of 2021. Gross charge-offs of $0.8 million were reduced by recoveries of $6.0 million.

Net charge-offs were $2.7 million for the first quarter of 2021. Gross charge-offs of $4.0 million were reduced by recoveries of $1.3 million.

CREDIT QUALITY

The following table presents loan and lease credit quality metrics as of the dates indicated:

  June 30,   March 31,   Increase
Credit Quality Metrics   2021       2021     (Decrease)
  (Dollars in thousands)
NPAs and Performing TDRs:          
Nonaccrual loans and leases held for investment (1) $ 56,803     $ 67,652     $ (10,849 )
Accruing loans contractually past due 90 days or more   -       -       -  
Foreclosed assets, net   13,227       14,298       (1,071 )
Total nonperforming assets ("NPAs") $ 70,030     $ 81,950     $ (11,920 )
           
Performing TDRs held for investment $ 40,129     $ 27,999     $ 12,130  
           
Nonaccrual loans and leases held for investment          
to loans and leases held for investment   0.29 %     0.36 %    
Nonperforming assets to loans and leases          
held for investment and foreclosed assets   0.36 %     0.43 %    
Allowance for credit losses to nonaccrual loans          
and leases held for investment   528.4 %     566.2 %    
           
Loan and Lease Credit Risk Ratings:          
Pass $ 18,822,938     $ 18,183,114     $ 639,824  
Special mention   536,052       632,997       (96,945 )
Classified   147,267       163,117       (15,850 )
Total loans and leases held for investment,          
net of deferred fees $ 19,506,257     $ 18,979,228     $ 527,029  
           
Classified loans and leases held for investment          
to loans and leases held for investment   0.75 %     0.86 %    
           
(1) Nonaccrual loans include SBA guaranteed amounts of $24.2 million at June 30, 2021 and $18.4 million at March 31, 2021.
 

Since pro-actively downgrading certain loans at the onset of the pandemic in the first quarter of 2020, special mention loans and leases have decreased $362.6 million from their peak in the first quarter of 2020, while classified loans and leases have decreased $146.0 million from their peak in the second quarter of 2020, and each have continued their steady decline in the second quarter of 2021. Classified and nonaccrual loans and leases are below their pre-pandemic levels and are at their lowest levels since December 31, 2013.

The following table presents nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by loan portfolio segment and class as of the dates indicated:

  June 30, 2021   March 31, 2021   Increase (Decrease)
      Accruing       Accruing       Accruing
      and 30-89       and 30-89       and 30-89
      Days Past       Days Past       Days Past
  Nonaccrual   Due   Nonaccrual   Due   Nonaccrual   Due
  (Dollars in thousands)
Real estate mortgage:                      
Commercial $ 32,065   $ -   $ 46,436   $ 5   $ (14,371 )   $ (5 )
Income producing and other                      
residential   6,133     2,179     2,471     6,339     3,662       (4,160 )
Total real estate mortgage   38,198     2,179     48,907     6,344     (10,709 )     (4,165 )
Real estate construction and land:                      
Commercial   284     -     302     -     (18 )     -  
Residential   1,934     22,714     416     1,241     1,518       21,473  
Total real estate                      
construction and land   2,218     22,714     718     1,241     1,500       21,473  
Commercial:                      
Asset-based   1,973     -     2,379     -     (406 )     -  
Venture capital   2,717     -     2,432     6,750     285       (6,750 )
Other commercial   11,337     270     12,660     1,251     (1,323 )     (981 )
Total commercial   16,027     270     17,471     8,001     (1,444 )     (7,731 )
Consumer   360     1,454     556     954     (196 )     500  
Total held for investment $ 56,803   $ 26,617   $ 67,652   $ 16,540   $ (10,849 )   $ 10,077  
                                       

During the second quarter of 2021, nonaccrual loans and leases decreased by $10.8 million due primarily to the payoff of one retail commercial real estate loan.

CAPITAL

The following table presents certain actual capital ratios and ratios excluding PPP loans:

  June 30, 2021    
      Excluding   March 31,
      PPP   2021
  Actual (1)   Loans (1)   Actual
PacWest Bancorp Consolidated:          
Tier 1 leverage capital ratio 7.67 %   7.89 % (3 ) 7.95 %
Common equity tier 1 capital ratio 10.41 %   10.41 %   10.39 %
Total capital ratio 14.99 %   14.99 %   13.60 %
Tangible common equity ratio (2) 7.80 %   7.94 % (3 ) 7.68 %
           
(1) Capital information for June 30, 2021 is preliminary.        
(2) Non-GAAP measure.          
(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.
 

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $34 billion in assets headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 70 full-service branches located in California, one branch located in Durham, North Carolina, and one branch located in Denver, Colorado. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

FORWARD LOOKING STATEMENTS

This communication contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. The COVID-19 pandemic has adversely affected PacWest, its employees, customers and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity and prospects is uncertain. The risks from the COVID-19 pandemic have decreased as the pandemic subsides, however, new variants may continue to impact key macro-economic indicators such as unemployment and GDP and may have a material impact on our allowance for credit losses and related provision for credit losses. Continued deterioration in general business and economic conditions could adversely affect PacWest’s revenues and the values of its assets, including goodwill, and liabilities, lead to a tightening of credit, and increase stock price volatility. In addition, PacWest’s results could be adversely affected by changes in interest rates, sustained high unemployment rates, deterioration in the credit quality of its loan portfolio or in the value of the collateral securing those loans, deterioration in the value of its investment securities, the magnitude of individual loan losses on security monitoring loans, and legal and regulatory developments. Actual results may differ materially from those set forth or implied in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission.

We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PACWEST BANCORP AND SUBSIDIARIES          
CONDENSED CONSOLIDATED BALANCE SHEET          
           
  June 30,   March 31,   June 30,
    2021       2021       2020  
  (Dollars in thousands, except per share data)
ASSETS:          
Cash and due from banks $ 179,505     $ 177,199     $ 174,059  
Interest-earning deposits in financial institutions   5,678,587       5,517,667       1,747,077  
Total cash and cash equivalents   5,858,092       5,694,866       1,921,136  
           
Securities available-for-sale, at estimated fair value   7,198,608       5,941,690       3,851,141  
Federal Home Loan Bank stock, at cost   17,250       17,250       17,250  
Total investment securities   7,215,858       5,958,940       3,868,391  
           
Loans held for sale   -       25,554       -  
           
Gross loans and leases held for investment   19,580,731       19,055,165       19,780,476  
Deferred fees, net   (74,474 )     (75,937 )     (85,845 )
Total loans and leases held for investment,          
net of deferred fees   19,506,257       18,979,228       19,694,631  
Allowance for loan and lease losses   (225,600 )     (292,445 )     (301,050 )
Total loans and leases held for investment, net   19,280,657       18,686,783       19,393,581  
           
Equipment leased to others under operating leases   313,574       327,413       295,191  
Premises and equipment, net   39,541       39,622       42,299  
Foreclosed assets, net   13,227       14,298       1,449  
Goodwill   1,204,118       1,204,092       1,078,670  
Core deposit and customer relationship intangibles, net   18,423       21,312       30,564  
Other assets   924,497       883,653       734,457  
Total assets $ 34,867,987     $ 32,856,533     $ 27,365,738  
           
LIABILITIES:          
Noninterest-bearing deposits $ 11,252,286     $ 11,017,462     $ 8,629,543  
Interest-bearing deposits   18,394,748       17,205,829       14,299,036  
Total deposits   29,647,034       28,223,291       22,928,579  
Borrowings   6,625       19,750       60,000  
Subordinated debentures   861,788       465,814       460,772  
Accrued interest payable and other liabilities   505,859       493,541       463,489  
Total liabilities   31,021,306       29,202,396       23,912,840  
STOCKHOLDERS' EQUITY (1)   3,846,681       3,654,137       3,452,898  
Total liabilities and stockholders’ equity $ 34,867,987     $ 32,856,533     $ 27,365,738  
           
Book value per share $ 32.17     $ 30.68     $ 29.17  
Tangible book value per share (2) $ 21.95     $ 20.39     $ 19.80  
Shares outstanding   119,555,102       119,105,642       118,374,603  
           
(1) Includes net unrealized gain on securities          
available-for-sale, net $ 145,516     $ 106,381     $ 145,038  
(2) Non-GAAP measure.          
           

 

PACWEST BANCORP AND SUBSIDIARIES                  
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)            
                   
  Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,
    2021       2021       2020       2021       2020  
  (Dollars in thousands, except per share data)
Interest income:                  
Loans and leases $ 244,529     $ 241,544     $ 247,851     $ 486,073     $ 510,129  
Investment securities   33,954       30,265       26,038       64,219       53,484  
Deposits in financial institutions   2,022       1,528       186       3,550       1,794  
Total interest income   280,505       273,337       274,075       553,842       565,407  
                   
Interest expense:                  
Deposits   7,269       7,500       13,075       14,769       41,322  
Borrowings   265       193       1,319       458       8,097  
Subordinated debentures   6,663       4,375       5,402       11,038       11,962  
Total interest expense   14,197       12,068       19,796       26,265       61,381  
                   
Net interest income   266,308       261,269       254,279       527,577       504,026  
Provision for credit losses   (88,000 )     (48,000 )     120,000       (136,000 )     232,000  
Net interest income after provision                  
for credit losses   354,308       309,269       134,279       663,577       272,026  
                   
Noninterest income:                  
Service charges on deposit accounts   3,452       2,934       2,004       6,386       4,662  
Other commissions and fees   10,704       9,158       10,111       19,862       19,832  
Leased equipment income   10,847       11,354       12,037       22,201       24,288  
Gain on sale of loans and leases   1,422       139       346       1,561       433  
Gain on sale of securities   -       101       7,715       101       7,897  
Other income   13,946       21,143       6,645       35,089       10,846  
Total noninterest income   40,371       44,829       38,858       85,200       67,958  
                   
Noninterest expense:                  
Compensation   90,807       79,882       61,910       170,689       123,192  
Occupancy   14,784       14,054       14,494       28,838       28,701  
Data processing   7,758       6,957       7,102       14,715       13,556  
Other professional services   5,256       5,126       4,146       10,382       8,404  
Insurance and assessments   3,745       4,903       9,373       8,648       13,622  
Intangible asset amortization   2,889       3,079       3,882       5,968       7,830  
Leased equipment depreciation   8,614       8,969       7,102       17,583       14,307  
Foreclosed assets (income) expense, net   (119 )     1       (146 )     (118 )     (80 )
Acquisition, integration and                  
reorganization costs   200       3,425       -       3,625       -  
Customer related expense   4,973       4,818       4,408       9,791       8,340  
Loan expense   4,031       3,193       3,379       7,224       6,029  
Goodwill impairment   -       -       -       -       1,470,000  
Other expense   8,812       15,729       11,315       24,541       21,034  
Total noninterest expense   151,750       150,136       126,965       301,886       1,714,935  
                   
Earnings (loss) before income taxes   242,929       203,962       46,172       446,891       (1,374,951 )
Income tax expense   62,417       53,556       12,968       115,973       24,956  
Net earnings (loss) $ 180,512     $ 150,406     $ 33,204     $ 330,918     $ (1,399,907 )
                   
Basic and diluted earnings (loss) per share $ 1.52     $ 1.27     $ 0.28     $ 2.78     $ (11.98 )
Dividends declared and paid per share $ 0.25     $ 0.25     $ 0.25     $ 0.50     $ 0.85  
                                       

 

 

PACWEST BANCORP AND SUBSIDIARIES                  
NET EARNINGS (LOSS) PER SHARE CALCULATIONS                
                   
  Three Months Ended
  Six Months Ended
  June 30,   March 31,   June 30,   June 30,
    2021       2021       2020       2021       2020  
  (In thousands, except per share data)
Basic Earnings (Loss) Per Share:                  
Net earnings (loss) $ 180,512     $ 150,406     $ 33,204     $ 330,918     $ (1,399,907 )
Less: earnings allocated to                  
unvested restricted stock (1)   (3,172 )     (2,355 )     (362 )     (5,495 )     (1,251 )
Net earnings (loss) allocated to                  
common shares $ 177,340     $ 148,051     $ 32,842     $ 325,423     $ (1,401,158 )
                   
Weighted-average basic shares                  
and unvested restricted stock                  
outstanding   119,386       118,852       118,192       119,121       118,484  
Less: weighted-average unvested                  
restricted stock outstanding   (2,356 )     (2,003 )     (1,606 )     (2,181 )     (1,551 )
Weighted-average basic shares                  
outstanding   117,030       116,849       116,586       116,940       116,933  
                   
Basic earnings (loss) per share $ 1.52     $ 1.27     $ 0.28     $ 2.78     $ (11.98 )
                   
Diluted Earnings (Loss) Per Share:                  
Net earnings (loss) allocated to                  
common shares $ 177,340     $ 148,051     $ 32,842     $ 325,423     $ (1,401,158 )
                   
Weighted-average diluted shares                  
outstanding   117,030       116,849       116,586       116,940       116,933  
                   
Diluted earnings (loss) per share $ 1.52     $ 1.27     $ 0.28     $ 2.78     $ (11.98 )
                   
(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.
 

 

PACWEST BANCORP AND SUBSIDIARIES                  
AVERAGE BALANCE SHEET AND YIELD ANALYSIS                  
                       
  Three Months Ended
  June 30, 2021   March 31, 2021   June 30, 2020
    Interest Average     Interest Average     Interest Average
  Average Income/ Yield/   Average Income/ Yield/   Average Income/ Yield/
  Balance Expense Cost   Balance Expense Cost   Balance Expense Cost
  (Dollars in thousands)
Assets:                      
Loans and leases (1)(2) $ 19,057,420 $ 246,147 5.18 %   $ 18,927,314 $ 242,846 5.20 %   $ 19,951,603 $ 248,474 5.01 %
Investment securities (3)   6,492,721   36,111 2.23 %     5,383,140   32,329 2.44 %     3,846,459   27,430 2.87 %
Deposits in financial                      
institutions   6,347,764   2,022 0.13 %     4,790,231   1,528 0.13 %     733,142   186 0.10 %
Total interest-earning                      
assets (1)   31,897,905   284,280 3.57 %     29,100,685   276,703 3.86 %     24,531,204   276,090 4.53 %
Other assets   2,428,207         2,315,197         2,090,023    
Total assets $ 34,326,112       $ 31,415,882       $ 26,621,227    
                       
Liabilities and                      
Stockholders' Equity:                      
Interest checking $ 7,235,726   2,394 0.13 %   $ 6,401,869   2,232 0.14 %   $ 4,001,750   1,573 0.16 %
Money market   8,484,933   3,318 0.16 %     7,975,996   3,278 0.17 %     6,114,354   2,856 0.19 %
Savings   598,225   36 0.02 %     572,959   35 0.02 %     524,335   33 0.03 %
Time   1,498,169   1,521 0.41 %     1,493,267   1,955 0.53 %     2,475,858   8,613 1.40 %
Total interest-bearing                      
deposits   17,817,053   7,269 0.16 %     16,444,091   7,500 0.18 %     13,116,297   13,075 0.40 %
Borrowings   225,446   265 0.47 %     226,053   193 0.35 %     871,110   1,319 0.61 %
Subordinated debentures   735,725   6,663 3.63 %     466,101   4,375 3.81 %     459,466   5,402 4.73 %
Total interest-bearing                      
liabilities   18,778,224   14,197 0.30 %     17,136,245   12,068 0.29 %     14,446,873   19,796 0.55 %
Noninterest-bearing                      
demand deposits   11,304,757         10,173,459         8,292,151    
Other liabilities   504,089         488,930         435,353    
Total liabilities   30,587,070         27,798,634         23,174,377    
Stockholders' equity   3,739,042         3,617,248         3,446,850    
Total liabilities and                      
stockholders' equity $ 34,326,112       $ 31,415,882       $ 26,621,227    
Net interest income (1)   $ 270,083       $ 264,635       $ 256,294  
Net interest spread (1)     3.27 %       3.57 %       3.98 %
Net interest margin (1)     3.40 %       3.69 %       4.20 %
                       
Total deposits (4) $ 29,121,810 $ 7,269 0.10 %   $ 26,617,550 $ 7,500 0.11 %   $ 21,408,448 $ 13,075 0.25 %
                       
(1) Tax equivalent.                      
(2) Includes net loan premium amortization of $1.5 million and $1.2 million and net loan discount accretion of $1.2 million for the three months ended
June 30, 2021, March 31, 2021, and June 30, 2020, respectively.            
(3) Includes tax-equivalent adjustments of $2.2 million, $2.1 million, and $1.4 million for the three months ended June 30, 2021,  
March 31, 2021, and June 30, 2020 related to tax-exempt income on investment securities.          
The federal statutory tax rate utilized was 21%.                  
(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is  
calculated as annualized interest expense on total deposits divided by average total deposits.          
           

 

PACWEST BANCORP AND SUBSIDIARIES                  
FIVE QUARTER BALANCE SHEET                  
                   
  June 30,   March 31,   December 31,   September 30,   June 30,
    2021       2021       2020       2020       2020  
  (Dollars in thousands, except per share data)
ASSETS:                  
Cash and due from banks $ 179,505     $ 177,199     $ 150,464     $ 187,176     $ 174,059  
Interest-earning deposits in financial                  
institutions   5,678,587       5,517,667       3,010,197       2,766,020       1,747,077  
Total cash and cash equivalents   5,858,092       5,694,866       3,160,661       2,953,196       1,921,136  
                   
Securities available-for-sale   7,198,608       5,941,690       5,235,591       4,532,614       3,851,141  
Federal Home Loan Bank stock   17,250       17,250       17,250       17,250       17,250  
Total investment securities   7,215,858       5,958,940       5,252,841       4,549,864       3,868,391  
                   
Loans held for sale   -       25,554       -       -       -  
                   
Gross loans and leases held for investment   19,580,731       19,055,165       19,153,357       19,101,680       19,780,476  
Deferred fees, net   (74,474 )     (75,937 )     (69,980 )     (75,480 )     (85,845 )
Total loans and leases held for                  
investment, net of deferred fees   19,506,257       18,979,228       19,083,377       19,026,200       19,694,631  
Allowance for loan and lease losses   (225,600 )     (292,445 )     (348,181 )     (345,966 )     (301,050 )
Total loans and leases held for                  
investment, net   19,280,657       18,686,783       18,735,196       18,680,234       19,393,581  
                   
Equipment leased to others under                  
operating leases   313,574       327,413       333,846       286,425       295,191  
Premises and equipment, net   39,541       39,622       39,234       40,544       42,299  
Foreclosed assets, net   13,227       14,298       14,027       13,747       1,449  
Goodwill   1,204,118       1,204,092       1,078,670       1,078,670       1,078,670  
Core deposit and customer relationship                  
intangibles, net   18,423       21,312       23,641       26,813       30,564  
Other assets   924,497       883,653       860,326       797,223       734,457  
Total assets $ 34,867,987     $ 32,856,533     $ 29,498,442     $ 28,426,716     $ 27,365,738  
                   
LIABILITIES:                  
Noninterest-bearing deposits $ 11,252,286     $ 11,017,462     $ 9,193,827     $ 9,346,744     $ 8,629,543  
Interest-bearing deposits   18,394,748       17,205,829       15,746,890       14,618,951       14,299,036  
Total deposits   29,647,034       28,223,291       24,940,717       23,965,695       22,928,579  
Borrowings   6,625       19,750       5,000       60,000       60,000  
Subordinated debentures   861,788       465,814       465,812       463,282       460,772  
Accrued interest payable and other                  
liabilities   505,859       493,541       491,962       451,508       463,489  
Total liabilities   31,021,306       29,202,396       25,903,491       24,940,485       23,912,840  
STOCKHOLDERS' EQUITY (1)   3,846,681       3,654,137       3,594,951       3,486,231       3,452,898  
Total liabilities and stockholders’                  
equity $ 34,867,987     $ 32,856,533     $ 29,498,442     $ 28,426,716     $ 27,365,738  
                   
Book value per share $ 32.17     $ 30.68     $ 30.36     $ 29.42     $ 29.17  
Tangible book value per share (2) $ 21.95     $ 20.39     $ 21.05     $ 20.09     $ 19.80  
Shares outstanding   119,555,102       119,105,642       118,414,853       118,489,927       118,374,603  
                   
(1) Includes net unrealized gain on                  
securities available-for-sale, net $ 145,516     $ 106,381     $ 172,523     $ 155,474     $ 145,038  
(2) Non-GAAP measure.                  
                   

 

PACWEST BANCORP AND SUBSIDIARIES                  
FIVE QUARTER STATEMENT OF EARNINGS                
                   
  Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
    2021       2021       2020       2020     2020  
  (Dollars in thousands, except per share data)
Interest income:                  
Loans and leases $ 244,529     $ 241,544     $ 242,198     $ 240,811   $ 247,851  
Investment securities   33,954       30,265       28,843       24,443     26,038  
Deposits in financial institutions   2,022       1,528       1,135       654     186  
Total interest income   280,505       273,337       272,176       265,908     274,075  
                   
Interest expense:                  
Deposits   7,269       7,500       8,454       9,887     13,075  
Borrowings   265       193       37       27     1,319  
Subordinated debentures   6,663       4,375       4,477       4,670     5,402  
Total interest expense   14,197       12,068       12,968       14,584     19,796  
                   
Net interest income   266,308       261,269       259,208       251,324     254,279  
Provision for credit losses   (88,000 )     (48,000 )     10,000       97,000     120,000  
Net interest income after provision                  
for credit losses   354,308       309,269       249,208       154,324     134,279  
                   
Noninterest income:                  
Service charges on deposit accounts   3,452       2,934       3,119       2,570     2,004  
Other commissions and fees   10,704       9,158       9,974       10,541     10,111  
Leased equipment income   10,847       11,354       9,440       9,900     12,037  
Gain on sale of loans and leases   1,422       139       1,671       35     346  
Gain on sale of securities   -       101       4       5,270     7,715  
Other income   13,946       21,143       15,642       9,936     6,645  
Total noninterest income   40,371       44,829       39,850       38,252     38,858  
                   
Noninterest expense:                  
Compensation   90,807       79,882       73,171       75,131     61,910  
Occupancy   14,784       14,054       14,083       14,771     14,494  
Data processing   7,758       6,957       6,718       6,505     7,102  
Other professional services   5,256       5,126       6,800       4,713     4,146  
Insurance and assessments   3,745       4,903       5,064       3,939     9,373  
Intangible asset amortization   2,889       3,079       3,172       3,751     3,882  
Leased equipment depreciation   8,614       8,969       7,501       7,057     7,102  
Foreclosed assets (income) expense, net   (119 )     1       (272 )     335     (146 )
Acquisition, integration and                  
reorganization costs   200       3,425       1,060       -     -  
Customer related expense   4,973       4,818       4,430       4,762     4,408  
Loan expense   4,031       3,193       3,926       3,499     3,379  
Other expense   8,812       15,729       10,029       8,939     11,315  
Total noninterest expense   151,750       150,136       135,682       133,402     126,965  
                   
Earnings before income taxes   242,929       203,962       153,376       59,174     46,172  
Income tax expense   62,417       53,556       36,546       13,671     12,968  
Net earnings $ 180,512     $ 150,406     $ 116,830     $ 45,503   $ 33,204  
                   
Basic and diluted earnings per share $ 1.52     $ 1.27     $ 0.99     $ 0.38   $ 0.28  
Dividends declared and paid per share $ 0.25     $ 0.25     $ 0.25     $ 0.25   $ 0.25  
                                     

 

PACWEST BANCORP AND SUBSIDIARIES                  
FIVE QUARTER SELECTED FINANCIAL DATA                
                   
  At or For the Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
    2021       2021       2020       2020       2020  
  (Dollars in thousands)        
Performance Ratios:                  
Return on average assets (1)   2.11 %     1.94 %     1.58 %     0.65 %     0.50 %
Pre-provision, pre-goodwill impairment,                  
pre-tax net revenue ("PPNR")                  
return on average assets (1)(2)   1.81 %     2.01 %     2.22 %     2.22 %     2.51 %
Return on average equity (1)   19.36 %     16.86 %     13.14 %     5.18 %     3.87 %
Return on average tangible equity (1)(2)   29.25 %     25.67 %     19.63 %     8.20 %     6.39 %
Efficiency ratio   47.9 %     46.4 %     43.6 %     45.1 %     42.9 %
Noninterest expense as a percentage                  
of average assets (1)   1.77 %     1.94 %     1.84 %     1.90 %     1.92 %
                   
Average Yields/Costs (1):                  
Yield on:                  
Average loans and leases (3)   5.18 %     5.20 %     5.15 %     5.01 %     5.01 %
Average investment securities (3)   2.23 %     2.44 %     2.50 %     2.52 %     2.87 %
Average interest-earning assets (3)   3.57 %     3.86 %     4.02 %     4.13 %     4.53 %
Cost of:                  
Average interest-bearing deposits   0.16 %     0.18 %     0.22 %     0.27 %     0.40 %
Average total deposits   0.10 %     0.11 %     0.14 %     0.17 %     0.25 %
Average interest-bearing liabilities   0.30 %     0.29 %     0.33 %     0.38 %     0.55 %
Net interest spread (3)   3.27 %     3.57 %     3.69 %     3.75 %     3.98 %
Net interest margin (3)   3.40 %     3.69 %     3.83 %     3.90 %     4.20 %
                   
Average Balances:                  
Assets:                  
Loans and leases, net of deferred fees $ 19,057,420     $ 18,927,314     $ 18,769,214     $ 19,195,737     $ 19,951,603  
Investment securities   6,492,721       5,383,140       4,888,993       4,107,915       3,846,459  
Deposits in financial institutions   6,347,764       4,790,231       3,576,335       2,554,349       733,142  
Interest-earning assets   31,897,905       29,100,685       27,234,542       25,858,001       24,531,204  
Total assets   34,326,112       31,415,882       29,334,789       27,935,193       26,621,227  
Liabilities:                  
Noninterest-bearing deposits   11,304,757       10,173,459       9,589,789       8,812,391       8,292,151  
Interest-bearing deposits   17,817,053       16,444,091       15,045,451       14,516,923       13,116,297  
Total deposits   29,121,810       26,617,550       24,635,240       23,329,314       21,408,448  
Borrowings   225,446       226,053       237,098       181,315       871,110  
Subordinated debentures   735,725       466,101       463,951       462,375       459,466  
Interest-bearing liabilities   18,778,224       17,136,245       15,746,500       15,160,613       14,446,873  
Stockholders' equity   3,739,042       3,617,248       3,536,425       3,497,869       3,446,850  
                   
(1) Annualized.                  
(2) Non-GAAP measure.                  
(3) Tax equivalent.                  
                   

 

PACWEST BANCORP AND SUBSIDIARIES                  
FIVE QUARTER SELECTED FINANCIAL DATA                
                   
  At or For the Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
    2021       2021       2020       2020       2020  
  (Dollars in thousands)        
Credit Quality Ratios:                  
Nonaccrual loans and leases held for                  
investment to loans and leases                  
held for investment   0.29 %     0.36 %     0.48 %     0.45 %     0.84 %
Nonperforming assets to loans and                  
leases held for investment and                  
foreclosed assets   0.36 %     0.43 %     0.55 %     0.52 %     0.85 %
Classified loans and leases held for                  
investment to loans and leases                  
held for investment   0.75 %     0.86 %     1.39 %     1.44 %     1.49 %
Provision for credit losses (for the                  
quarter) to average loans and leases                  
held for investment (annualized)   (1.85 )%     (1.03 )%     0.21 %     2.01 %     2.42 %
Net charge-offs (for the quarter) to                  
average loans and leases held                  
for investment (annualized)   (0.11 )%     0.06 %     0.40 %     0.75 %     0.27 %
Trailing 12 months net charge-offs                  
to average loans and leases                  
held for investment   0.27 %     0.37 %     0.45 %     0.36 %     0.20 %
Allowance for loan and lease losses to                  
loans and leases held for investment   1.16 %     1.54 %     1.82 %     1.82 %     1.53 %
Allowance for credit losses to loans                  
and leases held for investment   1.54 %     2.02 %     2.27 %     2.33 %     1.94 %
Allowance for credit losses to                  
nonaccrual loans and leases                  
held for investment   528.4 %     566.2 %     475.8 %     516.9 %     229.7 %
                   
PacWest Bancorp Consolidated:                  
Tier 1 leverage capital ratio (1)   7.67 %     7.95 %     8.55 %     8.66 %     8.93 %
Common equity tier 1 capital ratio (1)   10.41 %     10.39 %     10.53 %     10.45 %     9.97 %
Tier 1 capital ratio (1)   10.41 %     10.39 %     10.53 %     10.45 %     9.97 %
Total capital ratio (1)   14.99 %     13.60 %     13.76 %     13.74 %     13.18 %
Risk-weighted assets (1) $ 24,274,256     $ 23,012,350     $ 22,837,693     $ 22,114,040     $ 22,781,836  
                   
Equity to assets ratio   11.03 %     11.12 %     12.19 %     12.26 %     12.62 %
Tangible common equity ratio (2)   7.80 %     7.68 %     8.78 %     8.71 %     8.93 %
Book value per share $ 32.17     $ 30.68     $ 30.36     $ 29.42     $ 29.17  
Tangible book value per share (2) $ 21.95     $ 20.39     $ 21.05     $ 20.09     $ 19.80  
                   
Pacific Western Bank:                  
Tier 1 leverage capital ratio (1)   8.47 %     8.83 %     9.53 %     9.70 %     10.03 %
Common equity tier 1 capital ratio (1)   11.51 %     11.54 %     11.73 %     11.70 %     11.18 %
Tier 1 capital ratio (1)   11.51 %     11.54 %     11.73 %     11.70 %     11.18 %
Total capital ratio (1)   14.22 %     12.80 %     12.99 %     12.95 %     12.44 %
                   
(1) Capital information for June 30, 2021 is preliminary.                
(2) Non-GAAP measure.