July 15, 2016 - 7:00 AM EDT
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PacWest Bancorp Announces Results for the Second Quarter 2016

Highlights

  • Net Earnings of $82.2 Million, or $0.68 Per Diluted Share
  • New Loan and Lease Production of $931 Million for the Quarter; $158 Million of Net Loan Growth
  • Core Deposits Increased $442 Million during the Quarter and Represented 75% of Total Deposits
  • Core Tax Equivalent Net Interest Margin of 5.11%

LOS ANGELES, July 15, 2016 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the second quarter of 2016 of $82.2 million, or $0.68 per diluted share, compared to net earnings for the first quarter of 2016 of $90.5 million, or $0.74 per diluted share.  The decrease in net earnings was due mostly to lower accretion on acquired loans and leases, lower gain on sales of securities and the cost of terminating FDIC loss sharing agreements offset by lower credit loss provision as compared to the first quarter of 2016. 

Matt Wagner, President and CEO, commented, “We are very pleased with our strong second quarter results which produced a return on assets of 1.57% and a return on tangible equity of 14.61%. This performance was driven by our above-peer net interest margin, an efficiency ratio of 40.6% and strong asset quality which resulted in minimal charge-offs.”

Patrick Rusnak, Executive Vice President and CFO stated, “Our second quarter core tax equivalent net interest margin (NIM) remained relatively steady at 5.11% and excluding all purchase accounting items increased 7 basis points to 5.00%. The second quarter NIM benefited from an improved average earning asset mix and a 3 basis point decrease in the cost of deposits.”

Mr. Rusnak continued, “We are also pleased with the continued transformation of our deposit portfolio as core deposits were 75% of total deposits compared to 52% a year ago. With $158 million of net loan growth for the second quarter, we continue to expect mid-single digit loan growth for the year.”

Mr. Wagner continued, “We continue to be focused on two important corporate initiatives for 2016. These are the conversion of our core processing systems, the first phase of which was completed during the second quarter, and the submission of our first DFAST stress test to our regulators, after which we expect to more actively evaluate plans to reduce capital levels.”

FINANCIAL HIGHLIGHTS

            
 At or For the Three Months Ended At or For the Six Months Ended
 June 30, March 31,   June 30,  
  2016   2016  Change  2016   2015  Change
 (Dollars in thousands, except per share data)
Financial Highlights:            
Net Earnings$82,168  $90,456  $(8,288) $172,624  $158,162  $14,462 
Diluted Earnings Per Share$0.68  $0.74  $(0.06) $1.42  $1.54  $(0.12)
Return on Average Assets 1.57%  1.72%  (0.15)  1.65%  1.95%  (0.30)
Return on Average           
Tangible Equity (1) 14.61%  16.45%  (1.84)  15.52%  17.71%  (2.19)
            
Net Interest Margin           
(tax equivalent) 5.33%  5.53%  (0.20)  5.43%  5.92%  (0.49)
Core Net Interest Margin           
(tax equivalent) (1) 5.11%  5.10%  0.01   5.10%  5.38%  (0.28)
Efficiency Ratio 40.6%  38.5%  2.1   39.5%  37.4%  2.1 
            
Total Assets$21,147,139  $21,031,009  $116,130  $21,147,139  $16,697,020  $4,450,119 
Loans and Leases, Net           
of Deferred Fees$14,641,460  $14,483,517  $157,943  $14,641,460  $12,034,189  $2,607,271 
Noninterest-Bearing           
Deposits$6,222,696  $6,139,963  $82,733  $6,222,696  $3,396,688  $2,826,008 
Core Deposits$11,411,992  $10,970,318  $441,674  $11,411,992  $6,584,606  $4,827,386 
Total Deposits$15,148,009  $15,441,375  $(293,366) $15,148,009  $12,581,816  $2,566,193 
            
Noninterest-Bearing           
Deposits as Percentage           
of Total Deposits 41%  40%  1   41%  26%  15 
Core Deposits as           
Percentage of Total           
Deposits 75%  71%  4   75%  52%  23 
Tangible Common Equity           
Ratio (1) 12.12%  11.87%  0.25   12.12%  12.10%  0.02 
Tangible Book Value Per           
Share (1)$18.83  $18.33  $0.50  $18.83  $17.55  $1.28 
            
(1) Non-GAAP measure.           
            

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income decreased by $10.8 million to $233.8 million in the second quarter of 2016 compared to $244.6 million for the first quarter of 2016 due to lower accretion on acquired loans.  The decrease in accretion was related mostly to lower accelerated accretion from the payoff of one purchased credit impaired (“PCI”) loan in the first quarter. Total accretion on acquired loans was $16.2 million in the second quarter of 2016 (45 basis points on the loan and lease yield) compared to $27.9 million in the first quarter of 2016 (77 basis points on the loan and lease yield).  The loan and lease yield for the second quarter of 2016 was 6.24% compared to 6.57% for the first quarter of 2016.  The decrease in the loan and lease yield was due to the lower accretion on acquired loans and the yield on new production being lower than the current portfolio yield. Excluding accelerated accretion, the core loan and lease yield was 5.97% in the second quarter compared to 6.03% in the first quarter.   

The tax equivalent NIM for the second quarter of 2016 was 5.33% compared to 5.53% for the first quarter of 2016.  The decrease in the NIM was due to lower accretion on acquired loans. Such accretion contributed 36 basis points to the NIM in the second quarter of 2016 and 62 basis points to the NIM in the first quarter of 2016.  Excluding accelerated accretion, the core tax equivalent NIM was 5.11% for the second quarter compared to 5.10% for the first quarter.    

The cost of total deposits decreased to 0.20% in the second quarter from 0.23% in the first quarter of 2016 due to the increased average balance of noninterest-bearing deposits combined with a lower average cost and balance of time deposits.

The tax equivalent NIM and loan and lease yield are impacted by volatility in accelerated accretion of acquisition discounts due to the prepayment of acquired loans and leases. The effects of this item are shown in the following table for the periods indicated:

       
  Three Months Ended Three Months Ended
  June 30, 2016 March 31, 2016
   Loan and   Loan and 
  NIMLease Yield NIMLease Yield
Reported  5.33% 6.24%  5.53% 6.57%
Less:Accelerated accretion of acquisition     
 discounts from early payoffs of     
 acquired loans (0.22)% (0.27)%  (0.43)% (0.54)%
Core  5.11% 5.97%  5.10% 6.03%
 

The impact on the tax equivalent net interest income and NIM from all purchase accounting items is set forth in the table below for the periods indicated:

 
 Three Months Ended Three Months Ended
 June 30, 2016 March 31, 2016
  Impact on  Impact on
 AmountNIM AmountNIM
 (Dollars in thousands)
      
Net interest income/NIM$238,667  5.33% $249,540  5.53%
Less:Accelerated accretion of acquisition     
 discounts from early payoffs of     
 acquired loans (9,780) (0.22)%  (19,465) (0.43)%
 Remaining accretion of Non-PCI loan     
 acquisition discounts (6,407 (0.14)%  (8,403 (0.19)%
 Total accretion of loan acquisition     
 discounts (16,187) (0.36)%  (27,868) (0.62)%
 Amortization of TruPS discount 1,393  0.03%  1,395  0.03%
 Accretion of time deposits premium (172 0.00%  (270 (0.01)%
   (14,966) (0.33)%  (26,743) (0.60)%
Net interest income/NIM - excluding purchase     
accounting$223,701  5.00% $222,797  4.93%
 

Noninterest Income

Noninterest income decreased by $12.4 million to $22.1 million for the second quarter of 2016 due mostly to a $7.6 million decrease in net gains on sales of securities and a $4.1 million increase in FDIC loss sharing expense. The second quarter of 2016 included minimal sales of securities compared to $335 million of securities sales in the first quarter resulting in the lower net gains.  The higher FDIC loss sharing expense was due mainly to the $6.0 million pre-tax charge related to the early termination of our loss share agreements with the FDIC.  In addition, dividends and gains on equity investments increased by $1.9 million and other income decreased by $1.2 million.  First quarter other income included a loan syndication fee ($0.9 million), a death benefit received on a BOLI policy ($0.6 million) and a loss on the sale of the Pacific Western Equipment Finance (“PWEF”) leasing unit ($0.7 million); there were no similar items in the second quarter.

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

      
 Three Months Ended
 June 30, March 31, Increase
Noninterest Income 2016   2016  (Decrease)
 (In thousands)
      
Service charges on deposit accounts$3,633  $3,856  $(223)
Other commissions and fees 11,073   11,489   (416)
Leased equipment income 8,523   8,244   279 
Gain on sale of loans and leases 388   245   143 
Gain on securities 478   8,110   (7,632)
FDIC loss sharing expense, net (6,502)  (2,415)  (4,087)
Other income:     
Dividends and realized gains on equity investments 2,185   246   1,939 
Foreign currency translation net gains 324   606   (282
Income recognized on early repayment of leases 27   922   (895
Other 1,992   3,236   (1,244)
Total noninterest income$22,121  $34,539  $(12,418)
 

Noninterest Expense

Noninterest expense decreased by $0.6 million to $110.1 million for the second quarter compared to $110.7 million for the first quarter of 2016.  Noninterest expense decreased in most expense categories in the second quarter due partly to the sale of the PWEF leasing unit at the end of the first quarter. Compensation expense increased $1.1 million due mostly to higher stock-based compensation and incentive expense offset by lower payroll tax expense. Foreclosed assets income is lower by $0.6 million due to lower gains on foreclosed asset sales compared to the prior quarter.  

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

      
 Three Months Ended
 June 30, March 31, Increase
Noninterest Expense 2016   2016  (Decrease)
 (In thousands)
      
Compensation$62,174  $61,065  $1,109 
Occupancy 12,193   12,632   (439)
Data processing 5,644   5,904   (260)
Other professional services 3,223   3,572   (349)
Insurance and assessments 4,951   4,965   (14)
Intangible asset amortization 4,371   4,746   (375)
Leased equipment depreciation 5,286   5,024   262 
Foreclosed assets (income), net (3)  (561)  558 
Acquisition, integration and reorganization costs -   200   (200)
Other expense:     
Loan expense 2,323   2,155   168 
Other 9,919   10,986   (1,067
Total noninterest expense$110,081  $110,688  $(607
 

Income Taxes

The overall effective income tax rate was 37.7% in the second quarter of 2016 and 39.0% in the first quarter of 2016.  Although the second quarter benefited from a lower effective tax rate, the expected effective tax rate for the calendar year 2016 remains around 39%.

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Average total loans and leases for the second quarter of 2016 was relatively unchanged from the first quarter while period-end total loans and leases increased by $157.9 million in the second quarter to $14.6 billion at June 30, 2016.  The net increase was driven by second quarter originations and purchases of $931.4 million, offset partially by principal repayments of $720.0 million.     

The following table presents a roll forward of the loan and lease portfolio for the periods indicated:

    
 Three Months Ended
 June 30, March 31,
Loan and Lease Roll Forward (1) 2016   2016 
 (In thousands)
    
Beginning balance$14,483,517  $14,478,254 
New production 931,423   842,064 
Existing loans and leases:   
Principal repayments, net (2) (720,003  (665,281)
Loan and lease sales (51,597  (26,657)
Transfers to foreclosed assets -   (129)
Charge-offs (1,880  (5,536)
Sale of PWEF -   (139,198)
Ending balance$14,641,460  $14,483,517 
    
Weighted average yields on new production 5.06%  5.29%
    
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) Includes principal repayments on existing loans, changes in revolving lines of credit
(repayments and draws), loan participation sales and other changes within the loan portfolio.
 

The following table presents the composition of our loan and lease portfolio as of the dates indicated:

        
 June 30, March 31, December 31, June 30,
Loan and Lease Portfolio 2016   2016   2015   2015 
 (In thousands)
Real estate mortgage:       
Commercial$4,519,209  $4,640,419  $4,642,088  $4,596,301 
Residential 1,164,784   1,149,998   1,211,209   1,026,239 
Total real estate mortgage 5,683,993   5,790,417   5,853,297   5,622,540 
Real estate construction and land:       
Commercial 417,144   308,192   349,436   230,372 
Residential 281,788   269,965   184,382   119,825 
Total real estate construction and land 698,932   578,157   533,818   350,197 
Total real estate loans 6,382,925   6,368,574   6,387,115   5,972,737 
Commercial:       
Cash flow 3,048,439   3,173,424   3,073,965   2,857,928 
Asset-based 2,683,913   2,589,598   2,547,665   2,212,467 
Venture capital 1,666,352   1,507,788   1,458,013   - 
Equipment finance 646,940   733,228   890,349   904,488 
Total commercial 8,045,644   8,004,038   7,969,992   5,974,883 
Consumer 212,891   110,905   121,147   86,569 
Total loans and leases, net of       
deferred fees$14,641,460  $14,483,517  $14,478,254  $12,034,189 
        
Total unfunded loan commitments$3,888,686  $3,812,554  $3,580,655  $2,111,637 
                

Loan growth in the second quarter came primarily from the consumer, construction and venture capital portfolios. The construction and venture capital portfolios also accounted for most of the growth in our unfunded commitments during the quarter.

Credit Exposure Affected by Low Oil Prices

At June 30, 2016, we had 19 outstanding loan and lease relationships totaling $116.9 million to borrowers involved in the oil and gas services industry, down from $127.7 million at March 31, 2016.  The collateral for this credit exposure includes primarily equipment, such as drilling equipment and transportation vehicles.  The reserves related to this credit exposure total approximately 18%.  At June 30, 2016, five relationships totaling $48.5 million were on nonaccrual status and were classified, up from three relationships totaling $45.5 million at March 31, 2016.  The largest of these relationships had an aggregate outstanding balance of $39.9 million at June 30, 2016.    

Deposits and Client Investment Funds

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

        
 June 30, March 31, December 31, June 30,
Deposit Category 2016   2016   2015   2015 
 (Dollars in thousands)
        
Noninterest-bearing demand deposits$6,222,696  $6,139,963   6,171,455  $3,396,688 
Interest checking deposits 1,035,395   921,189   874,349   722,231 
Money market deposits 3,392,811   3,144,843   2,782,974   1,722,633 
Savings deposits 761,090   764,323   742,795   743,054 
Total core deposits 11,411,992   10,970,318   10,571,573   6,584,606 
Brokered non-maturity deposits 972,820   985,784   942,253   651,925 
Total non-maturity deposits 12,384,812   11,956,102   11,513,826   7,236,531 
Time deposits under $100,000 1,114,074   1,357,598   1,656,227   2,328,109 
Time deposits of $100,000 and over 1,649,123   2,127,675   2,496,129   3,017,176 
Total time deposits 2,763,197   3,485,273   4,152,356   5,345,285 
Total deposits$15,148,009  $15,441,375  $15,666,182  $12,581,816 
        
Noninterest-bearing demand deposits       
as percentage of total deposits 41%  40%  39%  26%
Core deposits as percentage of total deposits 75%  71%  67%  52%
                

At June 30, 2016, core deposits totaled $11.4 billion, or 75% of total deposits, including $6.2 billion of noninterest-bearing demand deposits, or 41% of total deposits. 

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients, including investments managed by Square 1 Asset Management, Inc. (“S1AM”) our registered investment advisor subsidiary and third-party sweep products.  Total client investment funds at June 30, 2016 were $1.5 billion, of which $1.2 billion was managed by S1AM.     

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $13.9 million was recorded in the second quarter of 2016 compared to $20.1 million in the first quarter of 2016.  The second quarter provision consisted of $12.0 million for Non-PCI loans and leases and $1.9 million for PCI loans and leases. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio increased to 1.03% at June 30, 2016 from 0.96% at March 31, 2016. 

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

           
  Three Months Ended June 30, 2016
  Non-PCI         
Allowance for Credit  Loans and  Unfunded  Total  PCI  
Losses Rollforward Leases Commitments Non-PCI Loans Total
  (In thousands)
           
Beginning balance $120,807  $17,569  $138,376  $9,554  $147,930 
Charge-offs  (1,712)  -   (1,712)  (168)  (1,880)
Recoveries  1,280   -   1,280   -   1,280 
Net charge-offs  (432)  -   (432)  (168)  (600)
Provision  11,625   375   12,000   1,903   13,903 
Ending balance $132,000  $17,944  $149,944  $11,289  $161,233 
           
   
  Three Months Ended March 31, 2016
  Non-PCI         
Allowance for Credit  Loans and  Unfunded  Total  PCI  
Losses Rollforward Leases Commitments Non-PCI Loans Total
  (In thousands)
           
Beginning balance $105,534  $16,734  $122,268  $9,577  $131,845 
Charge-offs  (5,373)  -   (5,373)  (163)  (5,536)
Recoveries  1,481   -   1,481   -   1,481 
Net charge-offs  (3,892)  -   (3,892)  (163)  (4,055)
Provision  19,165   835   20,000   140   20,140 
Ending balance $120,807  $17,569  $138,376  $9,554  $147,930 
 

All acquired loans are recorded initially at their estimated fair value including an estimate of credit losses. The table below presents two alternative views of credit risk coverage ratios for Non-PCI loans reflecting adjustments for acquired loans and associated purchase accounting discounts:

 June 30, 2016 March 31, 2016
 Non-PCI   Non-PCI  
Credit Risk Loans andAllowance/Coverage Loans andAllowance/Coverage
Coverage RatiosLeasesDiscountRatio LeasesDiscountRatio
 (Dollars in thousands)
        
Ending balance$14,566,425 $149,944  1.03% $14,365,915 $138,376  0.96%
Acquired loans (5,131,674) (37,440) (1)  (5,468,875) (34,231) (1)
Adjusted balance$9,434,751 $112,504  1.19% $8,897,040 $104,145  1.17%
        
Ending balance$14,566,425 $149,944  1.03% $14,365,915 $138,376  0.96%
Unamortized net discount 65,391  65,391  (2)  78,761  78,761  (2)
Adjusted balance$14,631,816 $215,335  1.47% $14,444,676 $217,137  1.50%
        
(1) Allowance attributed to $5.1 billion and $5.5 billion of acquired Non-PCI loans at June 30, 2016 and March 31, 2016, 
based on the allowance calculation that includes an amount for credit deterioration on acquired loans and leases since their 
acquisition dates.
(2) Unamortized net discount relates to $5.1 billion and $5.5 billion of acquired Non-PCI loans at June 30, 2016 and 
March 31, 2016, and is assigned specifically to those loans only.  Such discount represents the acquisition date fair value 
adjustment based on market, liquidity, interest rate risk and credit risk and is being accreted to interest income 
over the remaining life of the respective loans using the interest method.  Use of the interest method results in steadily 
declining amounts being taken into income in each reporting period.  The remaining discount of $65.4 million at 
June 30, 2016, is expected to be substantially accreted to income by the end of 2018.
        

Non-PCI loans and leases at June 30, 2016 included $9.4 billion of originated loans and leases that were not obtained through acquisitions. The related allowance for loan and lease losses totaled $97.7 million, or 1.04% of the outstanding balance.

CREDIT QUALITY

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

    
 June 30, March 31,
Non-PCI Credit Quality Metrics 2016   2016 
 (Dollars in thousands)
    
Nonaccrual loans and leases$127,655  $130,418 
Classified loans and leases 441,035   384,698 
Performing restructured loans 71,709   66,829 
Allowance for credit losses 149,944   138,376 
Net charge-offs (for the quarter) 432   3,892 
Provision for credit losses (for the quarter) 12,000   20,000 
Allowance for credit losses to loans and leases 1.03%  0.96%
Allowance for credit losses to nonaccrual loans   
and leases 117.5%  106.1%
Nonaccrual loans and leases to loans and leases 0.88%  0.91%
Nonperforming assets to loans and leases and   
foreclosed assets 0.99%  1.05%
Classified loans and leases to loans and leases 3.03%  2.68%
        

Classified loans and leases increased largely as a result of a $50 million healthcare real estate loan being classified due to declining operating performance.

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

 Non-PCI Nonaccrual Loans and Leases Non-PCI Accruing and
 June 30, 2016 March 31, 2016 30-89 Days Past Due
  % of   % of  June 30, March 31,
  Loan   Loan   2016   2016 
 AmountCategory AmountCategory Amount Amount
 (Dollars in thousands)
Real estate mortgage:         
Commercial$29,183  1% $30,357  1% $2,126  $4,968 
Residential 4,238  -%  5,807  1%  171   730 
Total real estate mortgage 33,421  1%  36,164  1%  2,297   5,698 
Real estate construction and land:         
Commercial -  -%  -  -%  -   - 
Residential 368  -%  370  -%  -   - 
Total real estate         
construction and land 368  -%  370  -%  -   - 
Commercial:         
Cash flow 38,146  1%  39,665  1%  389   639 
Asset-based 1,986  -%  2,046  -%  -   - 
Venture capital 1,088  -%  -  -%  3,548   9,554 
Equipment finance (1) 52,432  8%  51,247  7%  -   1,870 
Total commercial 93,652  1%  92,958  1%  3,937   12,063 
Consumer 214  -%  926  1%  -   30 
Total Non-PCI loans and         
leases$127,655  1% $130,418  1% $6,234  $17,791 
          
(1) Includes nonaccrual leases and loans to companies involved in the oil and gas industries of $48.5 million and $45.5 million at 
June 30, 2016 and March 31, 2016, respectively. 
          

The following table presents nonperforming assets as of the dates indicated:

    
 June 30, March 31,
Nonperforming Assets 2016   2016 
 (Dollars in thousands)
    
Nonaccrual Non-PCI loans and leases$127,655  $130,418 
Nonaccrual PCI Loans (1) 2,025   3,241 
Total nonaccrual loans and leases 129,680   133,659 
Non-PCI accruing loan contractually past due   
90 days or more -   2,538 
Foreclosed assets, net 16,181   18,310 
Total nonperforming assets$145,861  $154,507 
    
Nonaccrual loans and leases to loans and leases 0.88%  0.92%
Nonperforming assets to loans and leases   
and foreclosed assets 0.99%  1.06%
    
(1) Represents legacy CapitalSource borrowing relationships placed on nonaccrual status 
as of the acquisition date. 
    

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with $21 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (“Pacific Western”). The Bank has 79 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Pacific Western provides commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses.  Pacific Western offers additional products and services under the brands of its business groups, CapitalSource and Square 1 Bank. CapitalSource provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis.  Square 1 Bank offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovation hubs across the United States. For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.

FORWARD LOOKING STATEMENTS

This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, strategies, goals, and projections and including statements about our expectations regarding our loan and lease portfolio growth, allowance for loan and lease losses, capital management, including reducing excess capital, and effective tax rates. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such forward-looking statements for a variety of factors, including without limitation:

  • changes in economic or competitive market conditions could negatively impact investment or lending opportunities or product pricing and services;
  • loan repayments higher than expected;
  • higher than anticipated delinquencies, charge-offs, and loan and lease losses;
  • reduced demand for our services due to strategic or regulatory reasons;
  • our inability to grow deposits or access wholesale funding sources;
  • legislative or regulatory requirements or changes could negatively impact our business including an increase to capital requirements;
  • the need to retain capital for strategic or regulatory reasons;
  • changes in economic or competitive market conditions;
  • the financial performance of the Company;
  • stock price fluctuations;
  • credit quality deterioration or pronounced and sustained reduction in market values or other economic factors which adversely affect our borrowers’ ability to repay loans and leases and/or require an increased provision for loan and lease losses;
  • results of our DFAST submissions;
  • changes in tax laws or regulations affecting our business;
  • our inability to generate sufficient earnings;
  • tax planning or disallowance of tax benefits by tax authorities;
  • changes in tax filing jurisdictions or entity classifications; and
  • other risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission (“SEC”).

All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (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, December 31, 
 2016
 2016
 2015 
 (Dollars in thousands, except per share data)
ASSETS:   
Cash and due from banks$226,471  $161,977  $161,020 
Interest-earning deposits in financial institutions 218,882   357,541   235,466 
Total cash and cash equivalents 445,353   519,518   396,486 
            
Securities available-for-sale, at estimated fair value 3,347,546   3,240,586   3,559,437 
Federal Home Loan Bank stock, at cost 24,214   17,250   19,710 
Total investment securities 3,371,760   3,257,836   3,579,147 
            
Non-PCI loans and leases 14,566,425   14,365,915   14,339,070 
PCI loans 136,901   176,607   189,095 
Total gross loans and leases 14,703,326   14,542,522   14,528,165 
Deferred fees, net (61,866)  (59,005)  (49,911)
Total loans and leases, net of deferred fees 14,641,460   14,483,517   14,478,254 
Allowance for loan and lease losses (143,289)  (130,361)  (115,111)
Total loans and leases, net 14,498,171   14,353,156   14,363,143 
            
Equipment leased to others under operating leases 204,062   205,163   197,452 
Premises and equipment, net 38,718   39,713   39,197 
Foreclosed assets, net 16,181   18,310   22,120 
Deferred tax asset, net 24,413   91,126   126,389 
Goodwill 2,175,791   2,175,791   2,176,291 
Core deposit and customer     
relationship intangibles, net 43,766   48,137   53,220 
Other assets 328,924   322,259   335,045 
Total assets$21,147,139  $21,031,009  $21,288,490 
            
LIABILITIES:     
Noninterest-bearing deposits$6,222,696  $6,139,963  $6,171,455 
Interest-bearing deposits 8,925,313   9,301,412   9,494,727 
Total deposits 15,148,009   15,441,375   15,666,182 
Borrowings 918,208   551,401   621,914 
Subordinated debentures 439,322   438,723   436,000 
Accrued interest payable and other liabilities 128,296   142,918   166,703 
Total liabilities 16,633,835   16,574,417   16,890,799 
STOCKHOLDERS' EQUITY (1) 4,513,304   4,456,592   4,397,691 
Total liabilities and stockholders’ equity$21,147,139  $21,031,009  $21,288,490 
            
Book value per share$37.05  $36.60  $36.22 
Tangible book value per share (2)$18.83  $18.33  $17.86 
Shares outstanding 121,819,849   121,771,252   121,413,727 
      
(1) Includes net unrealized gain on securities
available-for-sale, net
$81,744  $48,479  $27,828 
(2) Non-GAAP measure.     
      


PACWEST BANCORP AND SUBSIDIARIES          
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS                   
 
 Three Months Ended
  Six Months Ended
 June 30, March 31, June 30,  June 30,
  2016   2016   2015    2016   2015 
 (Dollars in thousands, except per share data)
Interest income: 
Loans and leases$224,326  $236,375  $203,781   $460,701   405,878 
Investment securities 22,420   22,547   14,570    44,967   26,765 
Deposits in financial institutions 308   308   104    616   126 
Total interest income 247,054   259,230   218,455    506,284   432,769 
                     
Interest expense:          
Deposits 7,823   9,073   11,233    16,896   21,712 
Borrowings 352   581   88    933   323 
Subordinated debentures 5,122   4,982   4,582    10,104   9,107 
Total interest expense 13,297   14,636   15,903    27,933   31,142 
                     
Net interest income 233,757   244,594   202,552    478,351   401,627 
Provision for credit losses 13,903   20,140   6,529    34,043   22,963 
Net interest income after provision                    
for credit losses 219,854   224,454   196,023    444,308   378,664 
                     
Noninterest income:          
Service charges on deposit accounts 3,633   3,856   2,612    7,489   5,186 
Other commissions and fees 11,073   11,489   7,123    22,562   12,519 
Leased equipment income 8,523   8,244   5,375    16,767   10,757 
Gain on sale of loans and leases 388   245   163    633   163 
Gain (loss) on securities 478   8,110   (186)   8,588   3,089 
FDIC loss sharing expense, net (6,502)  (2,415)  (5,107)   (8,917)  (9,506)
Other income 4,528   5,010   9,643    9,538   18,286 
Total noninterest income 22,121   34,539   19,623    56,660   40,494 
                     
Noninterest expense:          
Compensation 62,174   61,065   49,033    123,239   96,770 
Occupancy 12,193   12,632   10,588    24,825   21,188 
Data processing 5,644   5,904   4,402    11,548   8,710 
Other professional services 3,223   3,572   3,332    6,795   6,553 
Insurance and assessments 4,951   4,965   4,716    9,916   7,741 
Intangible asset amortization 4,371   4,746   1,502    9,117   3,003 
Leased equipment depreciation 5,286   5,024   3,103    10,310   6,206 
Foreclosed assets (income), net (3)  (561)  (2,340)   (564)  (2,004)
Acquisition, integration and          
reorganization costs -   200   900    200   2,900 
Other expense 12,242   13,141   10,040    25,383   18,569 
Total noninterest expense 110,081   110,688   85,276    220,769   169,636 
                     
Earnings before income taxes 131,894   148,305   130,370    280,199   249,522 
Income tax expense (49,726)  (57,849)  (45,287)   (107,575)  (91,360)
Net earnings$82,168  $90,456  $85,083   $172,624  $158,162 
                     
Basic and diluted earnings per share$0.68  $0.74  $0.83   $1.42  $1.54 
                     

 

PACWEST BANCORP AND SUBSIDIARIES          
NET EARNINGS PER SHARE CALCULATIONS                  
 
 Three Months Ended
 Six Months Ended
 June 30, March 31, June 30, June 30,
  2016   2016   2015   2016   2015 
 (Dollars in thousands, except per share data)
Basic Earnings Per Share: 
Net earnings$82,168  $90,456  $85,083  $172,624  $158,162 
Less: earnings allocated to unvested         
restricted stock (1) (863)  (1,067)  (807)  (1,933)  (1,570)
Net earnings allocated to common                   
shares$81,305  $89,389  $84,276  $170,691  $156,592 
                    
Weighted-average basic shares and 
unvested restricted stock outstanding 121,799   121,598   103,030   121,698   103,033 
Less: weighted-average unvested         
restricted stock outstanding (1,481)  (1,392)  (1,060)  (1,436)  (1,091)
Weighted-average basic shares                   
outstanding 120,318   120,206   101,970   120,262   101,942 
                    
Basic earnings per share$0.68  $0.74  $0.83  $1.42  $1.54 
                    
Diluted Earnings Per Share: 
Net earnings allocated to common 
shares$81,305  $89,389  $84,276  $170,691  $156,592 
                    
Weighted-average basic shares 
outstanding 120,318   120,206   101,970   120,262   101,942 
                    
Diluted earnings per share$0.68  $0.74  $0.83  $1.42  $1.54 
                    
(1) Represents cash dividends paid to holders of unvested stock, net of estimated 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, 2016
 March 31, 2016
 June 30, 2015
 
 InterestAverage InterestAverage InterestAverage 
 AverageIncome/Yield/ AverageIncome/Yield/ AverageIncome/Yield/ 
 BalanceExpenseCost BalanceExpenseCost BalanceExpenseCost 
           (Dollars in thousands)           
Assets: 
PCI loans$147,270 $8,484  23.17% $167,626 $20,072  48.16% $228,217 $7,894  13.87% 
Non-PCI loans and leases 14,321,320  215,842  6.06%  14,303,539  216,303  6.08%  11,879,799  195,887  6.61% 
Total loans and leases 14,468,590  224,326  6.24%  14,471,165  236,375  6.57%  12,108,016  203,781  6.75% 
Investment securities (1) 3,288,819  27,330  3.34%  3,460,293  27,493  3.20%  1,672,590  16,739  4.01% 
Deposits in financial            
institutions 245,666  308  0.50%  230,293  308  0.54%  161,683  104  0.26% 
Total interest-earning            
assets 18,003,075  251,964  5.63%  18,161,751  264,176  5.85%  13,942,289  220,624  6.35% 
Other assets 2,996,867         3,036,843         2,521,022        
Total assets$20,999,942  $21,198,594  $16,463,311  
                               
Liabilities and 
Stockholders' Equity: 
Interest checking$1,024,763  501  0.20% $926,256  383  0.17% $741,966  202  0.11% 
Money market 4,321,533  2,886  0.27%  3,848,753  2,415  0.25%  2,065,190  1,088  0.21% 
Savings 766,309  412  0.22%  753,371  444  0.24%  740,878  555  0.30% 
Time 3,086,492  4,024  0.52%  3,860,272  5,831  0.61%  5,559,903  9,388  0.68% 
Total interest-bearing            
deposits 9,199,097  7,823  0.34%  9,388,652  9,073  0.39%  9,107,937  11,233  0.49% 
Borrowings 300,428  352  0.47%  494,725  581  0.47%  81,164  88  0.43% 
Subordinated debentures 439,081  5,122  4.69%  436,535  4,982  4.59%  432,656  4,582  4.25% 
Total interest-bearing            
liabilities 9,938,606  13,297  0.54%  10,319,912  14,636  0.57%  9,621,757  15,903  0.66% 
Noninterest-bearing            
demand deposits 6,437,720   6,273,249   3,157,129  
Other liabilities 140,023   166,831   135,677  
Total liabilities 16,516,349   16,759,992   12,914,563  
Stockholders' equity 4,483,593   4,438,602   3,548,748  
Total liabilities and      
stockholders' equity$20,999,942  $21,198,594  $16,463,311  
Net interest income (2) $238,667  $249,540  $204,721  
Net interest spread (2)  5.09%  5.28%  5.69% 
Net interest margin (2)  5.33%  5.53%  5.89% 
       
Total deposits (3)$15,636,817 $7,823  0.20% $15,661,901 $9,073  0.23% $12,265,066 $11,233  0.37% 
Funding sources (4)$16,376,326 $13,297  0.33% $16,593,161 $14,636  0.35% $12,778,886 $15,903  0.50% 
             
(1) Includes tax equivalent adjustments of $4.9 million, $4.9 million, and $2.2 million for the three months ended June 30, 2016, March 31, 2016, and June 30, 2015 related to tax exempt income on municipal securities.  The federal statutory tax rate utilized was 35% for the periods.
 
(2) Tax equivalent.  
(3) Total deposits is the sum of interest-bearing deposits and noninterest-bearing demand deposits.  The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
 
(4) Funding sources is the sum of interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated as annualized total interest expense divided by average funding sources.
 
        


PACWEST BANCORP AND SUBSIDIARIES           
FIVE QUARTER BALANCE SHEET                   
 
 June 30, March 31, December 31, September 30, June 30,
  2016   2016   2015   2015   2015 
 (Dollars in thousands, except per share data)
ASSETS:       
Cash and due from banks$226,471  $161,977  $161,020  $154,652  $207,598 
Interest-earning deposits in financial         
institutions 218,882   357,541   235,466   81,642   433,033 
  Total cash and cash equivalents  445,353   519,518   396,486   236,294   640,631 
          
Securities available-for-sale 3,347,546   3,240,586   3,559,437   1,809,364   1,698,158 
Federal Home Loan Bank stock 24,214   17,250   19,710   17,250   17,250 
  Total investment securities 3,371,760   3,257,836   3,579,147   1,826,614   1,715,408 
          
Non-PCI loans and leases 14,566,425   14,365,915   14,339,070   12,300,057   11,846,314 
PCI loans 136,901   176,607   189,095   193,340   222,691 
Total gross loans and leases 14,703,326   14,542,522   14,528,165   12,493,397   12,069,005 
Deferred fees, net (61,866)  (59,005)  (49,911)  (41,192)  (34,816)
Total loans and leases, net of                   
deferred fees 14,641,460   14,483,517   14,478,254   12,452,205   12,034,189 
Allowance for loan and lease losses (143,289)  (130,361)  (115,111)  (103,271)  (99,375)
  Total loans and leases, net 14,498,171   14,353,156   14,363,143   12,348,934   11,934,814 
          
Equipment leased to others under         
operating leases 204,062   205,163   197,452   161,508 - 117,182 
Premises and equipment, net 38,718   39,713   39,197   36,475   35,984 
Foreclosed assets, net 16,181   18,310   22,120   33,216   31,668 
Deferred tax asset, net 24,413   91,126   126,389   169,760   211,556 
Goodwill 2,175,791   2,175,791   2,176,291   1,728,380   1,728,380 
Core deposit and customer         
relationship intangibles, net 43,766   48,137   53,220   12,704   14,201 
Other assets 328,924   322,259   335,045   260,220   267,196 
  Total assets$21,147,139  $21,031,009  $21,288,490  $16,814,105  $16,697,020 
          
LIABILITIES:         
Noninterest-bearing deposits$6,222,696  $6,139,963  $6,171,455  $3,508,682  $3,396,688 
Interest-bearing deposits 8,925,313   9,301,412   9,494,727   8,607,081   9,185,128 
  Total deposits 15,148,009   15,441,375   15,666,182   12,115,763   12,581,816 
Borrowings 918,208   551,401   621,914   552,497   2,751 
Subordinated debentures 439,322   438,723   436,000   435,417   433,944 
Accrued interest payable and other         
liabilities 128,296   142,918   166,703   128,724   127,019 
  Total liabilities 16,633,835   16,574,417   16,890,799   13,232,401   13,145,530 
STOCKHOLDERS' EQUITY (1) 4,513,304   4,456,592   4,397,691   3,581,704   3,551,490 
  Total liabilities and stockholders’          
  equity$21,147,139  $21,031,009  $21,288,490  $16,814,105  $16,697,020 
          
Book value per share$37.05  $36.60  $36.22  $34.76  $34.46 
Tangible book value per share (2)$18.83  $18.33  $17.86  $17.86  $17.55 
Shares outstanding 121,819,849   121,771,252   121,413,727   103,053,694   103,051,989 
          
(1) Includes net unrealized gain on         
securities available-for-sale, net$81,744  $48,479  $27,828  $24,459  $16,255 
(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,
  2016   2016   2015   2015   2015 
 (Dollars in thousands, except per share data)
Interest income: 
Loans and leases$224,326  $236,375  $219,677  $193,539  $203,781 
Investment securities 22,420   22,547   23,648   13,955   14,570 
Deposits in financial institutions 308   308   172   178   104 
Total interest income 247,054   259,230   243,497   207,672   218,455 
          
Interest expense:         
Deposits 7,823   9,073   9,391   10,400   11,233 
Borrowings 352   581   159   72   88 
Subordinated debentures 5,122   4,982   4,748   4,680   4,582 
Total interest expense 13,297   14,636   14,298   15,152   15,903 
          
Net interest income 233,757   244,594   229,199   192,520   202,552 
Provision for credit losses 13,903   20,140   13,772   8,746   6,529 
Net interest income after provision          
for credit losses 219,854   224,454   215,427   183,774   196,023 
          
Noninterest income:         
Service charges on deposit accounts 3,633   3,856   3,901   2,601   2,612 
Other commissions and fees 11,073   11,489   12,691   6,376   7,123 
Leased equipment income 8,523   8,244   7,791   5,475   5,375 
Gain on sale of loans and leases 388   245   183   27   163 
Gain (loss) on securities 478   8,110   -   655   (186)
FDIC loss sharing expense, net (6,502)  (2,415)  (4,291)  (4,449)  (5,107)
Other income 4,528   5,010   7,783   5,073   9,643 
Total noninterest income 22,121   34,539   28,058   15,758   19,623 
          
Noninterest expense:         
Compensation 62,174   61,065   58,992   48,152   49,033 
Occupancy 12,193   12,632   12,194   10,762   10,588 
Data processing 5,644   5,904   5,585   4,322   4,402 
Other professional services 3,223   3,572   3,811   3,396   3,332 
Insurance and assessments 4,951   4,965   5,450   3,805   4,716 
Intangible asset amortization 4,371   4,746   4,910   1,497   1,502 
Leased equipment depreciation 5,286   5,024   4,235   3,162   3,103 
Foreclosed assets (income), net (3)  (561)  (3,185)  4,521   (2,340)
Acquisition, integration and         
reorganization costs -   200   17,600   747   900 
Other expense 12,242   13,141   12,672   9,775   10,040 
Total noninterest expense 110,081   110,688   122,264   90,139   85,276 
          
Earnings before income taxes 131,894   148,305   121,221   109,393   130,370 
Income tax expense (49,726)  (57,849)  (49,380)  (39,777)  (45,287)
Net earnings $82,168  $90,456  $71,841  $69,616  $85,083 
          
Basic and diluted earnings per share$0.68  $0.74  $0.60  $0.68  $0.83 
                    


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,
  2016   2016   2015   2015   2015 
 (Dollars in thousands)
Performance Ratios:         
Return on average assets (1) 1.57%  1.72%  1.37%  1.65%  2.07%
Return on average equity (1) 7.37%  8.20%  6.56%  7.73%  9.62%
Return on average tangible equity (1)(2) 14.61%  16.45%  13.14%  15.09%  18.90%
Yield on average loans and leases 6.24%  6.57%  6.21%  6.34%  6.75%
Yield on average interest-earning         
assets (3) 5.63%  5.85%  5.54%  5.88%  6.35%
Cost of average total deposits 0.20%  0.23%  0.24%  0.33%  0.37%
Cost of average time deposits 0.52%  0.61%  0.63%  0.66%  0.68%
Cost of average interest-bearing         
liabilities 0.54%  0.57%  0.55%  0.63%  0.66%
Cost of average funding sources 0.33%  0.35%  0.35%  0.46%  0.50%
Net interest rate spread (3) 5.09%  5.28%  4.99%  5.25%  5.69%
Net interest margin (3) 5.33%  5.53%  5.22%  5.46%  5.89%
Efficiency ratio 40.6%  38.5%  39.3%  39.6%  38.0%
Core net interest margin (2)(3) 5.11%  5.10%  5.10%  5.19%  5.33%
Noninterest expense as a percentage         
of average assets (1) 2.11%  2.10%  2.33%  2.14%  2.08%
          
Average Balances:         
Loans and leases$14,468,590  $14,471,165  $14,031,102  $12,112,881  $12,108,016 
Interest-earning assets 18,003,075   18,161,751   17,777,534   14,198,482   13,942,289 
Total assets 20,999,942   21,198,594   20,825,248   16,690,177   16,463,311 
Noninterest-bearing deposits 6,437,720   6,273,249   6,043,900   3,486,780   3,157,129 
Interest-bearing deposits 9,199,097   9,388,652   9,633,393   8,993,681   9,107,937 
Total deposits 15,636,817   15,661,901   15,677,293   12,480,461   12,265,066 
Borrowings and subordinated         
debentures 739,509   931,260   641,529   504,591   513,820 
Interest-bearing liabilities 9,938,606   10,319,912   10,274,922   9,498,272   9,621,757 
Funding sources 16,376,326   16,593,161   16,318,822   12,985,052   12,778,886 
Stockholders' equity 4,483,593   4,438,602   4,346,162   3,572,765   3,548,748 
          
(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,
  2016   2016   2015   2015   2015 
 (Dollars in thousands)
Non-PCI Credit Quality: 
Allowance for credit losses to loans 
and leases 1.03%  0.96%  0.85%  0.82%  0.78%
Allowance for credit losses to         
nonaccrual loans and leases 118%  106%  95%  94%  71%
Nonaccrual loans and leases to loans         
and leases 0.88%  0.91%  0.90%  0.87%  1.11%
Nonperforming assets to loans and         
leases and foreclosed assets 0.99%  1.05%  1.06%  1.14%  1.37%
Nonperforming assets to total assets 0.68%  0.72%  0.71%  0.84%  0.98%
Trailing twelve month net charge-offs         
to average loans and leases 0.04%  0.03%  0.06%  0.04%  0.06%
 
PacWest Bancorp Consolidated  
Capital: 
Tier 1 leverage ratio (1) 11.92%  11.51%  11.67%  12.04%  11.96%
Common equity tier 1 capital ratio (1) 12.75%  12.63%  12.58%  12.74%  12.87%
Tier 1 capital ratio (1) 12.75%  12.63%  12.60%  12.74%  12.87%
Total capital ratio (1) 16.11%  15.96%  15.65%  16.32%  16.53%
Tangible common equity ratio (2) 12.12%  11.87%  11.38%  12.21%  12.10%
Risk-weighted assets (1)$17,491,865  $17,226,658  $17,170,292  $14,038,839  $13,569,369 
 
Pacific Western Bank Capital: 
Tier 1 leverage ratio (1) 11.38%  11.10%  11.40%  11.56%  11.65%
Common equity tier 1 capital ratio (1) 12.15%  12.18%  12.03%  12.25%  12.55%
Tier 1 capital ratio (1) 12.15%  12.18%  12.03%  12.25%  12.55%
Total capital ratio (1) 13.08%  13.05%  12.80%  13.05%  13.35%
Tangible common equity ratio (2) 11.51%  11.27%  10.80%  11.53%  11.46%
          
(1) Capital information for June 30, 2016 is preliminary. 
(2) Non-GAAP measure. 
  

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP financial disclosures for return on average tangible equity, tangible common equity amounts and ratios, tangible book value per share, core net interest margin, and core loan and lease yield. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. We provide non-GAAP measures for return on average tangible equity, tangible common equity amounts and ratios, and tangible book value per share. Given that the use of these measures is prevalent among banking regulators, investors and analysts, we disclose them in addition to return on average assets, return on average equity, equity-to-assets ratio, and book value per share, respectively.

Please refer to the following tables for a presentation of performance ratios in accordance with GAAP and a reconciliation of the GAAP financial measures to the non-GAAP financial measures.

 

PACWEST BANCORP AND SUBSIDIARIES           
GAAP TO NON-GAAP RECONCILIATION                   
 
 Three Months Ended Six Months Ended
 June 30, March 31, June 30, June 30,
Return on Average Tangible Equity 2016   2016   2015   2016   2015 
 (Dollars in thousands)
 
Net earnings$82,168  $90,456  $85,083  $172,624  $158,162 
                    
Average stockholders' equity$4,483,593  $4,438,602  $3,548,748  $4,461,097  $3,541,088 
Less:  Average intangible assets 2,222,007   2,227,520   1,743,340   2,224,764   1,740,407 
Average tangible common equity$2,261,586  $2,211,082  $1,805,408  $2,236,333  $1,800,681 
 
Return on average equity (1) 7.37%  8.20%  9.62%  7.78%  9.01%
Return on average tangible equity (2) 14.61%  16.45%  18.90%  15.52%  17.71%
          
(1) Annualized net earnings divided by average stockholders' equity. 
(2) Annualized net earnings divided by average tangible common equity. 
  


PACWEST BANCORP AND SUBSIDIARIES           
GAAP TO NON-GAAP RECONCILIATION                   
 
 June 30, March 31, December 31, September 30, June 30,
Tangible Common Equity Ratio 2016   2016   2015   2015   2015 
 (Dollars in thousands)
PacWest Bancorp Consolidated: 
Stockholders' equity$4,513,304  $4,456,592  $4,397,691  $3,581,704  $3,551,490 
Less: Intangible assets 2,219,557   2,223,928   2,229,511   1,741,084   1,742,581 
Tangible common equity$2,293,747  $2,232,664  $2,168,180  $1,840,620  $1,808,909 
          
Total assets$21,147,139  $21,031,009  $21,288,490  $16,814,105  $16,697,020 
Less: Intangible assets 2,219,557   2,223,928   2,229,511   1,741,084   1,742,581 
Tangible assets$18,927,582  $18,807,081  $19,058,979  $15,073,021  $14,954,439 
 
Equity to assets ratio 21.34%  21.19%  20.66%  21.30%  21.27%
Tangible common equity ratio (1) 12.12%  11.87%  11.38%  12.21%  12.10%
 
Book value per share$37.05  $36.60  $36.22  $34.76  $34.46 
Tangible book value per share (2)$18.83  $18.33  $17.86  $17.86  $17.55 
Shares outstanding 121,819,849   121,771,252   121,413,727   103,053,694   103,051,989 
 
Pacific Western Bank: 
Stockholders' equity$4,390,928  $4,331,841  $4,276,279  $3,466,817  $3,440,715 
Less: Intangible assets 2,219,557   2,223,928   2,229,511   1,741,084   1,742,581 
Tangible common equity$2,171,371  $2,107,913  $2,046,768  $1,725,733  $1,698,134 
          
Total assets$21,084,950  $20,928,105  $21,180,689  $16,707,072  $16,555,610 
Less: Intangible assets 2,219,557   2,223,928   2,229,511   1,741,084   1,742,581 
Tangible assets$18,865,393  $18,704,177  $18,951,178  $14,965,988  $14,813,029 
 
Equity to assets ratio 20.82%  20.70%  20.19%  20.75%  20.78%
Tangible common equity ratio 11.51%  11.27%  10.80%  11.53%  11.46%
                    
(1) Tangible common equity divided by tangible assets. 
(2) Tangible common equity divided by shares outstanding. 
  
Contact: 

Matthew P. Wagner
President and CEO
Phone: 310-887-8520

Patrick J. Rusnak
Executive Vice President and CFO
Phone: 714-989-4705

Source: GlobeNewswire (July 15, 2016 - 7:00 AM EDT)

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