PacWest Bancorp Announces Results for the First Quarter 2022

Rhea-AI Summary

PacWest Bancorp (NASDAQ: PACW) reported first quarter 2022 net earnings of $120.1 million, or $1.01 per diluted share. Pre-provision net revenue (PPNR) fell by 10.8% from the previous quarter to $162.1 million. Net interest income rose to $312.7 million, with no provision for credit losses reported. Loan growth reached $1.4 billion or 6.1%, while core deposits decreased by 3.2%. Capital ratios declined due to growth in risk-weighted assets, with a CET1 ratio of 8.64%.

Positive

• Net earnings of $120.1 million, $1.01 per diluted share.
• Loan growth of $1.4 billion (6.1%) reaching an all-time high of $24.4 billion.
• Increased net interest income by $8.3 million, driving a 19 basis point rise in net interest margin.

Negative

• PPNR decreased by 10.8% compared to Q4 2021.
• Noninterest income dropped significantly by $36.6 million to $20.8 million, primarily due to a $23.4 million decline in warrant income.
• Core deposits decreased by $1.1 billion (3.2%) and total deposits fell by $1.8 billion (5.1%).
• Capital ratios declined; CET1 ratio decreased to 8.64%.

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

FIRST QUARTER 2022 RESULTS

	$120.1M		$1.01					$162.1M		20.93%
	Net Earnings		Diluted Earnings per Share					PPNR		ROATE

FIRST QUARTER 2022 HIGHLIGHTS

Net Earnings of $120.1 Million or $1.01 Per Diluted Share PPNR of $162.1 Million, Down 10.8% vs. 4Q21 Net Interest Income (TE) of $312.7 Million in 1Q22 vs. $304.5 Million in 4Q21 No Provision for Credit Losses in 1Q22 vs. Benefit of $6.0 Million in 4Q21 Noninterest Income of $20.8 Million in 1Q22 vs. $57.4 Million in 4Q21; Warrant Income Down $23.4 Million Noninterest Expense of $167.4 Million in 1Q22 vs. $176.1 Million in 4Q21 Loan Growth of $1.4 Billion or 6.1% from Prior Quarter Loan and Lease Production of $2.6 Billion in 1Q22 vs. $3.4 Billion in 4Q21; WAC of 4.31% in 1Q22 vs. 3.89% in 4Q21 Civic Loan Production of $559 Million in 1Q22 vs. $480 Million in 4Q21

Classified and Special Mention Loans and Leases Fell $34.0 Million and $14.3 Million from 4Q21 ACL Ratio of 1.12% and ALLL Ratio of 0.81% at 1Q22 vs. 1.19% and 0.87% at 4Q21, Respectively Net Charge-offs of $1.2 Million Core Deposits Down $1.1 Billion or 3.2%, Represents 95% of Total Deposits Cost of Deposits of 7 bps in 1Q22 vs. 8 bps in 4Q21 Capital Ratios Declined Due to Growth in Risk-Weighted Assets – CET1 Ratio of 8.64% and Total Capital Ratio of 12.27% at 1Q22 Tangible Book Value Per Share of $18.42 at 1Q22 vs. $21.31 at 4Q21 (Due to AOCI Change Noted Below) Available-for-Sale Securities Decreased from $10.7 Billion at 4Q21 to $10.0 Billion at 1Q22; AOCI on the AFS Portfolio Changed from a Net Unrealized Gain of $66.0 Million at 4Q21 to a Net Unrealized Loss of $376.5 Million at 1Q22

CEO COMMENTARY

Matt Wagner, President and CEO, commented, “Although external events and the resulting volatility in the capital market negatively impacted the first quarter, we continued to make progress on our strategic priorities of increasing earning assets through loan growth and growing net interest income while continuing to improve asset quality. The increase in average loans and leases of nearly $2.1 billion and decreasing higher-rate wholesale deposits during the first quarter resulted in an $8.3 million increase in net interest income and helped drive a 19 basis point increase in our net interest margin compared to the fourth quarter. Loans grew by $1.4 billion in the first quarter to an all-time high of $24.4 billion. With the 25 basis point increase by the Federal Reserve in market rates occurring late in the quarter, the increase had a minimal impact on first quarter results. Total deposits decreased by $1.8 billion driven by a decrease of $1.5 billion in venture banking due to declines in capital market activity, along with the planned reduction in maturing wholesale deposits of $0.5 billion, offset by deposit growth of $180 million in community banking.”

“Credit quality continues the improvement seen throughout 2021 with a $14.3 million decrease in special mention loans and leases in 1Q22 and a $34.0 million decrease in classified loans and leases in 1Q22, which, combined with changes in our loan portfolio composition, resulted in no provision for credit losses for the quarter.”

“The loan growth particularly over the last three quarters has increased risk-weighted assets resulting in a decrease in capital ratios, which remain well above regulatory thresholds. Capital and balance sheet management remain a focus area as we look to grow our capital levels to keep pace with our growth expectations.”

FINANCIAL HIGHLIGHTS

	At or For the												At or For the
	Three Months Ended												Three Months Ended
	March 31,				December 31,				Increase				March 31,								Increase
Financial Highlights (1)		2022				2021			(Decrease)					2022				2021			(Decrease)
	(Dollars in thousands, except per share data)
Net earnings	$	120,128			$	136,045			$	(15,917	)		$	120,128			$	150,406			$	(30,278	)
Diluted earnings per share	$	1.01			$	1.14			$	(0.13	)		$	1.01			$	1.27			$	(0.26	)
Pre-provision, pre-tax net revenue ("PPNR") (2)	$	162,109			$	181,677			$	(19,568	)		$	162,109			$	155,962			$	6,147
Return on average assets		1.22%				1.34%				(0.12	)			1.22%				1.94%				(0.72	)
PPNR return on average assets (2)		1.65%				1.79%				(0.14	)			1.65%				2.01%				(0.36	)
Return on average tangible equity (2)		20.93%				22.06%				(1.13	)			20.93%				25.67%				(4.74	)
Yield on average loans and leases (tax equivalent)		4.66%				4.93%				(0.27	)			4.66%				5.20%				(0.54	)
Cost of average total deposits		0.07%				0.08%				(0.01	)			0.07%				0.11%				(0.04	)
Net interest margin ("NIM") (tax equivalent)		3.43%				3.24%				0.19				3.43%				3.69%				(0.26	)
Efficiency ratio		50.1%				46.2%				3.9				50.1%				46.4%				3.7
Total assets	$	39,249,639			$	40,443,344			$	(1,193,705	)		$	39,249,639			$	32,856,533			$	6,393,106
Loans and leases held for investment, net of deferred fees	$	24,352,072			$	22,941,548			$	1,410,524			$	24,352,072			$	18,979,228			$	5,372,844
Noninterest-bearing demand deposits	$	14,057,051			$	14,543,133			$	(486,082	)		$	14,057,051			$	11,017,462			$	3,039,589
Core deposits	$	31,676,404			$	32,734,949			$	(1,058,545	)		$	31,676,404			$	25,576,348			$	6,100,056
Total deposits	$	33,224,895			$	34,997,757			$	(1,772,862	)		$	33,224,895			$	28,223,291			$	5,001,604
As percentage of total deposits:
Noninterest-bearing demand deposits		42%				41%				1				42%				39%				3
Core deposits		95%				93%				2				95%				91%				4
Equity to assets ratio		9.30%				9.89%				(0.59	)			9.30%				11.12%				(1.82	)
Common equity tier 1 capital ratio		8.64%				8.86%				(0.22	)			8.64%				10.39%				(1.75	)
Total capital ratio		12.27%				12.69%				(0.42	)			12.27%				13.60%				(1.33	)
Tangible common equity ratio (2)		5.83%				6.54%				(0.71	)			5.83%				7.68%				(1.85	)
Book value per share	$	30.52			$	33.45			$	(2.93	)		$	30.52			$	30.68			$	(0.16	)
Tangible book value per share (2)	$	18.42			$	21.31			$	(2.89	)		$	18.42			$	20.39			$	(1.97	)
(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 $8.3 million to $308.7 million for the first quarter of 2022 compared to $300.4 million for the fourth quarter of 2021 due mainly to higher income on investment securities and loans and leases primarily resulting from higher average balances as we deployed our excess liquidity. Income on investment securities increased by $5.0 million in the first quarter of 2022 due to a $433 million increase in the average balance of investment securities and a 15 basis point increase in the yield on average investment securities. Income on loans and leases increased by $4.1 million in the first quarter of 2022 due to a $2.1 billion increase in the average balance of loans and leases, offset partially by a 27 basis point decrease in the yield on average loans and leases and two fewer days compared to the fourth quarter of 2021. The tax equivalent yield on average loans and leases was 4.66% for the first quarter of 2022 compared to 4.93% for the fourth quarter of 2021. The decrease in the tax equivalent yield on average loans and leases was due primarily to loan prepayment fees being lower by $5.8 million and amortized loan fees being lower by $4.0 million.

The tax equivalent NIM was 3.43% for the first quarter of 2022 compared to 3.24% for the fourth quarter of 2021. The 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 and investment securities as a percentage of average interest-earning assets from 84% to 92% and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets from 16% to 8%, partially offset by a lower yield on average loans and leases. The average balance of loans and leases increased by $2.1 billion, the average balance of investment securities increased by $433 million, and the average balance of deposits in financial institutions decreased by $2.9 billion to $3.1 billion. The increase in the average balances of loans and leases and investment securities was the result of the Company’s effort to deploy our excess liquidity efficiently.

The cost of average total deposits was 0.07% in the first quarter of 2022 compared to 0.08% in the fourth quarter of 2021.

PROVISION FOR CREDIT LOSSES

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

	Three Months Ended
	March 31,				December 31,				Increase
Provision for Credit Losses		2022				2021			(Decrease)
	(In thousands)
Reduction in allowance for loan and lease losses	$	(2,000	)		$	(3,000	)		$	1,000
Addition to (reduction in) reserve for unfunded loan commitments		2,000				(3,000	)			5,000
Total provision for credit losses	$	-			$	(6,000	)		$	6,000

There was no provision for credit losses for the first quarter of 2022 compared to a benefit of $6.0 million for the fourth quarter of 2021. In the first quarter of 2022, the continued credit quality improvement combined with changes in our loan portfolio composition, offset by the provision needed for growth in loans and unfunded commitments, resulted in no provision for the quarter.

NONINTEREST INCOME

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

	Three Months Ended
	March 31,				December 31,				Increase
Noninterest Income		2022				2021			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	3,571			$	3,476			$	95
Other commissions and fees		11,580				10,633				947
Leased equipment income		13,094				12,602				492
Gain on sale of loans and leases		60				172				(112	)
Gain on sale of securities		104				999				(895	)
Dividends and (losses) gains on equity investments		(11,375	)			(1,570	)			(9,805	)
Warrant income		629				23,990				(23,361	)
Other income		3,155				7,080				(3,925	)
Total noninterest income	$	20,818			$	57,382			$	(36,564	)

Noninterest income decreased by $36.6 million to $20.8 million for the first quarter of 2022 compared to $57.4 million for the fourth quarter of 2021 due primarily to decreases of $23.4 million in warrant income, $9.8 million in dividends and gains on equity investments, and $3.9 million in other income. Warrant income decreased to $0.6 million in the first quarter of 2022 from a record quarterly high of $24.0 million in the fourth quarter of 2021 due to decreased capital market activity and volatility resulting from geopolitical tensions and inflationary pressures. The capital market volatility also impacted the fair values of our equity investments in the first quarter of 2022. Dividends and gains on equity investments decreased due primarily to lower gains on sales of equity investments, higher fair value losses on equity investments still held, and lower income distributions and fair value marks on SBIC investments. The net realized and unrealized losses on equity investments were $12.2 million in the first quarter of 2022, with one equity investment accounting for $7.5 million of the total net losses. As of March 31, 2022, we held six equity investments with a carrying value of $8.8 million, two of which were sold in April reducing the balance to $0.1 million. Other income decreased due to an early lease termination of $4.9 million recorded in the fourth quarter of 2021, partially offset by a $1.0 million increase in foreign currency translation gains.

NONINTEREST EXPENSE

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

	Three Months Ended
	March 31,				December 31,				Increase
Noninterest Expense		2022				2021			(Decrease)
	(In thousands)
Compensation	$	92,240			$	99,700			$	(7,460	)
Occupancy		15,200				14,656				544
Data processing		9,629				8,171				1,458
Other professional services		5,954				5,946				8
Insurance and assessments		5,490				5,032				458
Intangible asset amortization		3,649				3,876				(227	)
Leased equipment depreciation		9,189				9,569				(380	)
Foreclosed assets (income) expense, net		(3,353	)			(260	)			(3,093	)
Acquisition, integration and reorganization costs		-				5,590				(5,590	)
Customer related expense		12,655				6,175				6,480
Loan expense		5,157				5,627				(470	)
Other		11,616				12,028				(412	)
Total noninterest expense	$	167,426			$	176,110			$	(8,684	)

Noninterest expense decreased by $8.7 million to $167.4 million for the first quarter of 2022 compared to $176.1 million for the fourth quarter of 2021 due primarily to a decrease in compensation expense of $7.5 million, a decrease in acquisition, integration and reorganization costs of $5.6 million, and an increase in foreclosed assets income of $3.1 million, partially offset by an increase in customer related expense of $6.5 million. The decrease in compensation expense was due mainly to lower commissions and bonus expense, partially offset by a seasonal increase in payroll taxes. There were no acquisition, integration and reorganization costs in the first quarter of 2022 compared to $5.6 million in the fourth quarter of 2021 related to the October 8, 2021 HOA Business acquisition. The increase in foreclosed assets income was due to a $3.2 million gain on the sale of our largest foreclosed property. The increase in customer related expense was due to increased third-party expenses related to the HOA Business.

INCOME TAXES

The effective income tax rate was 25.9% for the first quarter of 2022 compared to 27.5% for the fourth quarter of 2021. The decrease was due primarily to a lower blended state tax rate. 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:

	March 31, 2022						December 31, 2021						March 31, 2021
				% of						% of						% of
Deposit Composition	Balance			Total			Balance			Total			Balance			Total
	(Dollars in thousands)
Noninterest-bearing demand	$	14,057,051		42	%		$	14,543,133		41	%		$	11,017,462		39	%
Interest checking		6,673,696		20	%			7,319,898		21	%			6,862,398		25	%
Money market		10,301,996		31	%			10,241,265		29	%			7,112,610		25	%
Savings		643,661		2	%			630,653		2	%			583,878		2	%
Total core deposits		31,676,404		95	%			32,734,949		93	%			25,576,348		91	%
Non-core non-maturity deposits		322,732		1	%			889,976		3	%			1,162,590		4	%
Total non-maturity deposits		31,999,136		96	%			33,624,925		96	%			26,738,938		95	%
Time deposits $250,000 and under		878,383		3	%			885,938		3	%			940,340		3	%
Time deposits over $250,000		347,376		1	%			486,894		1	%			544,013		2	%
Total time deposits		1,225,759		4	%			1,372,832		4	%			1,484,353		5	%
Total deposits	$	33,224,895		100	%		$	34,997,757		100	%		$	28,223,291		100	%

At March 31, 2022, core deposits totaled $31.7 billion or 95% of total deposits, including $14.1 billion of noninterest-bearing demand deposits or 42% of total deposits. Core deposits decreased by $1.1 billion or 3.2% in the first quarter of 2022 driven primarily by a decrease in balances from our venture banking clients, offset partially by an increase in community banking deposits. Total deposits decreased by $1.8 billion or 5.1% in the first quarter of 2022 due to the $1.5 billion decrease in venture banking deposits and a $0.6 billion decrease in non-core non-maturity deposits, of which $0.5 billion was scheduled for maturity during the quarter, offset partially by an increase of $180 million in community banking deposits. Total venture banking deposits decreased from $15.5 billion as of December 31, 2021 to $14.0 billion as of March 31, 2022.

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 increased from $1.4 billion as of December 31, 2021 to $1.7 billion as of March 31, 2022, of which $1.0 billion was managed by PWAM. The increase was primarily attributable to our venture banking clients.

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
Roll Forward of Loans and Leases Held	March 31,				December 31,
for Investment, Net of Deferred Fees		2022				2021
	(Dollars in thousands)
Balance, beginning of period	$	22,941,548			$	20,511,020
Additions:
Production		2,574,860				3,372,815
Disbursements		1,589,152				1,917,195
Total production and disbursements		4,164,012				5,290,010
Reductions:
Payoffs		(1,448,680	)			(2,000,293	)
Paydowns		(1,264,571	)			(845,443	)
Total payoffs and paydowns		(2,713,251	)			(2,845,736	)
Sales		(36,698	)			(15,837	)
Transfers to foreclosed assets		(305	)			-
Charge-offs		(3,234	)			(4,395	)
Total reductions		(2,753,488	)			(2,865,968	)
Loans acquired through acquisitions		-				6,486
Net increase (decrease)		1,410,524				2,430,528
Balance, end of period	$	24,352,072			$	22,941,548
Weighted average rate on production (1)		4.31	%			3.89	%
(1) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees. Amortized fees added approximately 24 basis points to loan yields in 2022.

Loans and leases held for investment, net of deferred fees, increased by $1.4 billion or 6.1% in the first quarter of 2022 to $24.4 billion at March 31, 2022. The overall increase in the loans and leases balance for the first quarter of 2022 was due primarily to increases in the income producing and other residential, asset-based, and residential real estate construction portfolios, offset partially by reductions in the venture capital and other commercial portfolios.

Civic loan production was $559 million in the first quarter of 2022 compared to $480 million in the fourth quarter of 2021. The Civic loan portfolio as of March 31, 2022 totaled $1.7 billion.

PPP loans declined by $86.3 million in the first quarter of 2022, as the program continues to wind down. Net fees for PPP loans were $2.5 million in the first quarter of 2022, down from $3.6 million in the fourth quarter of 2021. Remaining PPP loans totaled $70.4 million as of March 31, 2022, with $1.7 million of net fees to amortize over the remaining life of the loans.

The weighted average rate on the $2.6 billion of production for the first quarter of 2022 increased to 4.31% from 3.89% in the fourth quarter of 2021 due primarily to the loan mix (lower levels of single-family loan pool purchases and higher level of Civic fundings). In the first quarter of 2022, we purchased $587 million of single-family loan pools compared to $1.1 billion in the fourth quarter of 2021. The single-family loan pool purchase portfolio as of March 31, 2022 totaled $2.9 billion.

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:

	March 31, 2022						December 31, 2021						March 31, 2021
				% of						% of						% of
Loan and Lease Portfolio	Balance			Total			Balance			Total			Balance			Total
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	3,669,741		15	%		$	3,762,299		17	%		$	3,941,610		21	%
Residential		8,369,550		35	%			7,416,421		32	%			4,045,603		21	%
Total real estate mortgage		12,039,291		50	%			11,178,720		49	%			7,987,213		42	%
Real estate construction and land:
Commercial		802,022		3	%			832,591		4	%			990,035		5	%
Residential		2,891,467		12	%			2,604,536		11	%			2,575,788		14	%
Total real estate construction and land		3,693,489		15	%			3,437,127		15	%			3,565,823		19	%
Total real estate		15,732,780		65	%			14,615,847		64	%			11,553,036		61	%
Commercial:
Asset-based		4,739,220		19	%			4,075,477		18	%			3,383,403		18	%
Venture capital		2,077,339		9	%			2,320,593		10	%			1,495,798		8	%
Other commercial		1,298,136		5	%			1,471,981		6	%			2,206,639		11	%
Total commercial		8,114,695		33	%			7,868,051		34	%			7,085,840		37	%
Consumer		504,597		2	%			457,650		2	%			340,352		2	%
Total loans and leases held for investment, net of deferred fees	$	24,352,072		100	%		$	22,941,548		100	%		$	18,979,228		100	%
Total unfunded loan commitments	$	9,899,345					$	9,006,350					$	8,127,999

ALLOWANCE FOR CREDIT LOSSES

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

	Three Months Ended March 31, 2022
	Allowance for				Reserve for				Total
Allowance for Credit	Loan and				Unfunded Loan				Allowance for
Losses Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	200,564			$	73,071			$	273,635
Charge-offs		(3,234	)			-				(3,234	)
Recoveries		2,068				-				2,068
Net charge-offs		(1,166	)			-				(1,166	)
Provision		(2,000	)			2,000				-
Ending balance	$	197,398			$	75,071			$	272,469
	Three Months Ended December 31, 2021
	Allowance for				Reserve for				Total
Allowance for Credit	Loan and				Unfunded Loan				Allowance for
Losses Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	203,733			$	76,071			$	279,804
Charge-offs		(4,395	)			-				(4,395	)
Recoveries		4,226				-				4,226
Net charge-offs		(169	)			-				(169	)
Provision		(3,000	)			(3,000	)			(6,000	)
Ending balance	$	200,564			$	73,071			$	273,635

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

	March 31,				December 31,				Increase
Allowance for Credit Losses		2022				2021			(Decrease)
	(Dollars in thousands)
Allowance for loan and lease losses	$	197,398			$	200,564			$	(3,166	)
Reserve for unfunded loan commitments		75,071				73,071				2,000
Allowance for credit losses	$	272,469			$	273,635			$	(1,166	)
Provision for credit losses (for the quarter)	$	-			$	(6,000	)		$	6,000
Net charge-offs (recoveries) (for the quarter)	$	1,166			$	169			$	997
Net charge-offs (recoveries) to average loans and leases (for the quarter)		0.02	%			0.00	%
Allowance for loan and lease losses to loans and leases held for investment		0.81	%			0.87	%
Allowance for loan and lease losses to loans and leases held for investment, excluding PPP loans		0.81	%			0.88	%
Allowance for credit losses to loans and leases held for investment		1.12	%			1.19	%
Allowance for credit losses to loans and leases held for investment, excluding PPP loans		1.12	%			1.20	%

The allowance for credit losses decreased by $1.2 million in the first quarter of 2022 to $272.5 million at March 31, 2022. The decrease in the allowance for credit losses during the first quarter of 2022 was attributable to $1.2 million in net charge-offs. The allowance for credit losses ratio, excluding PPP loans, of 1.12% remains robust and moderately higher than the pre-pandemic level of 0.97% as of the January 1, 2020 CECL adoption date.

Net charge-offs were $1.2 million for the first quarter of 2022 as gross charge-offs of $3.2 million were reduced by recoveries of $2.0 million.

Net charge-offs were $0.2 million for the fourth quarter of 2021 as gross charge-offs of $4.4 million were reduced by recoveries of $4.2 million.

CREDIT QUALITY

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

	March 31,				December 31,				Increase
Credit Quality Metrics		2022				2021			(Decrease)
	(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)	$	66,538			$	61,174			$	5,364
Accruing loans contractually past due 90 days or more		-				-				-
Foreclosed assets, net		304				12,843				(12,539	)
Total nonperforming assets ("NPAs")	$	66,842			$	74,017			$	(7,175	)
Performing TDRs held for investment	$	16,781			$	24,430			$	(7,649	)
Nonaccrual loans and leases held for investment to loans and leases held for investment		0.27	%			0.27	%
Nonperforming assets to loans and leases held for investment and foreclosed assets		0.27	%			0.32	%
Allowance for credit losses to nonaccrual loans and leases held for investment		409.5	%			447.3	%
Loan and Lease Credit Risk Ratings:
Pass	$	23,892,689			$	22,433,833			$	1,458,856
Special mention		377,315				391,611				(14,296	)
Classified		82,068				116,104				(34,036	)
Total loans and leases held for investment, net of deferred fees	$	24,352,072			$	22,941,548			$	1,410,524
Classified loans and leases held for investment to loans and leases held for investment		0.34	%			0.51	%
(1) Nonaccrual loans include SBA guaranteed amounts of $13.4 million at March 31, 2022 and $22.1 million at December 31, 2021.

Since downgrading certain loans at the onset of the pandemic in the first quarter of 2020 given all the uncertainty at the time, special mention loans and leases have decreased by $521.3 million or 58% from their peak in the first quarter of 2020, while classified loans and leases have decreased by $211.2 million or 72% from their peak in the second quarter of 2020, and each have continued to decline in the first quarter of 2022. Classified loans and leases are now below pre-pandemic levels, while special mention loans and leases are also approaching pre-pandemic levels. Nonaccrual loans and leases increased by $5.4 million to $66.5 million in the first quarter of 2022 due primarily to an increase in nonaccrual short-term, single-family residential renovation loans. With this product, it is common for the borrower to let the loan become delinquent once they enter escrow to sell the renovated home as the loan will be paid off through the closing of escrow.

In the first quarter of 2022, we sold our largest foreclosed asset with a book value of $12.6 million, which resulted in a gain on sale of $3.2 million.

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:

	March 31, 2022						December 31, 2021						Increase (Decrease)
				Accruing						Accruing							Accruing
				and 30-89						and 30-89							and 30-89
				Days Past						Days Past							Days Past
	Nonaccrual			Due			Nonaccrual			Due			Nonaccrual				Due
	(In thousands)
Real estate mortgage:
Commercial	$	32,071		$	2,090		$	27,540		$	2,165		$	4,531			$	(75	)
Income producing and other residential		17,463			31,103			12,292			39,929			5,171				(8,826	)
Total real estate mortgage		49,534			33,193			39,832			42,094			9,702				(8,901	)
Real estate construction and land:
Commercial		-			-			-			-			-				-
Residential		6,215			21,413			4,715			5,031			1,500				16,382
Total real estate construction and land		6,215			21,413			4,715			5,031			1,500				16,382
Commercial:
Asset-based		1,323			-			1,464			-			(141	)			-
Venture capital		3,659			-			2,799			-			860				-
Other commercial		5,420			47			11,950			630			(6,530	)			(583	)
Total commercial		10,402			47			16,213			630			(5,811	)			(583	)
Consumer		387			994			414			1,004			(27	)			(10	)
Total held for investment	$	66,538		$	55,647		$	61,174		$	48,759		$	5,364			$	6,888

The increase in accruing and 30-89 days past due loans in the residential real estate construction category is primarily due to an increase in short-term, single-family residential renovation loans. With this product, it is common for the borrower to let the loan become delinquent once they enter escrow to sell the renovated home as the loan will be paid off through the closing of escrow. This increase in accruing and 30-89 days past due loans was offset partially by a decrease in the income producing and other residential loans category, which was due mainly to a reduction in past due purchased single-family loans.

CAPITAL

Our capital ratios decreased during the first quarter of 2022 as risk-weighted assets grew by $1.8 billion primarily as a result of loan growth. We are considering various non-common equity capital enhancing strategies, such as a preferred offering depending on market conditions, to increase capital given our growth in the last three quarters and anticipated future loan growth. The following table presents certain actual capital ratios and ratios excluding PPP loans:

	March 31, 2022
					Excluding				December 31,
					PPP					2021
	Actual (1)				Loans (1)				Actual
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio		7.11	%			7.13	%	(3)		6.84	%
Common equity tier 1 capital ratio		8.64	%			8.64	%			8.86	%
Tier 1 capital ratio		9.07	%			9.07	%			9.32	%
Total capital ratio		12.27	%			12.27	%			12.69	%
Risk-weighted assets (in thousands)	$	30,297,945			$	30,297,945			$	28,508,808
Tangible common equity ratio (2)		5.83	%			5.84	%	(3)		6.54	%
(1) Capital information for March 31, 2022 is preliminary.
(2) Non-GAAP measure.
(3) PPP loans have been excluded from total assets in the denominator as they are zero risk-weighted.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $39 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 innovative 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 are based on information available at the time of the communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those expressed in them. The ongoing COVID-19 pandemic continues to affect PacWest, its employees, customers and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity and prospects is uncertain due in part to the new variants of COVID-19. The risks from the COVID-19 pandemic have decreased as the pandemic subsides, however, new variants may continue to impact key macro-economic indicators such as unemployment and GDP and may have a material impact on our allowance for credit losses and related provision for credit losses. Continued deterioration in general business and economic conditions could adversely affect PacWest’s revenues and the values of its assets, including goodwill, and liabilities, lead to a tightening of credit, and increase stock price volatility. In addition, PacWest’s results could be adversely affected by changes in interest rates, sustained high unemployment rates, deterioration in the credit quality of its loan portfolio or in the value of the collateral securing those loans, deterioration in the value of its investment securities, 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
	March 31,				December 31,				March 31,
		2022				2021				2021
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	205,446			$	112,548			$	177,199
Interest-earning deposits in financial institutions		1,865,235				3,944,686				5,517,667
Total cash and cash equivalents		2,070,681				4,057,234				5,694,866
Securities available-for-sale, at estimated fair value		9,975,109				10,694,458				5,941,690
Federal Home Loan Bank stock, at cost		17,250				17,250				17,250
Total investment securities		9,992,359				10,711,708				5,958,940
Loans held for sale		-				-				25,554
Gross loans and leases held for investment		24,439,749				23,026,308				19,055,165
Deferred fees, net		(87,677	)			(84,760	)			(75,937	)
Total loans and leases held for investment, net of deferred fees		24,352,072				22,941,548				18,979,228
Allowance for loan and lease losses		(197,398	)			(200,564	)			(292,445	)
Total loans and leases held for investment, net		24,154,674				22,740,984				18,686,783
Equipment leased to others under operating leases		325,305				339,150				327,413
Premises and equipment, net		51,011				46,740				39,622
Foreclosed assets, net		304				12,843				14,298
Goodwill		1,405,736				1,405,736				1,204,092
Core deposit and customer relationship intangibles, net		41,308				44,957				21,312
Other assets		1,208,261				1,083,992				883,653
Total assets	$	39,249,639			$	40,443,344			$	32,856,533
LIABILITIES:
Noninterest-bearing deposits	$	14,057,051			$	14,543,133			$	11,017,462
Interest-bearing deposits		19,167,844				20,454,624				17,205,829
Total deposits		33,224,895				34,997,757				28,223,291
Borrowings		991,000				-				19,750
Subordinated debt		863,880				863,283				465,814
Accrued interest payable and other liabilities		519,269				582,674				493,541
Total liabilities		35,599,044				36,443,714				29,202,396
STOCKHOLDERS' EQUITY (1)		3,650,595				3,999,630				3,654,137
Total liabilities and stockholders’ equity	$	39,249,639			$	40,443,344			$	32,856,533
Book value per share	$	30.52			$	33.45			$	30.68
Tangible book value per share (2)	$	18.42			$	21.31			$	20.39
Shares outstanding		119,601,766				119,584,854				119,105,642
(1) Includes net unrealized (loss) gain on securities available-for-sale, net	$	(376,475	)		$	65,968			$	106,381
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
	Three Months Ended
	March 31,				December 31,				March 31,
		2022				2021				2021
	(In thousands, except per share data)
Interest income:
Loans and leases	$	267,759			$	263,662			$	241,544
Investment securities		53,422				48,469				30,265
Deposits in financial institutions		1,723				2,674				1,528
Total interest income		322,904				314,805				273,337
Interest expense:
Deposits		6,208				6,622				7,500
Borrowings		161				64				193
Subordinated debt		7,818				7,714				4,375
Total interest expense		14,187				14,400				12,068
Net interest income		308,717				300,405				261,269
Provision for credit losses		-				(6,000	)			(48,000	)
Net interest income after provision for credit losses		308,717				306,405				309,269
Noninterest income:
Service charges on deposit accounts		3,571				3,476				2,934
Other commissions and fees		11,580				10,633				9,158
Leased equipment income		13,094				12,602				11,354
Gain on sale of loans and leases		60				172				139
Gain on sale of securities		104				999				101
Dividends and (losses) gains on equity investments		(11,375	)			(1,570	)			10,904
Warrant income		629				23,990				6,123
Other income		3,155				7,080				4,116
Total noninterest income		20,818				57,382				44,829
Noninterest expense:
Compensation		92,240				99,700				79,882
Occupancy		15,200				14,656				14,054
Data processing		9,629				8,171				6,957
Other professional services		5,954				5,946				5,126
Insurance and assessments		5,490				5,032				4,903
Intangible asset amortization		3,649				3,876				3,079
Leased equipment depreciation		9,189				9,569				8,969
Foreclosed assets (income) expense, net		(3,353	)			(260	)			1
Acquisition, integration and reorganization costs		-				5,590				3,425
Customer related expense		12,655				6,175				4,818
Loan expense		5,157				5,627				3,193
Other expense		11,616				12,028				15,729
Total noninterest expense		167,426				176,110				150,136
Earnings before income taxes		162,109				187,677				203,962
Income tax expense		41,981				51,632				53,556
Net earnings	$	120,128			$	136,045			$	150,406
Basic and diluted earnings per share	$	1.01			$	1.14			$	1.27
Dividends declared and paid per share	$	0.25			$	0.25			$	0.25

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
	Three Months Ended
	March 31,				December 31,				March 31,
	2022				2021				2021
	(Dollars in thousands, except per share data)
Basic Earnings Per Share:
Net earnings	$	120,128			$	136,045			$	150,406
Less: earnings allocated to unvested restricted stock (1)		(2,037	)			(2,311	)			(2,355	)
Net earnings allocated to common shares	$	118,091			$	133,734			$	148,051
Weighted average basic shares and unvested restricted stock outstanding		119,595				119,577				118,852
Less: weighted average unvested restricted stock outstanding		(2,246	)			(2,314	)			(2,003	)
Weighted average basic shares outstanding		117,349				117,263				116,849
Basic earnings per share	$	1.01			$	1.14			$	1.27
Diluted Earnings Per Share:
Net earnings allocated to common shares	$	118,091			$	133,734			$	148,051
Weighted average diluted shares outstanding		117,349				117,263				116,849
Diluted earnings per share	$	1.01			$	1.14			$	1.27
(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
	March 31, 2022							December 31, 2021							March 31, 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)	$	23,433,019	$	269,521	4.66	%		$	21,367,665	$	265,549	4.93	%		$	18,927,314	$	242,846	5.20	%
Investment securities (3)		10,397,709		55,594	2.17	%			9,964,568		50,710	2.02	%			5,383,140		32,329	2.44	%
Deposits in financial institutions		3,083,159		1,723	0.23	%			5,961,104		2,674	0.18	%			4,790,231		1,528	0.13	%
Total interest-earning assets (1)		36,913,887		326,838	3.59	%			37,293,337		318,933	3.39	%			29,100,685		276,703	3.86	%
Other assets		2,969,417							3,064,810							2,315,197
Total assets	$	39,883,304						$	40,358,147						$	31,415,882
Liabilities and Stockholders' Equity:
Interest checking	$	7,094,623		1,776	0.10	%		$	7,767,211		2,041	0.10	%		$	6,401,869		2,232	0.14	%
Money market		10,852,454		3,461	0.13	%			10,226,366		3,400	0.13	%			7,975,996		3,278	0.17	%
Savings		642,709		39	0.02	%			634,874		39	0.02	%			572,959		35	0.02	%
Time		1,278,609		932	0.30	%			1,421,859		1,142	0.32	%			1,493,267		1,955	0.53	%
Total interest-bearing deposits		19,868,395		6,208	0.13	%			20,050,310		6,622	0.13	%			16,444,091		7,500	0.18	%
Borrowings		298,444		161	0.22	%			234,391		64	0.11	%			226,053		193	0.35	%
Subordinated debt		863,572		7,818	3.67	%			862,777		7,714	3.55	%			466,101		4,375	3.81	%
Total interest-bearing liabilities		21,030,411		14,187	0.27	%			21,147,478		14,400	0.27	%			17,136,245		12,068	0.29	%
Noninterest-bearing demand deposits		14,463,667							14,713,385							10,173,459
Other liabilities		541,745							543,017							488,930
Total liabilities		36,035,823							36,403,880							27,798,634
Stockholders' equity		3,847,481							3,954,267							3,617,248
Total liabilities and stockholders' equity	$	39,883,304						$	40,358,147						$	31,415,882
Net interest income (1)			$	312,651						$	304,533						$	264,635
Net interest spread (1)					3.32	%						3.12	%						3.57	%
Net interest margin (1)					3.43	%						3.24	%						3.69	%
Total deposits (4)	$	34,332,062	$	6,208	0.07	%		$	34,763,695	$	6,622	0.08	%		$	26,617,550	$	7,500	0.11	%
(1) Tax equivalent.
(2) Includes net loan premium amortization of $5.7 million, $6.4 million, and $1.2 million for the three months ended March 31, 2022, December 31, 2021, and March 31, 2021, respectively.
(3) Includes tax-equivalent adjustments of $2.2 million, $2.2 million, and $2.1 million for the three months ended March 31, 2022, December 31, 2021, and March 31, 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
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	205,446			$	112,548			$	174,585			$	179,505			$	177,199
Interest-earning deposits in financial institutions		1,865,235				3,944,686				3,524,613				5,678,587				5,517,667
Total cash and cash equivalents		2,070,681				4,057,234				3,699,198				5,858,092				5,694,866
Securities available-for-sale		9,975,109				10,694,458				9,276,926				7,198,608				5,941,690
Federal Home Loan Bank stock		17,250				17,250				17,250				17,250				17,250
Total investment securities		9,992,359				10,711,708				9,294,176				7,215,858				5,958,940
Loans held for sale		-				-				-				-				25,554
Gross loans and leases held for investment		24,439,749				23,026,308				20,588,255				19,580,731				19,055,165
Deferred fees, net		(87,677	)			(84,760	)			(77,235	)			(74,474	)			(75,937	)
Total loans and leases held for investment, net of deferred fees		24,352,072				22,941,548				20,511,020				19,506,257				18,979,228
Allowance for loan and lease losses		(197,398	)			(200,564	)			(203,733	)			(225,600	)			(292,445	)
Total loans and leases held for investment, net		24,154,674				22,740,984				20,307,287				19,280,657				18,686,783
Equipment leased to others under operating leases		325,305				339,150				334,275				313,574				327,413
Premises and equipment, net		51,011				46,740				47,246				39,541				39,622
Foreclosed assets, net		304				12,843				13,364				13,227				14,298
Goodwill		1,405,736				1,405,736				1,204,118				1,204,118				1,204,092
Core deposit and customer relationship intangibles, net		41,308				44,957				15,533				18,423				21,312
Other assets		1,208,261				1,083,992				970,479				924,497				883,653
Total assets	$	39,249,639			$	40,443,344			$	35,885,676			$	34,867,987			$	32,856,533
LIABILITIES:
Noninterest-bearing deposits	$	14,057,051			$	14,543,133			$	12,881,806			$	11,252,286			$	11,017,462
Interest-bearing deposits		19,167,844				20,454,624				17,677,939				18,394,748				17,205,829
Total deposits		33,224,895				34,997,757				30,559,745				29,647,034				28,223,291
Borrowings		991,000				-				-				6,625				19,750
Subordinated debt		863,880				863,283				862,447				861,788				465,814
Accrued interest payable and other liabilities		519,269				582,674				545,050				505,859				493,541
Total liabilities		35,599,044				36,443,714				31,967,242				31,021,306				29,202,396
STOCKHOLDERS' EQUITY (1)		3,650,595				3,999,630				3,918,434				3,846,681				3,654,137
Total liabilities and stockholders’ equity	$	39,249,639			$	40,443,344			$	35,885,676			$	34,867,987			$	32,856,533
Book value per share	$	30.52			$	33.45			$	32.77			$	32.17			$	30.68
Tangible book value per share (2)	$	18.42			$	21.31			$	22.57			$	21.95			$	20.39
Shares outstanding		119,601,766				119,584,854				119,579,566				119,555,102				119,105,642
(1) Includes net unrealized (loss) gain on securities available-for-sale, net	$	(376,475	)		$	65,968			$	98,859			$	145,516			$	106,381
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
	(In thousands, except per share data)
Interest income:
Loans and leases	$	267,759			$	263,662			$	246,722			$	244,529			$	241,544
Investment securities		53,422				48,469				40,780				33,954				30,265
Deposits in financial institutions		1,723				2,674				2,580				2,022				1,528
Total interest income		322,904				314,805				290,082				280,505				273,337
Interest expense:
Deposits		6,208				6,622				6,417				7,269				7,500
Borrowings		161				64				101				265				193
Subordinated debt		7,818				7,714				7,722				6,663				4,375
Total interest expense		14,187				14,400				14,240				14,197				12,068
Net interest income		308,717				300,405				275,842				266,308				261,269
Provision for credit losses		-				(6,000	)			(20,000	)			(88,000	)			(48,000	)
Net interest income after provision for credit losses		308,717				306,405				295,842				354,308				309,269
Noninterest income:
Service charges on deposit accounts		3,571				3,476				3,407				3,452				2,934
Other commissions and fees		11,580				10,633				11,792				10,704				9,158
Leased equipment income		13,094				12,602				10,943				10,847				11,354
Gain on sale of loans and leases		60				172				-				1,422				139
Gain on sale of securities		104				999				515				-				101
Dividends and (losses) gains on equity investments		(11,375	)			(1,570	)			8,387				5,394				10,904
Warrant income		629				23,990				13,578				5,650				6,123
Other income		3,155				7,080				2,723				2,902				4,116
Total noninterest income		20,818				57,382				51,345				40,371				44,829
Noninterest expense:
Compensation		92,240				99,700				98,061				90,807				79,882
Occupancy		15,200				14,656				14,928				14,784				14,054
Data processing		9,629				8,171				7,391				7,758				6,957
Other professional services		5,954				5,946				5,164				5,256				5,126
Insurance and assessments		5,490				5,032				3,685				3,745				4,903
Intangible asset amortization		3,649				3,876				2,890				2,889				3,079
Leased equipment depreciation		9,189				9,569				8,603				8,614				8,969
Foreclosed assets (income) expense, net		(3,353	)			(260	)			165				(119	)			1
Acquisition, integration and reorganization costs		-				5,590				200				200				3,425
Customer related expense		12,655				6,175				4,538				4,973				4,818
Loan expense		5,157				5,627				4,180				4,031				3,193
Other expense		11,616				12,028				9,616				8,812				15,729
Total noninterest expense		167,426				176,110				159,421				151,750				150,136
Earnings before income taxes		162,109				187,677				187,766				242,929				203,962
Income tax expense		41,981				51,632				47,770				62,417				53,556
Net earnings	$	120,128			$	136,045			$	139,996			$	180,512			$	150,406
Basic and diluted earnings per share	$	1.01			$	1.14			$	1.17			$	1.52			$	1.27
Dividends declared and paid per share	$	0.25			$	0.25			$	0.25			$	0.25			$	0.25

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		1.22	%			1.34	%			1.55	%			2.11	%			1.94	%
Pre-provision, pre-tax net revenue ("PPNR") return on average assets (1)(2)		1.65	%			1.79	%			1.86	%			1.81	%			2.01	%
Return on average equity (1)		12.66	%			13.65	%			14.18	%			19.36	%			16.86	%
Return on average tangible equity (1)(2)		20.93	%			22.06	%			21.03	%			29.25	%			25.67	%
Efficiency ratio		50.1	%			46.2	%			47.2	%			47.9	%			46.4	%
Noninterest expense as a percentage of average assets (1)		1.70	%			1.73	%			1.76	%			1.77	%			1.94	%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)		4.66	%			4.93	%			5.01	%			5.18	%			5.20	%
Average investment securities (3)		2.17	%			2.02	%			2.12	%			2.23	%			2.44	%
Average interest-earning assets (3)		3.59	%			3.39	%			3.50	%			3.57	%			3.86	%
Cost of:
Average interest-bearing deposits		0.13	%			0.13	%			0.14	%			0.16	%			0.18	%
Average total deposits		0.07	%			0.08	%			0.08	%			0.10	%			0.11	%
Average interest-bearing liabilities		0.27	%			0.27	%			0.29	%			0.30	%			0.29	%
Net interest spread (3)		3.32	%			3.12	%			3.21	%			3.27	%			3.57	%
Net interest margin (3)		3.43	%			3.24	%			3.33	%			3.40	%			3.69	%
Average Balances:
Assets:
Loans and leases, net of deferred fees	$	23,433,019			$	21,367,665			$	19,670,671			$	19,057,420			$	18,927,314
Investment securities		10,397,709				9,964,568				8,047,098				6,492,721				5,383,140
Deposits in financial institutions		3,083,159				5,961,104				5,657,768				6,347,764				4,790,231
Interest-earning assets		36,913,887				37,293,337				33,375,537				31,897,905				29,100,685
Total assets		39,883,304				40,358,147				35,871,664				34,326,112				31,415,882
Liabilities:
Noninterest-bearing deposits		14,463,667				14,713,385				12,198,313				11,304,757				10,173,459
Interest-bearing deposits		19,868,395				20,050,310				18,130,694				17,817,053				16,444,091
Total deposits		34,332,062				34,763,695				30,329,007				29,121,810				26,617,550
Borrowings		298,444				234,391				238,335				225,446				226,053
Subordinated debt		863,572				862,777				862,272				735,725				466,101
Interest-bearing liabilities		21,030,411				21,147,478				19,231,301				18,778,224				17,136,245
Stockholders' equity		3,847,481				3,954,267				3,916,621				3,739,042				3,617,248
(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
	March 31,				December 31,				September 30,				June 30,				March 31,
		2022				2021				2021				2021				2021
	(Dollars in thousands, except per share data)
Credit Quality Ratios:
Nonaccrual loans and leases held for investment to loans and leases held for investment		0.27	%			0.27	%			0.31	%			0.29	%			0.36	%
Nonperforming assets to loans and leases held for investment and foreclosed assets		0.27	%			0.32	%			0.38	%			0.36	%			0.43	%
Classified loans and leases held for investment to loans and leases held for investment		0.34	%			0.51	%			0.69	%			0.75	%			0.86	%
Provision for credit losses (for the quarter) to average loans and leases held for investment (annualized)		0.00	%			(0.11	)%			(0.40	)%			(1.85	)%			(1.03	)%
Net charge-offs (for the quarter) to average loans and leases held for investment (annualized)		0.02	%			0.00	%			0.01	%			(0.11	)%			0.06	%
Trailing 12 months net charge-offs to average loans and leases held for investment		(0.02	)%			(0.01	)%			0.09	%			0.27	%			0.37	%
Allowance for loan and lease losses to loans and leases held for investment		0.81	%			0.87	%			0.99	%			1.16	%			1.54	%
Allowance for credit losses to loans and leases held for investment		1.12	%			1.19	%			1.36	%			1.54	%			2.02	%
Allowance for credit losses to nonaccrual loans and leases held for investment		409.5	%			447.3	%			433.8	%			528.4	%			566.2	%
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio (1)		7.11	%			6.84	%			8.05	%			7.67	%			7.95	%
Common equity tier 1 capital ratio (1)		8.64	%			8.86	%			10.15	%			10.41	%			10.39	%
Tier 1 capital ratio (1)		9.07	%			9.32	%			10.65	%			10.41	%			10.39	%
Total capital ratio (1)		12.27	%			12.69	%			14.36	%			14.99	%			13.60	%
Risk-weighted assets (1)	$	30,297,945			$	28,508,808			$	26,057,583			$	24,274,256			$	23,012,350
Equity to assets ratio		9.30	%			9.89	%			10.92	%			11.03	%			11.12	%
Tangible common equity ratio (2)		5.83	%			6.54	%			7.79	%			7.80	%			7.68	%
Book value per share	$	30.52			$	33.45			$	32.77			$	32.17			$	30.68
Tangible book value per share (2)	$	18.42			$	21.31			$	22.57			$	21.95			$	20.39
Pacific Western Bank:
Tier 1 leverage capital ratio (1)		7.31	%			7.00	%			8.40	%			8.47	%			8.83	%
Common equity tier 1 capital ratio (1)		9.32	%			9.56	%			11.12	%			11.51	%			11.54	%
Tier 1 capital ratio (1)		9.32	%			9.56	%			11.12	%			11.51	%			11.54	%
Total capital ratio (1)		11.45	%			11.80	%			13.59	%			14.22	%			12.80	%
(1) Capital information for March 31, 2022 is preliminary.
(2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) Pre-provision, pre-tax net revenue (“PPNR”), (2) PPNR return on average assets (3) return on average tangible equity, (4) tangible common equity ratio, and (5) tangible book value per share. The Company uses these 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. In particular, the use of PPNR, return on average tangible equity, tangible common equity ratio, and tangible book value per share is prevalent among banking regulators, investors, and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) net earnings, (2) return on average assets, (3) return on average equity, (4) equity to assets ratio, and (5) book value per share.

The tables below present the reconciliations of these GAAP financial measures to the related non-GAAP financial measures:

	Three Months Ended
PPNR and PPNR Return	March 31,				December 31,				March 31,
on Average Assets	2022				2021				2021
	(Dollars in thousands)
Net earnings	$	120,128			$	136,045			$	150,406
Add: Provision for credit losses	-					(6,000	)			(48,000	)
Add: Income tax expense	41,981				51,632				53,556
Pre-provision, pre-tax net revenue ("PPNR")	$	162,109			$	181,677			$	155,962
Average assets	$	39,883,304			$	40,358,147			$	31,415,882
Return on average assets (1)		1.22	%			1.34	%			1.94	%
PPNR return on average assets (2)		1.65	%			1.79	%			2.01	%
(1) Annualized net earnings divided by average assets.
(2) Annualized PPNR divided by average assets.

	Three Months Ended
	March 31,				December 31,				March 31,
Return on Average Tangible Equity	2022				2021				2021
	(Dollars in thousands)
Net earnings	$	120,128			$	136,045			$	150,406
Add: Intangible asset amortization	3,649				3,876				3,079
Adjusted net earnings	$	123,777			$	139,921			$	153,485
Average stockholders' equity	$	3,847,481			$	3,954,267			$	3,617,248
Less: Average intangible assets	1,449,056				1,437,780				1,192,780
Average tangible common equity	$	2,398,425			$	2,516,487			$	2,424,468
Return on average equity (1)	12.66		%		13.65		%		16.86		%
Return on average tangible equity (2)	20.93		%		22.06		%		25.67		%
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.

Tangible Common Equity Ratio/	March 31,				December 31,				September 30,				June 30,				March 31,
Tangible Book Value Per Share		2022				2021				2021				2021				2021
	(Dollars in thousands, except per share data)
Stockholders' equity	$	3,650,595			$	3,999,630			$	3,918,434			$	3,846,681			$	3,654,137
Less: Intangible assets		1,447,044				1,450,693				1,219,651				1,222,541				1,225,404
Tangible common equity	$	2,203,551			$	2,548,937			$	2,698,783			$	2,624,140			$	2,428,733
Total assets	$	39,249,639			$	40,443,344			$	35,885,676			$	34,867,987			$	32,856,533
Less: Intangible assets		1,447,044				1,450,693				1,219,651				1,222,541				1,225,404
Tangible assets	$	37,802,595			$	38,992,651			$	34,666,025			$	33,645,446			$	31,631,129
Equity to assets ratio		9.30	%			9.89	%			10.92	%			11.03	%			11.12	%
Tangible common equity ratio (1)		5.83	%			6.54	%			7.79	%			7.80	%			7.68	%
Book value per share	$	30.52			$	33.45			$	32.77			$	32.17			$	30.68
Tangible book value per share (2)	$	18.42			$	21.31			$	22.57			$	21.95			$	20.39
Shares outstanding		119,601,766				119,584,854				119,579,566				119,555,102				119,105,642
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

CONTACTS

Matthew P. Wagner President and CEO 303.802.8900	Bart R. Olson EVP and CFO 714.989.4149	William J. Black EVP Strategy and Corporate Development 919.597.7466

FAQ

What are the first quarter 2022 earnings for PACW?

PacWest Bancorp reported first quarter 2022 net earnings of $120.1 million, or $1.01 per diluted share.

How much did PACW's noninterest income decrease in Q1 2022?

Noninterest income for PacWest Bancorp decreased by $36.6 million to $20.8 million in the first quarter of 2022.

What was the loan growth for PACW in Q1 2022?

PacWest Bancorp experienced loan growth of $1.4 billion, or 6.1%, reaching a total of $24.4 billion.

What is the current CET1 ratio for PACW?

As of the first quarter of 2022, PacWest Bancorp's CET1 ratio is 8.64%.

How did PACW's net interest income change in Q1 2022?

Net interest income for PacWest Bancorp increased by $8.3 million in Q1 2022 compared to the previous quarter.