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PacWest Bancorp Announces Results for the Third Quarter 2022

Company Release - 10/19/2022

LOS ANGELES, Oct. 19, 2022 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) -

THIRD QUARTER 2022 RESULTS

$122.2M $ 1.02 24.11 % 8.55 %
Net Earnings Available to
Common Stockholders
Diluted Earnings
per Common Share
ROATCE CET1

THIRD QUARTER 2022 HIGHLIGHTS

  • All Regulatory Capital Ratios Increased from 2Q22, With CET1 Increasing from 8.24% to 8.55%
  • Total Deposits Up $228 Million or 0.7% from 2Q22; Venture Banking Deposits Grew $129 Million to $12.2 Billion
  • Credit Metrics Remain Steady with Nonperforming Assets Ratio of 34 Basis Points
  • Loan Growth of $1.2 Billion or 4.4% from 2Q22
  • Net Interest Income (TE) of $338.6 Million in 3Q22 vs. $327.8 Million in 2Q22; Up 3.3%

CEO COMMENTARY

Matt Wagner, CEO, commented, “We are pleased with the growth in our capital ratios during the third quarter of 2022. The increases in the ratios were due to strong earnings, the credit-linked notes transaction completed in late September, and slower growth in loans and loan commitments. Capital remains a primary focus area and we are targeting a CET1 ratio of 10% by the end of 2023.”

“We were also pleased with the stabilization in venture banking deposits, which grew by $129 million to $12.2 billion, contributing to total deposits growing by $228 million in the third quarter of 2022. After exceptionally strong loan growth in the first half of 2022, loan growth slowed in the third quarter of 2022 due to the expected impact from higher interest rates and our decision to slow loan growth as part of managing our balance sheet.”

“Credit quality remains strong as evidenced by credit metrics such as nonperforming assets of 34 basis points and net charge-offs of three basis points for the quarter and one basis point on a year-to-date basis.”

“Lastly, on a macroeconomic level as we assess the current state and direction of the economy we are thinking about and planning for a weaker economic outlook.”

FINANCIAL HIGHLIGHTS

                       
  At or For the       At or For the    
  Three Months Ended       Nine Months Ended    
  September 30,   June 30,   Increase   September 30,   Increase
Financial Highlights (1)   2022       2022     (Decrease)     2022       2021     (Decrease)
  (Dollars in thousands, except per share data)
Net earnings available to                    
common stockholders $ 122,224     $ 122,360     $ (136 )   $ 364,712     $ 470,914     $ (106,202 )
Diluted earnings per                    
common share $ 1.02     $ 1.02     $ -     $ 3.04     $ 3.96     $ (0.92 )
Pre-provision, pre-tax net                    
revenue ("PPNR") (2) $ 178,182     $ 174,626     $ 3,556     $ 514,917     $ 478,657     $ 36,260  
Return on average assets   1.28 %     1.23 %     0.05       1.24 %     1.86 %     (0.62 )
PPNR return on average                    
assets (2)   1.73 %     1.75 %     (0.02 )     1.71 %     1.89 %     (0.18 )
Return on average                    
tangible common equity (2)   24.11 %     24.42 %     (0.31 )     23.05 %     25.20 %     (2.15 )
                       
Yield on average loans and                    
leases (tax equivalent)   5.12 %     4.65 %     0.47       4.82 %     5.13 %     (0.31 )
Cost of average total                    
deposits   0.70 %     0.18 %     0.52       0.32 %     0.10 %     0.22  
Net interest margin ("NIM")                    
(tax equivalent)   3.57 %     3.56 %     0.01       3.52 %     3.46 %     0.06  
Efficiency ratio   51.0 %     49.5 %     1.5       50.2 %     47.2 %     3.0  
                       
Total assets $ 41,404,592     $ 40,950,723     $ 453,869     $ 41,404,592     $ 35,885,676     $ 5,518,916  
Loans and leases held                    
for investment,                    
net of deferred fees $ 27,660,041     $ 26,501,137     $ 1,158,904     $ 27,660,041     $ 20,511,020     $ 7,149,021  
Noninterest-bearing                    
demand deposits $ 12,775,756     $ 13,338,029     $ (562,273 )   $ 12,775,756     $ 12,881,806     $ (106,050 )
Core deposits $ 28,559,310     $ 29,218,646     $ (659,336 )   $ 28,559,310     $ 28,140,708     $ 418,602  
Total deposits $ 34,195,872     $ 33,968,152     $ 227,720     $ 34,195,872     $ 30,559,745     $ 3,636,127  
                       
As percentage of total                    
deposits:                      
Noninterest-bearing                    
demand deposits   37 %     39 %     (2 )     37 %     42 %     (5 )
Core deposits   83 %     86 %     (3 )     83 %     92 %     (9 )
                       
Equity to assets ratio   9.36 %     9.72 %     (0.36 )     9.36 %     10.92 %     (1.56 )
Common equity tier 1                    
capital ratio   8.55 %     8.24 %     0.31       8.55 %     10.15 %     (1.60 )
Tier 1 capital ratio   10.46 %     10.15 %     0.31       10.46 %     10.65 %     (0.19 )
Total capital ratio   13.43 %     13.12 %     0.31       13.43 %     14.36 %     (0.93 )
Tangible common equity                    
ratio (2)   4.85 %     5.15 %     (0.30 )     4.85 %     7.79 %     (2.94 )
Book value per common                    
share $ 28.07     $ 28.93     $ (0.86 )   $ 28.07     $ 32.77     $ (4.70 )
Tangible book value per                    
common share (2) $ 16.11     $ 16.93     $ (0.82 )   $ 16.11     $ 22.57     $ (6.46 )
                       
(1) The operations of the HOA Business are included from its October 8, 2021 acquisition date and        
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 $11.3 million to $335.2 million for the third quarter of 2022 compared to $323.9 million for the second quarter of 2022. Interest income on loans and leases increased by $53.3 million in the third quarter of 2022 due to a $1.6 billion increase in the average balance of loans and leases and a 47 basis point increase in the tax equivalent yield on average loans and leases compared to the second quarter of 2022. Interest income on deposits in financial institutions increased by $6.0 million in the third quarter of 2022 due to a 139 basis point increase in the yield on average deposits in financial institutions, offset partially by a $175 million decrease in the average balance. The tax equivalent yield on average loans and leases was 5.12% for the third quarter of 2022 compared to 4.65% for the second quarter of 2022. The increase in the tax equivalent yield on average loans and leases was due primarily to higher coupon interest due to increased rates on new production and on existing variable rate loans. Interest expense on deposits increased by $45.9 million in the third quarter of 2022 due mainly to increased market rates and a higher level of wholesale deposits which contributed to a 52 basis point increase in the cost of average total deposits. Interest expense on borrowings and subordinated debt increased by $2.3 million due to a 190 basis points increase in the cost of average borrowings and subordinated debt, partially offset by an $851 million decrease in the average balance.

The tax equivalent NIM was 3.57% for the third quarter of 2022 compared to 3.56% for the second quarter of 2022. The slight increase in the NIM was due mainly to the change in the interest-earning assets mix driven by the increase in the balance of average loans and leases as a percentage of average interest-earning assets from 69% to 72%, the decrease in the balance of average investment securities as a percentage of average interest-earning assets from 26% to 23%, and the balance of average deposits in financial institutions as a percentage of average interest-earning assets remained unchanged at 5%. The balance of average loans and leases increased by $1.6 billion to $27.0 billion, the balance of average investment securities decreased by $685 million to $8.8 billion, and the balance of average deposits in financial institutions decreased by $175 million to $1.8 billion.

The cost of average total deposits was 0.70% for the third quarter of 2022 compared to 0.18% for the second quarter of 2022 due mainly to higher average balances and rates on higher-cost wholesale money market and brokered time deposits, as well as higher market rates on our deposit products.

PROVISION FOR CREDIT LOSSES

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

  Three Months Ended    
  September 30,   June 30,   Increase
Provision for Credit Losses 2022     2022     (Decrease)
  (In thousands)
Addition (reduction) in allowance for    
loan and lease losses $ 3,000   $ (10,000 )   $ 13,000  
Addition to reserve for        
unfunded loan commitments   -     20,000       (20,000 )
Total loan-related provision   3,000     10,000       (7,000 )
Addition to allowance for      
held-to-maturity securities -   1,500     (1,500 )
Total provision for credit losses $ 3,000   $ 11,500     $ (8,500 )
           

 

The provision for credit losses was $3.0 million for the third quarter of 2022 compared to $11.5 million for the second quarter of 2022. The $7.0 million decrease in the loan-related provision was due mainly to a lower level of growth in loans and leases and unfunded commitments in the third versus the second quarter of 2022 and a decrease in COVID-related qualitative reserves, partially offset by increased reserves needed due to a less favorable economic forecast in the third versus the second quarter of 2022.

NONINTEREST INCOME

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

  Three Months Ended      
  September 30,   June 30,   Increase  
Noninterest Income 2022     2022     (Decrease)  
  (In thousands)  
Service charges on deposit accounts $ 3,608   $ 3,634     $ (26 )  
Other commissions and fees   10,034     10,813       (779 )  
Leased equipment income   12,835     12,335       500    
Gain on sale of loans and leases   58     12       46    
Gain (loss) on sale of securities   86     (1,209 )     1,295    
Dividends and gains on equity investments   3,228     4,097       (869 )  
Warrant income   292     1,615       (1,323 )  
Other income   8,478     3,049       5,429    
Total noninterest income $ 38,619   $ 34,346     $ 4,273    
             

Noninterest income increased by $4.3 million to $38.6 million for the third quarter of 2022 compared to $34.3 million for the second quarter of 2022 due primarily to increases of $5.4 million in other income and $1.3 million in gain on sale of securities, offset partially by a decrease of $1.3 million in warrant income and a decrease of $0.9 million in dividends and gains on equity investments. The increase in other income was due primarily to the receipt of a $5.5 million legal settlement, net of current year legal fees. The increase in gain on sale of securities resulted from the sale of $440.4 million of securities for a net gain of $86,000 compared to sales of $393.4 million of securities for a net loss of $1.2 million for the second quarter of 2022. Warrant income was lower due to a lack of capital market activities. The decrease in dividends and gains on equity investments was due to lower fair value gains on equity investments still held and SBIC investments, partially offset by lower losses on sales of equity investments and increased income distributions on SBIC investments.

NONINTEREST EXPENSE

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

  Three Months Ended    
  September 30,   June 30,   Increase
Noninterest Expense   2022       2022     (Decrease)
  (In thousands)
Compensation $ 105,933     $ 102,542     $ 3,391  
Occupancy   15,574       15,268       306  
Data processing   9,568       9,258       310  
Other professional services   10,674       6,726       3,948  
Insurance and assessments   7,159       5,632       1,527  
Intangible asset amortization   3,649       3,649       -  
Leased equipment depreciation   8,908       8,934       (26 )
Foreclosed assets (income) expense, net   (248 )     (28 )     (220 )
Customer related expense   12,673       11,748       925  
Loan expense   6,228       7,037       (809 )
Other   15,500       12,879       2,621  
Total noninterest expense $ 195,618     $ 183,645     $ 11,973  
           

Noninterest expense increased by $12.0 million to $195.6 million for the third quarter of 2022 compared to $183.6 million for the second quarter of 2022 due primarily to increases of $3.9 million in other professional services, $3.4 million in compensation expense, $2.6 million in other expense, and $1.5 million in insurance and assessments expense. The increase in other professional services was due mostly to issuance costs of the credit-linked notes transaction. The increase in compensation expense was due mainly to an increase in our headcount by 68 FTEs during the third quarter primarily related to hiring at Civic and for our digital and innovation initiatives. The increase in other expense was due primarily to a legal settlement accrual. The increase in insurance and assessments expense was due to higher FDIC assessment expense due to downward trends in core deposits and capital levels in the first half of 2022. Noninterest expense includes $7.0 million of non-recurring expenses in the third quarter of 2022 related to the issuance costs of the credit-linked notes transaction and a legal settlement accrual.

INCOME TAXES

The effective income tax rate was 24.9% for the third quarter of 2022 compared to 25.0% for the second quarter of 2022. The effective tax rate for the full year 2022 is currently 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:

  September 30, 2022
  June 30, 2022  
  September 30, 2021
    % of     % of     % of
Deposit Composition Balance Total   Balance Total   Balance Total
  (Dollars in thousands)
Noninterest-bearing demand $ 12,775,756 37 %   $ 13,338,029 39 %   $ 12,881,806 42 %
Interest checking   6,780,900 20 %     6,197,234 18 %     7,168,472 24 %
Money market   8,361,779 24 %     9,029,433 27 %     7,463,261 24 %
Savings   640,875 2 %     653,950 2 %     627,169 2 %
Total core deposits   28,559,310 83 %     29,218,646 86 %     28,140,708 92 %
Wholesale non-maturity deposits   2,367,544 7 %     2,185,248 6 %     960,438 3 %
Total non-maturity deposits   30,926,854 90 %     31,403,894 92 %     29,101,146 95 %
Retail time deposits   1,778,325 5 %     1,354,198 4 %     1,262,864 4 %
Brokered time deposits   1,490,693 5 %     1,210,060 4 %     195,735 1 %
Total time deposits (1)   3,269,018 10 %     2,564,258 8 %     1,458,599 5 %
Total deposits $ 34,195,872 100 %   $ 33,968,152 100 %   $ 30,559,745 100 %
                 
(1) Includes time deposits over $250,000 of $1.0 billion, $665.9 million, and $576.0 million at September 30, 2022, June 30, 2022,    
and September 30, 2021, respectively.              

Total deposits increased by $228 million or 0.7% in the third quarter of 2022 due to a $705 million increase in time deposits and a $182 million increase in wholesale non-maturity deposits, offset partially by a decrease in core deposits. Total venture banking deposits increased from $12.1 billion as of June 30, 2022 to $12.2 billion as of September 30, 2022. At September 30, 2022, core deposits totaled $28.6 billion or 83% of total deposits, including $12.8 billion of noninterest-bearing demand deposits or 37% of total deposits. Core deposits decreased by $659 million or 2.3% in the third quarter of 2022 driven primarily by a $586 million decrease in balances from our community banking clients primarily in September due to client business activity.

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 decreased from $2.1 billion as of June 30, 2022 to $1.8 billion as of September 30, 2022, of which $1.1 billion was managed by PWAM. The decrease of $0.3 billion was primarily attributable to deposit transfers by venture banking clients back onto our balance sheet.

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
  Nine Months Ended
Roll Forward of Loans and Leases Held September 30,   June 30,   September 30,
for Investment, Net of Deferred Fees   2022       2022       2022  
  (Dollars in thousands)
Balance, beginning of period $ 26,501,137     $ 24,352,072     $ 22,941,548  
Additions:        
Production   1,758,107       2,815,181       7,148,148  
Disbursements   1,677,795       1,871,627       5,138,574  
Total production and disbursements   3,435,902       4,686,808       12,286,722  
Reductions:        
Payoffs   (977,654 )     (1,347,447 )     (3,773,781 )
Paydowns   (1,256,557 )     (1,183,178 )     (3,704,306 )
Total payoffs and paydowns   (2,234,211 )     (2,530,625 )     (7,478,087 )
Sales   (19,635 )     (4,319 )     (60,652 )
Transfers to foreclosed assets   (2,966 )     -       (3,271 )
Charge-offs   (4,652 )     (2,799 )     (10,685 )
Transfers to loans held for sale   (15,534 )     -       (15,534 )
Total reductions   (2,276,998 )     (2,537,743 )     (7,568,229 )
Net increase   1,158,904       2,149,065       4,718,493  
Balance, end of period $ 27,660,041     $ 26,501,137     $ 27,660,041  
           
Weighted average rate on production (1)   5.92 %     4.61 %     4.82 %
           
(1) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes
amortized fees. Amortized fees added approximately 22 basis points to loan yields in 2022.

 

Loans and leases held for investment, net of deferred fees, increased by $1.2 billion or 4.4% in the third quarter of 2022 to $27.7 billion at September 30, 2022. The overall increase in the loans and leases balance for the third quarter of 2022 was due primarily to increases in the residential real estate mortgage and residential real estate construction portfolios.

Civic loan production was $831 million for the third quarter of 2022 compared to $847 million for the second quarter of 2022. The Civic loan portfolio as of September 30, 2022 totaled $2.9 billion.

The weighted average rate on the $1.8 billion of production for the third quarter of 2022 increased to 5.92% from 4.61% for the second quarter of 2022 due primarily to the loan mix (lower percentage of multi-family production, no single-family loan pool purchases, and a higher percentage of Civic production) and the increase in market interest rates.

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:

  September 30, 2022   June 30, 2022   September 30, 2021
    % of     % of     % of
Loan and Lease Portfolio Balance Total   Balance Total   Balance Total
  (Dollars in thousands)
Real estate mortgage:              
Commercial $ 3,770,706 14 %   $ 3,670,515 14 %   $ 3,694,597 18 %
Residential   10,860,043 39 %     9,879,131 37 %     5,886,360 29 %
Total real estate mortgage   14,630,749 53 %     13,549,646 51 %     9,580,957 47 %
Real estate construction and land:            
Commercial   843,086 3 %     837,423 3 %     992,003 5 %
Residential   3,450,430 12 %     3,153,616 12 %     2,659,870 13 %
Total real estate construction            
and land   4,293,516 15 %     3,991,039 15 %     3,651,873 18 %
Total real estate   18,924,265 68 %     17,540,685 66 %     13,232,830 65 %
Commercial:              
Asset-based   5,154,654 19 %     5,068,112 19 %     3,661,769 18 %
Venture capital   2,001,086 7 %     2,179,190 8 %     1,632,861 8 %
Other commercial   1,115,442 4 %     1,229,504 5 %     1,577,592 7 %
Total commercial   8,271,182 30 %     8,476,806 32 %     6,872,222 33 %
Consumer   464,594 2 %     483,646 2 %     405,968 2 %
Total loans and leases held for            
investment, net of deferred fees $ 27,660,041 100 %   $ 26,501,137 100 %   $ 20,511,020 100 %
                 
Total unfunded loan commitments $ 11,227,234     $ 11,866,437     $ 8,480,599  

 

ALLOWANCE FOR CREDIT LOSSES  ON LOANS AND LEASES

The following tables present roll forwards of the allowance for credit losses on loans and leases for the periods indicated:

             
  Three Months Ended September 30, 2022  
Allowance for Credit Allowance for   Reserve for   Total  
Losses on Loans and Loan and   Unfunded Loan   Allowance for  
Leases Rollforward Lease Losses   Commitments   Credit Losses  
  (In thousands)  
Beginning balance $ 188,705     $ 95,071   $ 283,776    
Charge-offs   (4,652 )     -     (4,652 )  
Recoveries   2,274       -     2,274    
Net charge-offs   (2,378 )     -     (2,378 )  
Provision   3,000       -     3,000    
Ending balance $ 189,327     $ 95,071   $ 284,398    
             
             
             
  Three Months Ended June 30, 2022  
Allowance for Credit Allowance for   Reserve for   Total  
Losses on Loans and Loan and   Unfunded Loan   Allowance for  
Leases Rollforward Lease Losses   Commitments   Credit Losses  
  (In thousands)  
Beginning balance $ 197,398     $ 75,071   $ 272,469    
Charge-offs   (2,799 )     -     (2,799 )  
Recoveries   4,106       -     4,106    
Net recoveries   1,307       -     1,307    
Provision   (10,000 )     20,000     10,000    
Ending balance $ 188,705     $ 95,071   $ 283,776    

 

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

             
Allowance for Credit Losses September 30,   June 30,   Increase  
on Loans and Leases   2022       2022     (Decrease)  
  (Dollars in thousands)  
Allowance for loan and lease losses $ 189,327     $ 188,705     $ 622    
Reserve for unfunded loan commitments   95,071       95,071       -    
Allowance for credit losses $ 284,398     $ 283,776     $ 622    
             
Provision for credit losses (for the quarter) $ 3,000     $ 10,000     $ (7,000 )  
Net charge-offs (recoveries) (for the quarter) $ 2,378     $ (1,307 )   $ 3,685    
Net charge-offs (recoveries) to average loans            
and leases (for the quarter)   0.03 %     (0.02 )%      
Allowance for loan and lease losses to loans            
and leases held for investment   0.68 %     0.71 %      
Allowance for credit losses to loans and leases            
held for investment   1.03 %     1.07 %      

 

The allowance for credit losses increased by $0.6 million in the third quarter of 2022 to $284.4 million at September 30, 2022. This increase was attributable mainly to a $3.0 million provision for credit losses, offset partially by $2.4 million in net charge-offs.

Net charge-offs over the trailing twelve months were $2.4 million, which results in net charge-offs to average loans and leases over the trailing twelve months of 0.1%.

CREDIT QUALITY

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

             
  September 30,   June 30,   Increase  
Credit Quality Metrics   2022       2022     (Decrease)  
  (Dollars in thousands)  
NPAs and Performing TDRs:            
Nonaccrual loans and leases held for investment (1) $ 89,742     $ 78,527     $ 11,215    
Accruing loans contractually past due 90 days or more   -       -       -    
Foreclosed assets, net   2,967       -       2,967    
   Total nonperforming assets ("NPAs") $ 92,709     $ 78,527     $ 14,182    
             
Performing TDRs held for investment $ 8,106     $ 11,723     $ (3,617 )  
             
Nonaccrual loans and leases held for investment            
to loans and leases held for investment   0.32 %     0.30 %      
Nonperforming assets to loans and leases            
held for investment and foreclosed assets   0.34 %     0.30 %      
Allowance for credit losses to nonaccrual loans            
and leases held for investment   316.9 %     361.4 %      
                     
(1) Nonaccrual loans include SBA guaranteed amounts of $17.2 million at September 30, 2022 and $13.8 million at June 30, 2022.                    

 

Nonaccrual loans and leases increased by $11.2 million to $89.7 million in the third quarter of 2022 due primarily to a $15.5 million office building loan.

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:

                         
  September 30, 2022   June 30, 2022   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  
  (In thousands)  
Real estate mortgage:                        
Commercial $ 42,772   $ 14   $ 28,529   $ 14   $ 14,243     $ -    
Residential   25,950     21,700     27,524     13,577     (1,574 )     8,123    
Total real estate mortgage   68,722     21,714     56,053     13,591     12,669       8,123    
Real estate construction and land:                        
Commercial   -     -     -     -     -       -    
Residential   7,101     3,051     13,287     25,981     (6,186 )     (22,930 )  
Total real estate                        
construction and land   7,101     3,051     13,287     25,981     (6,186 )     (22,930 )  
Commercial:                        
Asset-based   2,127     -     1,189     -     938       -    
Venture capital   3,809     -     3,120     -     689       -    
Other commercial   7,616     265     4,655     9,503     2,961       (9,238 )  
Total commercial   13,552     265     8,964     9,503     4,588       (9,238 )  
Consumer   367     1,996     223     1,711     144       285    
Total held for investment $ 89,742   $ 27,026   $ 78,527   $ 50,786   $ 11,215     $ (23,760 )  
                         

 Loans and leases accruing and 30-89 days past due generally fluctuate from period to period. The $23.8 million decrease in the third quarter of 2022 was primarily in Civic residential construction loans and in the other commercial category, offset partially by an increase in the residential mortgage loans category.

CAPITAL

Our CET1, Tier 1, Total capital, and Tier 1 leverage capital ratios increased during the third quarter of 2022 due mainly to strong earnings and the completion of the credit-linked notes transaction on September 29, 2022, which added approximately 20 basis points to the CET1 ratio. The notes sold had an aggregate principal amount of $132.8 million with net proceeds of approximately $128.7 million. The notes are linked to the credit risk of an approximately $2.66 billion reference pool of previously purchased single-family residential mortgage loans. The notes were issued in five classes with a blended interest rate of SOFR plus 11%. The transaction results in a lower risk-weighting on the reference pool of loans for regulatory capital purposes. The following table presents capital ratios as of the dates indicated:

             
             
  September 30,   June 30,   September 30,  
    2022       2022       2021    
PacWest Bancorp Consolidated:            
Common equity tier 1 capital ratio (1)   8.55 %     8.24 %     10.15 %  
Tier 1 capital ratio (1)   10.46 %     10.15 %     10.65 %  
Total capital ratio (1)   13.43 %     13.12 %     14.36 %  
Tier 1 leverage capital ratio (1)   8.63 %     8.52 %     8.05 %  
Risk-weighted assets (1) (in thousands) $ 33,055,996     $ 33,009,455     $ 26,057,583    
Tangible common equity ratio (2)   4.85 %     5.15 %     7.79 %  
Tangible common equity ratio excluding            
the impact of AOCI for securities (2)   6.97 %     6.79 %     7.50 %  
             
(1) Capital information for September 30, 2022 is preliminary.          
(2) Non-GAAP measure.            
             

 

CONFERENCE CALL

PacWest Bancorp (“PacWest”) will host a conference call at 8:00 AM PT/ 11:00 AM ET on Thursday, October 20, 2022 to discuss the Company’s performance for the third quarter of 2022.

Participants may access the conference call/webcast at:
Participant Dial-in: (800) 458-4121
Participant Webcast Link: https://event.webcasts.com/starthere.jsp?ei=1562576&tp_key=817f59ebeb
Confirmation Code: 8001555

The call will be recorded and made available for replay on October 20, 2022, after 12:00 PM PT. The recording may be accessed through the link above or at https://www.pacwestbancorp.com/news-market-data/presentations/default.aspx.

ABOUT PACWEST BANCORP

PacWest is a bank holding company with over $41 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 is focused on relationship-based business banking to small, middle-market, and venture-backed businesses nationwide. The Bank offers a broad range of loan and lease and deposit products and services through 69 full-service branches located in California, one branch located in Durham, North Carolina, one branch located in Denver, Colorado, and numerous loan production offices across the country. 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 provides 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 innovation hubs across the United States. The Bank also offers financing of business-purpose, non-owner-occupied investor properties through Civic, a wholly-owned subsidiary. The Bank also provides a specialized suite of services for the HOA industry. 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 often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of PacWest’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those expressed in them. The risks and impacts of the COVID-19 pandemic appear to have largely subsided, however, new variants may continue to impact key macro-economic indicators such as unemployment and GDP and may have a material impact on our business, financial position, results of operations, liquidity, and our allowance for credit losses and the related provision for credit losses. Continued deterioration in general business and economic conditions, uncertainty in U.S. fiscal monetary policy, including the interest rate policies of the Federal Reserve Board, and volatility and disruptions in credit and capital markets 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, inflation, 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, 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.

All forward-looking statements in this communication are based on information available at the time the statement is made. 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            
             
  September 30,   June 30,   September 30,  
    2022       2022       2021    
  (Dollars in thousands, except per share data)  
ASSETS:            
Cash and due from banks $ 216,436     $ 197,027     $ 174,585    
Interest-earning deposits in financial institutions   2,244,272       2,192,877       3,524,613    
Total cash and cash equivalents   2,460,708       2,389,904       3,699,198    
             
Securities available-for-sale, at estimated fair value   5,891,328       6,780,648       9,276,926    
Securities held-to-maturity, at amortized cost,            
net of allowance for credit losses   2,264,601       2,260,367       -    
Federal Home Loan Bank stock, at cost   36,990       33,210       17,250    
Total investment securities   8,192,919       9,074,225       9,294,176    
             
Loans held for sale   15,534       -       -    
             
Gross loans and leases held for investment   27,775,962       26,608,541       20,588,255    
Deferred fees, net   (115,921 )     (107,404 )     (77,235 )  
Total loans and leases held for investment,            
net of deferred fees   27,660,041       26,501,137       20,511,020    
Allowance for loan and lease losses   (189,327 )     (188,705 )     (203,733 )  
Total loans and leases held for investment, net   27,470,714       26,312,432       20,307,287    
             
Equipment leased to others under operating leases   338,691       324,233       334,275    
Premises and equipment, net   50,781       51,083       47,246    
Foreclosed assets, net   2,967       -       13,364    
Goodwill   1,405,736       1,405,736       1,204,118    
Core deposit and customer relationship intangibles, net   34,010       37,659       15,533    
Other assets   1,432,532       1,355,451       970,479    
Total assets $ 41,404,592     $ 40,950,723     $ 35,885,676    
             
LIABILITIES:            
Noninterest-bearing deposits $ 12,775,756     $ 13,338,029     $ 12,881,806    
Interest-bearing deposits   21,420,116       20,630,123       17,677,939    
Total deposits   34,195,872       33,968,152       30,559,745    
Borrowings   1,864,815       1,592,000       -    
Subordinated debt   863,379       863,756       862,447    
Accrued interest payable and other liabilities   604,581       548,412       545,050    
Total liabilities   37,528,647       36,972,320       31,967,242    
STOCKHOLDERS' EQUITY (1)   3,875,945       3,978,403       3,918,434    
Total liabilities and stockholders’ equity $ 41,404,592     $ 40,950,723     $ 35,885,676    
             
Book value per common share $ 28.07     $ 28.93     $ 32.77    
Tangible book value per common share (2) $ 16.11     $ 16.93     $ 22.57    
Common shares outstanding   120,314,023       120,288,024       119,579,566    
             
(1) Includes net unrealized (loss) gain on:            
Securities available-for-sale, net $ (637,346 )   $ (428,242 )   $ 98,859    
Securities held to maturity   (210,868 )     (216,508 )     -    
Total $ (848,214 )   $ (644,750 )   $ 98,859    
(2) Non-GAAP measure.            
             

 

 

PACWEST BANCORP AND SUBSIDIARIES                    
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS                
                     
  Three Months Ended   Nine Months Ended  
  September 30,   June 30,   September 30,   September 30,  
    2022       2022       2021       2022       2021    
  (In thousands, except per share data)  
Interest income:                    
Loans and leases $ 346,550     $ 293,286     $ 246,722     $ 907,595     $ 732,795    
Investment securities   53,135       52,902       40,780       159,459       104,999    
Deposits in financial institutions   10,359       4,330       2,580       16,412       6,130    
Total interest income   410,044       350,518       290,082       1,083,466       843,924    
                     
Interest expense:                    
Deposits   61,288       15,362       6,417       82,858       21,186    
Borrowings   3,081       2,441       101       5,683       559    
Subordinated debt   10,494       8,790       7,722       27,102       18,760    
Total interest expense   74,863       26,593       14,240       115,643       40,505    
                     
Net interest income   335,181       323,925       275,842       967,823       803,419    
Provision for credit losses   3,000       11,500       (20,000 )     14,500       (156,000 )  
Net interest income after provision                    
for credit losses   332,181       312,425       295,842       953,323       959,419    
                     
Noninterest income:                    
Service charges on deposit accounts   3,608       3,634       3,407       10,813       9,793    
Other commissions and fees   10,034       10,813       11,792       32,427       31,654    
Leased equipment income   12,835       12,335       10,943       38,264       33,144    
Gain on sale of loans and leases   58       12       -       130       1,561    
Gain (loss) on sale of securities   86       (1,209 )     515       (1,019 )     616    
Dividends and gains (losses) on equity investments   3,228       4,097       8,387       (4,050 )     24,685    
Warrant income   292       1,615       13,578       2,536       25,351    
Other income   8,478       3,049       2,723       14,682       9,741    
Total noninterest income   38,619       34,346       51,345       93,783       136,545    
                     
Noninterest expense:                    
Compensation   105,933       102,542       98,061       300,715       268,750    
Occupancy   15,574       15,268       14,928       46,042       43,766    
Data processing   9,568       9,258       7,391       28,455       22,106    
Other professional services   10,674       6,726       5,164       23,354       15,546    
Insurance and assessments   7,159       5,632       3,685       18,281       12,333    
Intangible asset amortization   3,649       3,649       2,890       10,947       8,858    
Leased equipment depreciation   8,908       8,934       8,603       27,031       26,186    
Foreclosed assets (income) expense, net   (248 )     (28 )     165       (3,629 )     47    
Acquisition, integration and reorganization costs   -       -       200       -       3,825    
Customer related expense   12,673       11,748       4,538       37,076       14,329    
Loan expense   6,228       7,037       4,180       18,422       11,404    
Other expense   15,500       12,879       9,616       39,995       34,157    
Total noninterest expense   195,618       183,645       159,421       546,689       461,307    
                     
Earnings before income taxes   175,182       163,126       187,766       500,417       634,657    
Income tax expense   43,566       40,766       47,770       126,313       163,743    
Net earnings   131,616       122,360       139,996       374,104       470,914    
Preferred stock dividends   9,392       -       -       9,392       -    
Net earnings available to                    
common stockholders $ 122,224     $ 122,360     $ 139,996     $ 364,712     $ 470,914    
                     
Basic and diluted earnings per common share $ 1.02     $ 1.02     $ 1.17     $ 3.04     $ 3.96    
Dividends declared and paid per common share $ 0.25     $ 0.25     $ 0.25     $ 0.75     $ 0.75    
                     

 

PACWEST BANCORP AND SUBSIDIARIES                  
NET EARNINGS PER COMMON SHARE                  
                     
  Three Months Ended   Nine Months Ended  
  September 30,   June 30,   September 30,   September 30,  
    2022       2022       2021       2022       2021    
  (Dollars in thousands, except per share data)  
Basic Earnings Per Common Share:                    
Net earnings $ 131,616     $ 122,360     $ 139,996     $ 374,104     $ 470,914    
Less: Preferred stock dividends   (9,392 )     -       -       (9,392 )     -    
Net earnings available to                    
common stockholders   122,224       122,360       139,996       364,712       470,914    
Less: Earnings allocated to                    
unvested restricted stock (1)   (2,331 )     (2,351 )     (2,417 )     (6,721 )     (7,930 )  
Net earnings allocated to                    
common shares $ 119,893     $ 120,009     $ 137,579     $ 357,991     $ 462,984    
                     
Weighted average basic shares                    
and unvested restricted stock                    
outstanding   120,342       120,022       119,569       119,989       119,272    
Less: weighted average unvested                    
restricted stock outstanding   (2,556 )     (2,460 )     (2,340 )     (2,422 )     (2,235 )  
Weighted average basic shares                    
outstanding   117,786       117,562       117,229       117,567       117,037    
                     
Basic earnings per common share $ 1.02     $ 1.02     $ 1.17     $ 3.04     $ 3.96    
                     
Diluted Earnings Per Common Share:                    
Net earnings allocated to                    
common shares $ 119,893     $ 120,009     $ 137,579     $ 357,991     $ 462,984    
                     
Weighted average diluted shares                    
outstanding   117,786       117,562       117,229       117,567       117,037    
                     
Diluted earnings per common share $ 1.02     $ 1.02     $ 1.17     $ 3.04     $ 3.96    
                     
(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  
  September 30, 2022   June 30, 2022   September 30, 2021  
    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) $ 27,038,873 $ 348,639 5.12 %   $ 25,449,773 $ 295,154 4.65 %   $ 19,670,671 $ 248,485 5.01 %  
Investment securities (3)   8,803,349   54,423 2.45 %     9,488,653   54,910 2.32 %     8,047,098   42,952 2.12 %  
Deposits in financial                        
institutions   1,809,809   10,359 2.27 %     1,984,751   4,330 0.88 %     5,657,768   2,580 0.18 %  
Total interest-earning                        
assets (1)   37,652,031   413,421 4.36 %     36,923,177   354,394 3.85 %     33,375,537   294,017 3.50 %  
Other assets   3,189,241         3,108,714         2,496,127      
Total assets $ 40,841,272       $ 40,031,891       $ 35,871,664      
                         
Liabilities and                        
Stockholders' Equity:                      
Interest checking $ 6,650,477   19,475 1.16 %   $ 6,517,381   3,816 0.23 %   $ 7,372,859   2,042 0.11 %  
Money market   10,914,027   31,780 1.16 %     10,553,942   8,448 0.32 %     8,662,449   2,997 0.14 %  
Savings   649,574   42 0.03 %     650,479   41 0.03 %     620,079   38 0.02 %  
Time   3,000,187   9,991 1.32 %     1,939,816   3,057 0.63 %     1,475,307   1,340 0.36 %  
Total interest-bearing                        
deposits   21,214,265   61,288 1.15 %     19,661,618   15,362 0.31 %     18,130,694   6,417 0.14 %  
Borrowings   505,482   3,081 2.42 %     1,356,616   2,441 0.72 %     238,335   101 0.17 %  
Subordinated debt   863,719   10,494 4.82 %     863,653   8,790 4.08 %     862,272   7,722 3.55 %  
Total interest-bearing                        
liabilities   22,583,466   74,863 1.32 %     21,881,887   26,593 0.49 %     19,231,301   14,240 0.29 %  
Noninterest-bearing                        
demand deposits   13,653,177         13,987,398         12,198,313      
Other liabilities   593,450         510,238         525,429      
Total liabilities   36,830,093         36,379,523         31,955,043      
Stockholders' equity   4,011,179         3,652,368         3,916,621      
Total liabilities and                        
stockholders' equity $ 40,841,272       $ 40,031,891       $ 35,871,664      
Net interest income (1)   $ 338,558       $ 327,801       $ 279,777    
Net interest spread (1)     3.04 %       3.36 %       3.21 %  
Net interest margin (1)     3.57 %       3.56 %       3.33 %  
                         
Total deposits (4) $ 34,867,442 $ 61,288 0.70 %   $ 33,649,016 $ 15,362 0.18 %   $ 30,329,007 $ 6,417 0.08 %  
                         
(1) Tax equivalent.                        
(2) Includes net loan premium amortization of $3.8 million, $5.8 million, and $2.4 million for the three months ended September 30, 2022,
June 30, 2022, and September 30, 2021, respectively.                  
(3) Includes tax-equivalent adjustments of $1.3 million, $2.0 million, and $2.2 million for the three months ended September 30, 2022,  
June 30, 2022, and September 30, 2021 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                    
                     
  September 30,   June 30,   March 31,   December 31,   September 30,  
    2022       2022       2022       2021       2021    
  (Dollars in thousands, except per share data)  
ASSETS:                    
Cash and due from banks $ 216,436     $ 197,027     $ 205,446     $ 112,548     $ 174,585    
Interest-earning deposits in financial                    
institutions   2,244,272       2,192,877       1,865,235       3,944,686       3,524,613    
Total cash and cash equivalents   2,460,708       2,389,904       2,070,681       4,057,234       3,699,198    
                     
Securities available-for-sale   5,891,328       6,780,648       9,975,109       10,694,458       9,276,926    
Securities held-to-maturity   2,264,601       2,260,367       -       -       -    
Federal Home Loan Bank stock   36,990       33,210       17,250       17,250       17,250    
   Total investment securities   8,192,919       9,074,225       9,992,359       10,711,708       9,294,176    
                     
Loans held for sale   15,534       -       -       -       -    
                     
Gross loans and leases held for investment   27,775,962       26,608,541       24,439,749       23,026,308       20,588,255    
Deferred fees, net   (115,921 )     (107,404 )     (87,677 )     (84,760 )     (77,235 )  
Total loans and leases held for                    
investment, net of deferred fees   27,660,041       26,501,137       24,352,072       22,941,548       20,511,020    
Allowance for loan and lease losses   (189,327 )     (188,705 )     (197,398 )     (200,564 )     (203,733 )  
Total loans and leases held for                    
investment, net   27,470,714       26,312,432       24,154,674       22,740,984       20,307,287    
                     
Equipment leased to others under                    
operating leases   338,691       324,233       325,305       339,150   -   334,275    
Premises and equipment, net   50,781       51,083       51,011       46,740       47,246    
Foreclosed assets, net   2,967       -       304       12,843       13,364    
Goodwill   1,405,736       1,405,736       1,405,736       1,405,736       1,204,118    
Core deposit and customer relationship                    
intangibles, net   34,010       37,659       41,308       44,957       15,533    
Other assets   1,432,532       1,355,451       1,208,261       1,083,992       970,479    
Total assets $ 41,404,592     $ 40,950,723     $ 39,249,639     $ 40,443,344     $ 35,885,676    
                     
LIABILITIES:                    
Noninterest-bearing deposits $ 12,775,756     $ 13,338,029     $ 14,057,051     $ 14,543,133     $ 12,881,806    
Interest-bearing deposits   21,420,116       20,630,123       19,167,844       20,454,624       17,677,939    
Total deposits   34,195,872       33,968,152       33,224,895       34,997,757       30,559,745    
Borrowings   1,864,815       1,592,000       991,000       -       -    
Subordinated debt   863,379       863,756       863,880       863,283       862,447    
Accrued interest payable and other                    
liabilities   604,581       548,412       519,269       582,674       545,050    
Total liabilities   37,528,647       36,972,320       35,599,044       36,443,714       31,967,242    
STOCKHOLDERS' EQUITY (1)   3,875,945       3,978,403       3,650,595       3,999,630       3,918,434    
Total liabilities and stockholders’                    
equity $ 41,404,592     $ 40,950,723     $ 39,249,639     $ 40,443,344     $ 35,885,676    
                     
Book value per common share $ 28.07     $ 28.93     $ 30.52     $ 33.45     $ 32.77    
Tangible book value per common share (2) $ 16.11     $ 16.93     $ 18.42     $ 21.31     $ 22.57    
Common shares outstanding   120,314,023       120,288,024       119,601,766       119,584,854       119,579,566    
                     
(1) Includes net unrealized (loss) gain on:                    
Securities available-for-sale, net $ (637,346 )   $ (428,242 )   $ (376,475 )   $ 65,968     $ 98,859    
Securities held to maturity   (210,868 )     (216,508 )     -       -       -    
Total $ (848,214 )   $ (644,750 )   $ (376,475 )   $ 65,968     $ 98,859    
(2) Non-GAAP measure.                    
                     

 

PACWEST BANCORP AND SUBSIDIARIES                    
FIVE QUARTER STATEMENT OF EARNINGS                  
                     
  Three Months Ended  
  September 30,   June 30,   March 31,   December 31,   September 30,  
    2022       2022       2022       2021       2021    
  (In thousands, except per share data)  
Interest income:                    
Loans and leases $ 346,550     $ 293,286     $ 267,759     $ 263,662     $ 246,722    
Investment securities   53,135       52,902       53,422       48,469       40,780    
Deposits in financial institutions   10,359       4,330       1,723       2,674       2,580    
Total interest income   410,044       350,518       322,904       314,805       290,082    
                     
Interest expense:                    
Deposits   61,288       15,362       6,208       6,622       6,417    
Borrowings   3,081       2,441       161       64       101    
Subordinated debt   10,494       8,790       7,818       7,714       7,722    
Total interest expense   74,863       26,593       14,187       14,400       14,240    
                     
Net interest income   335,181       323,925       308,717       300,405       275,842    
Provision for credit losses   3,000       11,500       -       (6,000 )     (20,000 )  
Net interest income after provision                    
for credit losses   332,181       312,425       308,717       306,405       295,842    
                     
Noninterest income:                    
Service charges on deposit accounts   3,608       3,634       3,571       3,476       3,407    
Other commissions and fees   10,034       10,813       11,580       10,633       11,792    
Leased equipment income   12,835       12,335       13,094       12,602       10,943    
Gain on sale of loans and leases   58       12       60       172       -    
Gain (loss) on sale of securities   86       (1,209 )     104       999       515    
Dividends and gains (losses) on equity investments   3,228       4,097       (11,375 )     (1,570 )     8,387    
Warrant income   292       1,615       629       23,990       13,578    
Other income   8,478       3,049       3,155       7,080       2,723    
Total noninterest income   38,619       34,346       20,818       57,382       51,345    
                     
Noninterest expense:                    
Compensation   105,933       102,542       92,240       99,700       98,061    
Occupancy   15,574       15,268       15,200       14,656       14,928    
Data processing   9,568       9,258       9,629       8,171       7,391    
Other professional services   10,674       6,726       5,954       5,946       5,164    
Insurance and assessments   7,159       5,632       5,490       5,032       3,685    
Intangible asset amortization   3,649       3,649       3,649       3,876       2,890    
Leased equipment depreciation   8,908       8,934       9,189       9,569       8,603    
Foreclosed assets (income) expense, net   (248 )     (28 )     (3,353 )     (260 )     165    
Acquisition, integration and reorganization costs   -       -       -       5,590       200    
Customer related expense   12,673       11,748       12,655       6,175       4,538    
Loan expense   6,228       7,037       5,157       5,627       4,180    
Other expense   15,500       12,879       11,616       12,028       9,616    
Total noninterest expense   195,618       183,645       167,426       176,110       159,421    
                     
Earnings before income taxes   175,182       163,126       162,109       187,677       187,766    
Income tax expense   43,566       40,766       41,981       51,632       47,770    
Net earnings   131,616       122,360       120,128       136,045       139,996    
Preferred stock dividends   9,392       -       -       -       -    
Net earnings available to                    
common stockholders $ 122,224     $ 122,360     $ 120,128     $ 136,045     $ 139,996    
                     
Basic and diluted earnings per common share $ 1.02     $ 1.02     $ 1.01     $ 1.14     $ 1.17    
Dividends declared and paid per common 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  
  September 30,   June 30,   March 31,   December 31,   September 30,  
    2022       2022       2022       2021       2021    
  (Dollars in thousands)  
Performance Ratios:                    
Return on average assets (1)   1.28 %     1.23 %     1.22 %     1.34 %     1.55 %  
Pre-provision, pre-tax net revenue                    
("PPNR") return on average                    
assets (1)(2)   1.73 %     1.75 %     1.65 %     1.79 %     1.86 %  
Return on average equity (1)   13.02 %     13.44 %     12.66 %     13.65 %     14.18 %  
Return on average tangible common                    
equity (1)(2)   24.11 %     24.42 %     20.93 %     22.06 %     21.03 %  
Efficiency ratio   51.0 %     49.5 %     50.1 %     46.2 %     47.2 %  
Noninterest expense as a percentage                    
of average assets (1)   1.90 %     1.84 %     1.70 %     1.73 %     1.76 %  
                     
Average Yields/Costs (1):                    
Yield on:                    
Average loans and leases (3)   5.12 %     4.65 %     4.66 %     4.93 %     5.01 %  
Average investment securities (3)   2.45 %     2.32 %     2.17 %     2.02 %     2.12 %  
Average interest-earning assets (3)   4.36 %     3.85 %     3.59 %     3.39 %     3.50 %  
Cost of:                    
Average interest-bearing deposits   1.15 %     0.31 %     0.13 %     0.13 %     0.14 %  
Average total deposits   0.70 %     0.18 %     0.07 %     0.08 %     0.08 %  
Average interest-bearing liabilities   1.32 %     0.49 %     0.27 %     0.27 %     0.29 %  
Net interest spread (3)   3.04 %     3.36 %     3.32 %     3.12 %     3.21 %  
Net interest margin (3)   3.57 %     3.56 %     3.43 %     3.24 %     3.33 %  
                     
Average Balances:                    
Assets:                    
Loans and leases, net of deferred fees $ 27,038,873     $ 25,449,773     $ 23,433,019     $ 21,367,665     $ 19,670,671    
Investment securities   8,803,349       9,488,653       10,397,709       9,964,568       8,047,098    
Deposits in financial institutions   1,809,809       1,984,751       3,083,159       5,961,104       5,657,768    
Interest-earning assets   37,652,031       36,923,177       36,913,887       37,293,337       33,375,537    
Total assets   40,841,272       40,031,891       39,883,304       40,358,147       35,871,664    
Liabilities:                    
Noninterest-bearing deposits   13,653,177       13,987,398       14,463,667       14,713,385       12,198,313    
Interest-bearing deposits   21,214,265       19,661,618       19,868,395       20,050,310       18,130,694    
Total deposits   34,867,442       33,649,016       34,332,062       34,763,695       30,329,007    
Borrowings   505,482       1,356,616       298,444       234,391       238,335    
Subordinated debt   863,719       863,653       863,572       862,777       862,272    
Interest-bearing liabilities   22,583,466       21,881,887       21,030,411       21,147,478       19,231,301    
Stockholders' equity   4,011,179       3,652,368       3,847,481       3,954,267       3,916,621    
                     
(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  
  September 30,   June 30,   March 31,   December 31,   September 30,  
    2022       2022       2022       2021       2021    
  (Dollars in thousands, except per share data)  
Credit Quality Metrics for Loans                    
and Leases Held for Investment:                    
Nonaccrual loans and leases $ 89,742     $ 78,527     $ 66,538     $ 61,174     $ 64,507    
Nonperforming assets   92,709       78,527       66,842       74,017       77,871    
Special mention loans and leases   463,994       480,261       377,315       391,611       496,366    
Classified loans and leases   96,685       104,264       82,068       116,104       141,604    
Allowance for loan and lease losses   189,327       188,705       197,398       200,564       203,733    
Allowance for credit losses   284,398       283,776       272,469       273,635       279,804    
For the quarter:                    
Provision for credit losses   3,000       10,000       -       (6,000 )     (20,000 )  
Net charge-offs (recoveries)   2,378       (1,307 )     1,166       169       367    
                     
Nonaccrual loans and leases to loans                    
and leases   0.32 %     0.30 %     0.27 %     0.27 %     0.31 %