PacWest Bancorp Announces Results for the Fourth Quarter and Full Year 2020

Rhea-AI Summary

PacWest Bancorp (PACW) reported fourth quarter 2020 earnings of $116.8 million, or $0.99 per diluted share, a significant increase from $45.5 million in Q3 2020. The rise was driven by an $87 million decrease in provisions for credit losses. However, the company faced a net loss of $1.24 billion for the full year due to a $1.47 billion goodwill impairment. Core deposits rose by 5% to $22.3 billion in Q4, and the CET1 ratio stood strong at 10.53%. Despite pandemic challenges, the bank aims to focus on profitability while managing credit risks in 2021.

Positive

• Fourth quarter earnings increased to $116.8 million from $45.5 million in Q3 2020.
• Core deposits grew by 5% to $22.3 billion, accounting for 89% of total deposits.
• Reduced provision for credit losses to $10 million in Q4 from $97 million in Q3, reflecting improvement in economic forecasts.
• Strong capital position with a CET1 ratio of 10.53%.

Negative

• Full year 2020 net loss of $1.24 billion, primarily due to a $1.47 billion goodwill impairment.
• Provisions for credit losses increased to $339 million for the year compared to $22 million in 2019.
• Loan and lease credit quality metrics remain elevated amid ongoing economic impacts from COVID-19.

Fourth Quarter 2020 Highlights

• Net Earnings of $116.8 Million, or $0.99 Per Diluted Share
• Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $163.4 Million
• Provision for Credit Losses of $10.0 Million in Q4 Compared to $97.0 Million in Q3
• Core Deposits Up $1.1 Billion or 5% in Q4; Represents 89% of Total Deposits
• Strong Capital Position – CET1 Ratio of 10.53%

Full Year 2020 Highlights

• Excluding Goodwill Impairment, Net Earnings of $232.4 Million, or $1.97 Per Diluted Share
• Net Loss of $1.24 Billion, or $(10.61) Per Diluted Share Due to $1.47 Billion Goodwill Impairment
• Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $646.6 Million
• Provision for Credit Losses of $339.0 Million Compared to $22.0 Million in 2019
• Core Deposits Up $6.1 Billion or 38% in 2020
• Strong Capital Position – Increased CET1 Ratio 75 Basis Points to 10.53% in 2020
• Increased Allowance for Credit Losses Ratio to 2.41% (Excluding PPP Loans)

LOS ANGELES, Jan. 20, 2021 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the fourth quarter of 2020 of $116.8 million, or $0.99 per diluted share, compared to net earnings for the third quarter of 2020 of $45.5 million, or $0.38 per diluted share. The increase in net earnings for the fourth quarter was due primarily to an $87.0 million decrease in the provision for credit losses.

Net loss for the full year 2020 was $1.24 billion, or $10.61 per diluted share, compared to net earnings for the full year 2019 of $468.6 million, or $3.90 per diluted share. The decrease in net earnings for 2020 was primarily due to a $1.47 billion goodwill impairment charge and a higher provision for credit losses attributable mainly to the significant deterioration in the economic forecast used to estimate the allowance for credit losses as a result of the COVID-19 pandemic.

Matt Wagner, President and CEO, commented, “We finished the year strong with fourth quarter earnings boosted by continued asset growth and improved credit costs. Our fourth quarter results produced a return on assets of 1.58% and a return on tangible equity of 19.63%.”

Mr. Wagner continued, “We experienced strong deposit growth again in the fourth quarter, resulting in further increases in our liquidity position. Our average on-balance sheet cash balance grew to $3.6 billion in the fourth quarter with a yield of 13 basis points. While our focus is on managing net interest income, this excess liquidity had a negative impact on our fourth quarter NIM of 46 basis points.”

Mr. Wagner added, “Our priority continues to be on mitigating potential credit losses in our portfolios, especially those portfolios impacted most by COVID-19. We are also focused on assisting our customers with applying for new PPP loans and forgiveness for their previous PPP loans during 2021.”

Mr. Wagner added, “In 2020, our operating results were significantly impacted by the economic impact of the COVID-19 pandemic. These factors resulted in the goodwill impairment in the first quarter and elevated credit loss provisions in 2020, however, our strong PPNR allowed us to internally generate capital and build our allowance for credit losses during the year. As we head into 2021 with good momentum, we will continue to focus on the safety of our employees amid the pandemic, delivering high quality service to our valued clients, while strategically managing our business to optimize profitability in this low-rate environment.”

FINANCIAL HIGHLIGHTS

	At or For the												At or For the
	Three Months Ended												Year Ended
	December 31,				September 30,				Increase				December 31,								Increase
Financial Highlights		2020				2020			(Decrease)					2020				2019			(Decrease)
	(Dollars in thousands, except per share data)
Net earnings (loss)	$	116,830			$	45,503			$	71,327			$	(1,237,574	)		$	468,636			$	(1,706,210	)
Diluted earnings (loss)
per share	$	0.99			$	0.38			$	0.61			$	(10.61	)		$	3.90			$	(14.51	)
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (1)	$	163,376			$	156,174			$	7,202			$	646,599			$	654,940			$	(8,341	)
Return on average assets		1.58	%			0.65	%			0.93				(4.46	)%			1.80	%			(6.26	)
PPNR return on average
assets (1)		2.22	%			2.22	%			-				2.33	%			2.51	%			(0.18	)
Return on average
tangible equity (1)		19.63	%			8.20	%			11.43				10.36	%			21.49	%			(11.13	)
Yield on average loans and
leases (tax equivalent)		5.15	%			5.01	%			0.14				5.18	%			6.00	%			(0.82	)
Cost of average total
deposits		0.14	%			0.17	%			(0.03	)			0.27	%			0.77	%			(0.50	)
Net interest margin ("NIM")
(tax equivalent)		3.83	%			3.90	%			(0.07	)			4.05	%			4.54	%			(0.49	)
Efficiency ratio		43.6	%			45.1	%			(1.5	)			43.1	%			42.7	%			0.4
Total assets	$	29,498,442			$	28,426,716			$	1,071,726			$	29,498,442			$	26,770,806			$	2,727,636
Loans and leases held
for investment,
net of deferred fees	$	19,083,377			$	19,026,200			$	57,177			$	19,083,377			$	18,846,872			$	236,505
Noninterest-bearing
demand deposits	$	9,193,827			$	9,346,744			$	(152,917	)		$	9,193,827			$	7,243,298			$	1,950,529
Core deposits	$	22,264,480			$	21,117,629			$	1,146,851			$	22,264,480			$	16,187,287			$	6,077,193
Total deposits	$	24,940,717			$	23,965,695			$	975,022			$	24,940,717			$	19,233,036			$	5,707,681
As percentage of total
deposits:
Noninterest-bearing
demand deposits		37	%			39	%			(2	)			37	%			38	%			(1	)
Core deposits		89	%			88	%			1				89	%			84	%			5
Equity to assets ratio		12.19	%			12.26	%			(0.07	)			12.19	%			18.51	%			(6.32	)
Tangible common equity
ratio (1)		8.78	%			8.71	%			0.07				8.78	%			9.79	%			(1.01	)
Book value per share	$	30.36			$	29.42			$	0.94			$	30.36			$	41.36			$	(11.00	)
Tangible book value per
share (1)	$	21.05			$	20.09			$	0.96			$	21.05			$	19.77			$	1.28
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $7.9 million to $259.2 million for the fourth quarter of 2020 compared to $251.3 million for the third quarter of 2020 due mainly to higher income on investment securities, higher loan prepayment fees, higher recapture of nonaccrual interest, higher amortized loan fee income from PPP loan forgiveness, and lower interest expense, partially offset by a negative impact on net interest income due to the change in the earning asset mix and a lower balance of average loans and leases. The tax equivalent yield on average loans and leases was 5.15% for the fourth quarter of 2020 compared to 5.01% for the third quarter of 2020. The increase in the tax equivalent yield on average loans and leases was primarily due to higher loan prepayment fees, higher recapture of nonaccrual interest, and higher amortized loan fee income from PPP loan forgiveness in the fourth quarter as compared to the third quarter.

The tax equivalent NIM was 3.83% for the fourth quarter of 2020 compared to 3.90% for the third quarter of 2020. The decrease in the NIM was due mostly to the change in the earning asset mix. Average loans and leases decreased by $426.5 million, while the average balance of deposits in financial institutions increased by $1.0 billion and the average balance of investment securities increased by $781.1 million in the fourth quarter of 2020. This excess liquidity had a negative impact on the fourth quarter tax equivalent NIM of 46 basis points.

The cost of average total deposits decreased to 0.14% for the fourth quarter of 2020 from 0.17% for the third quarter of 2020. The lower cost of average total deposits was due primarily to the repricing of maturing brokered time deposits.

Provision for Credit Losses

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

	Three Months Ended
	December 31,				September 30,			Increase
Provision for Credit Losses		2020			2020			(Decrease)
	(In thousands)
Addition to allowance for loan and lease losses	$	21,000			$	81,000		$	(60,000	)
(Reduction in) addition to reserve for
unfunded loan commitments		(11,000	)			16,000			(27,000	)
Total provision for credit losses	$	10,000			$	97,000		$	(87,000	)

The provision for credit losses decreased by $87.0 million to $10.0 million for the fourth quarter of 2020 compared to $97.0 million for the third quarter of 2020. This reduction reflected improvement in certain key macro-economic forecast variables, a lower provision for unfunded loan commitments, and decreased provisions for individually evaluated loans and leases.

Noninterest Income

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

	Three Months Ended
	December 31,				September 30,				Increase
Noninterest Income		2020			2020				(Decrease)
	(In thousands)
Service charges on deposit accounts	$	3,119			$	2,570			$	549
Other commissions and fees		9,974				10,541				(567	)
Leased equipment income		9,440				9,900				(460	)
Gain on sale of loans and leases		1,671				35				1,636
Gain on sale of securities		4				5,270				(5,266	)
Other income:
Dividends and gains on equity investments		5,064				6,945				(1,881	)
Warrant income		7,299				500				6,799
Other		3,279				2,491				788
Total noninterest income	$	39,850			$	38,252			$	1,598

Noninterest income increased by $1.6 million to $39.9 million for the fourth quarter of 2020 compared to $38.3 million for the third quarter of 2020 due primarily to an increase of $6.8 million in warrant income attributable to higher gains from exercised warrants, and an increase of $1.6 million in gain on sale of loans and leases, offset partially by decreases of $5.3 million in gain on sale of securities and $1.9 million in dividends and gains on equity investments. The increase in the gain on sale of loans and leases resulted from the sales of $119.9 million of loans for a gain of $1.7 million in the fourth quarter compared to sales of $3.0 million for a gain of $35 thousand in the third quarter. The decrease in the gain on sale of securities resulted from minimal sales in the fourth quarter compared to sales of $17.0 million of securities for a gain of $5.3 million in the third quarter. The decrease in dividends and gains on equity investments was due primarily to lower net fair value gains on equity investments still held, offset partially by higher income from distributions on fair value equity investments.

Noninterest Expense

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

	Three Months Ended
	December 31,				September 30,			Increase
Noninterest Expense		2020			2020			(Decrease)
	(In thousands)
Compensation	$	73,171			$	75,131		$	(1,960	)
Occupancy		14,083				14,771			(688	)
Data processing		6,718				6,505			213
Other professional services		6,800				4,713			2,087
Insurance and assessments		5,064				3,939			1,125
Intangible asset amortization		3,172				3,751			(579	)
Leased equipment depreciation		7,501				7,057			444
Foreclosed assets (income) expense, net		(272	)			335			(607	)
Acquisition, integration and reorganization costs		1,060				-			1,060
Customer related expense		4,430				4,762			(332	)
Loan expense		3,926				3,499			427
Other		10,029				8,939			1,090
Total noninterest expense	$	135,682			$	133,402		$	2,280

Noninterest expense increased by $2.3 million to $135.7 million for the fourth quarter of 2020 compared to $133.4 million for the third quarter of 2020 attributable primarily to increases of $2.1 million in other professional services, $1.1 million in insurance and assessments, $1.1 million in acquisition, integration and reorganization costs, and $1.1 million in other expense, offset partially by a decrease of $2.0 million in compensation expense. The increase in other professional services was due mainly to higher consulting expense. The increase in insurance and assessments expense was due to an increase in FDIC assessment expense. The increase in acquisition, integration and reorganization costs was due to advisory services. The increase in other expense was due primarily to an increase in franchise taxes. The decrease in compensation expense was due mainly to lower bonus accruals and lower stock compensation expense.

Income Taxes

The effective income tax rate was 23.8% for the fourth quarter of 2020 compared to 23.1% for the third quarter of 2020. The effective tax rate for the year ended December 31, 2020 was (6.5%), however when excluding the non-deductible goodwill impairment, the effective tax rate for the full year 2020 was 24.4%. The effective tax rate for the full year 2021 is currently estimated to be in the range of 26% to 28%.

BALANCE SHEET HIGHLIGHTS

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								Year Ended
Roll Forward of Loans and Leases Held	December 31,				September 30,				December 31,
for Investment, Net of Deferred Fees (1)		2020				2020				2020
	(Dollars in thousands)
Balance, beginning of period	$	19,026,200			$	19,694,631			$	18,846,872
Additions:
Production		1,131,165				519,671				4,243,538
Disbursements		1,354,038				1,008,336				5,159,912
Total production and disbursements		2,485,203				1,528,007				9,403,450
Reductions:
Payoffs		(1,330,321	)			(982,889	)			(3,738,754	)
Paydowns		(957,075	)			(1,160,692	)			(5,193,848	)
Total payoffs and paydowns		(2,287,396	)			(2,143,581	)			(8,932,602	)
Sales		(119,931	)			(2,979	)			(125,999	)
Transfers to foreclosed assets		(385	)			(12,594	)			(14,755	)
Charge-offs		(20,314	)			(37,284	)			(93,589	)
Total reductions		(2,428,026	)			(2,196,438	)			(9,166,945	)
Net increase (decrease)		57,177				(668,431	)			236,505
Balance, end of period	$	19,083,377			$	19,026,200			$	19,083,377
Weighted average rate on production (2)		4.41	%			4.95	%			3.57	%
(1)  Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) The weighted average rate on production presents contractual rates on a tax equivalent basis
and excludes amortized fees. Amortized fees added approximately 25 basis points to loan yields in 2020.

Loans and leases held for investment, net of deferred fees, increased by $57.2 million in the fourth quarter of 2020 to $19.1 billion at December 31, 2020. The majority of the increase in the loans and leases balance for the fourth quarter of 2020 related to increases in the asset-based and income producing and other residential loan classes, offset partially by decreases in the other commercial and commercial construction and land classes. The weighted average rate on fourth quarter production decreased to 4.41% due to fourth quarter production including a higher percentage of lower-rate products such as equity fund loans and multi-family loans as compared to third quarter production. The weighted average rate on new production for the year ended December 31, 2020 of 3.57% was negatively impacted by the $1.2 billion of Paycheck Protection Program (“PPP”) loans originated with a coupon rate of 1%. Excluding PPP loans, the weighted average rate on new production for the year was 4.66%. For the year ended December 31, 2020, loans and leases held for investment, net of deferred fees, increased by $236.5 million. The majority of the increase in the loans and leases balance for the year related to increases in the other commercial and residential construction and land classes, offset partially by decreases in the venture capital, asset-based, and consumer loan classes.

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:

	December 31, 2020					September 30, 2020					December 31, 2019
			% of					% of					% of
Loan and Lease Portfolio	Balance		Total			Balance		Total			Balance		Total
	(In thousands)
Real estate mortgage:
Commercial	$	4,096,671	21	%		$	4,192,466	22	%		$	4,202,687	22	%
Income producing and other
residential		3,803,265	20	%			3,684,579	19	%			3,770,060	20	%
Total real estate mortgage		7,899,936	41	%			7,877,045	41	%			7,972,747	42	%
Real estate construction and land:
Commercial		1,117,121	6	%			1,241,647	7	%			1,082,368	6	%
Residential		2,243,160	12	%			2,182,100	11	%			1,655,434	9	%
Total real estate construction
and land		3,360,281	18	%			3,423,747	18	%			2,737,802	15	%
Total real estate		11,260,217	59	%			11,300,792	59	%			10,710,549	57	%
Commercial:
Asset-based		3,429,283	18	%			3,153,048	17	%			3,748,407	20	%
Venture capital		1,698,508	9	%			1,637,132	9	%			2,179,422	12	%
Other commercial		2,375,114	12	%			2,572,994	13	%			1,767,667	9	%
Total commercial		7,502,905	39	%			7,363,174	39	%			7,695,496	41	%
Consumer		320,255	2	%			362,234	2	%			440,827	2	%
Total loans and leases held for
investment, net of deferred fees	$	19,083,377	100	%		$	19,026,200	100	%		$	18,846,872	100	%
Total unfunded loan commitments	$	7,601,390				$	7,178,506				$	8,183,158

Allowance for Credit Losses

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

	Three Months Ended December 31, 2020
	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	$	345,966			$	96,571			$	442,537
Charge-offs		(20,314	)			-				(20,314	)
Recoveries		1,529				-				1,529
Net charge-offs		(18,785	)			-				(18,785	)
Provision		21,000				(11,000	)			10,000
Ending balance	$	348,181			$	85,571			$	433,752
	Three Months Ended September 30, 2020
	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	$	301,050			$	80,571			$	381,621
Charge-offs		(37,284	)			-				(37,284	)
Recoveries		1,200				-				1,200
Net charge-offs		(36,084	)			-				(36,084	)
Provision		81,000				16,000				97,000
Ending balance	$	345,966			$	96,571			$	442,537
Allowance for Credit	Year Ended December 31,
Losses Rollforward		2020				2019
	(In thousands)
Beginning balance	$	174,646			$	169,333
Cumulative effect of change in
accounting principle - CECL		7,327				-
Charge-offs		(93,589	)			(32,262	)
Recoveries		6,368				15,575
Net charge-offs		(87,221	)			(16,687	)
Provision		339,000				22,000
Ending balance	$	433,752			$	174,646

The allowance for credit losses decreased by $8.8 million in the fourth quarter of 2020 to $433.8 million at December 31, 2020. The decrease in the allowance for credit losses during the fourth quarter was attributable to $18.8 million in net charge-offs, offset partially by a $10.0 million provision for credit losses.

Net charge-offs were $18.8 million for the fourth quarter of 2020. Gross charge-offs of $20.3 million were reduced by recoveries of $1.5 million.  The most significant charge-off was $15.5 million and related to a security monitoring loan.

Net charge-offs were $36.1 million for the third quarter of 2020. Gross charge-offs of $37.3 million were reduced by recoveries of $1.2 million.  The most significant charge-off was $32.8 million and also related to a security monitoring loan. 

Security monitoring loans have decreased 47% from $619.3 million as of December 31, 2019 to $329.3 million as of December 31, 2020 since ceasing new originations in the fourth quarter of 2019 while actively reducing the remaining loans. As of December 31, 2020, $250.6 million of these are performing and pass-rated, while $78.7 million are classified, of which $32.5 million are on nonaccrual.

For the fourth quarter of 2020 and third quarter of 2020, annualized net charge-offs to average loans and leases were 0.40% and 0.75%, respectively.

The allowance for credit losses as a percentage of loans and leases held for investment was 2.27% at December 31, 2020 and 2.33% at September 30, 2020. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.82% at December 31, 2020 and September 30, 2020. The allowance for credit losses and allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding PPP loans that are fully guaranteed and do not carry any allowance, were 2.41% and 1.93% at December 31, 2020, respectively, compared to 2.48% and 1.94% at September 30, 2020, respectively.

For the full year 2020, gross charge-offs were $93.6 million and included $63.5 million for other commercial loans, of which $59.6 million related to security monitoring loans, $11.8 million for asset-based loans, $10.2 million for commercial real estate loans, and $6.8 million for venture capital loans compared to gross charge-offs for the full year 2019 of $32.3 million that included $12.0 million for asset-based loans, of which $11.8 million related to a single loan, $9.4 million for venture capital loans, and $9.1 million for other commercial loans.

For the full year 2020, recoveries were $6.4 million and included $3.6 million for other commercial loans and $1.3 million for venture capital loans compared to recoveries for the full year 2019 of $15.6 million that included $8.2 million for venture capital loans, $4.8 million for other commercial loans, and $1.4 million for asset-based loans.

For the full year 2020, net charge-offs to average loans and leases increased to 0.45% from 0.09% for the full year 2019.

Deposits and Client Investment Funds

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

																	(Keep as 12/31)
	December 31, 2020					September 30, 2020						December 31, 2019					December 31, 2019
			% of						% of					% of					% of
Deposit Composition	Balance		Total			Balance			Total			Balance		Total			Balance		Total
	(Dollars in thousands)
Noninterest-bearing demand	$	9,193,827	37	%		$	9,346,744		39	%		$	7,243,298	38	%		$	7,243,298	38	%
Interest checking		5,974,910	24	%			4,657,511		20	%			3,753,978	19	%			3,753,978	19	%
Money market		6,532,917	26	%			6,539,313		27	%			4,690,420	24	%			4,690,420	24	%
Savings		562,826	2	%			574,061		2	%			499,591	3	%			499,591	3	%
Total core deposits		22,264,480	89	%			21,117,629		88	%			16,187,287	84	%			16,187,287	84	%
Non-core non-maturity deposits		1,149,467	5	%			1,123,909		5	%			496,407	3	%			496,407	3	%
Total non-maturity deposits		23,413,947	94	%			22,241,538		93	%			16,683,694	87	%			16,683,694	87	%
Time deposits $250,000 and under		994,197	4	%			1,047,621		4	%			2,065,733	11	%			2,065,733	11	%
Time deposits over $250,000		532,573	2	%			676,536		3	%			483,609	2	%			483,609	2	%
Total time deposits		1,526,770	6	%			1,724,157		7	%			2,549,342	13	%			2,549,342	13	%
Total deposits	$	24,940,717	100	%		$	23,965,695		100	%		$	19,233,036	100	%		$	19,233,036	100	%

At December 31, 2020, core deposits totaled $22.3 billion, or 89% of total deposits, including $9.2 billion of noninterest-bearing demand deposits, or 37% of total deposits. Core deposits increased by $1.1 billion in the fourth quarter driven by continued strong deposit growth from our venture banking clients. For the year ended December 31, 2020, core deposits increased by $6.1 billion and total deposits increased by $5.7 billion.

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds at December 31, 2020 were $1.3 billion, of which $1.0 billion was managed by PWAM.

CREDIT QUALITY

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

	December 31,				September 30,				Increase
Credit Quality Metrics		2020				2020			(Decrease)
	(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)	$	91,163			$	85,615			$	5,548
Accruing loans contractually past due 90 days or more		-				-				-
Foreclosed assets, net		14,027				13,747				280
Total nonperforming assets ("NPAs")	$	105,190			$	99,362			$	5,828
Performing TDRs held for investment	$	14,254			$	13,679			$	575
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.48	%			0.45	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.55	%			0.52	%
Loan and Lease Credit Risk Ratings:
Pass	$	18,076,832			$	17,967,872			$	108,960
Special mention		741,283				783,756				(42,473	)
Classified		265,262				274,572				(9,310	)
Total loans and leases held for investment,
net of deferred fees	$	19,083,377			$	19,026,200			$	57,177
Classified loans and leases held for investment
to loans and leases held for investment		1.39	%			1.44	%
Allowance for Credit Losses:
Allowance for loan and lease losses	$	348,181			$	345,966			$	2,215
Reserve for unfunded loan commitments		85,571				96,571				(11,000	)
Allowance for credit losses	$	433,752			$	442,537			$	(8,785	)
Provision for credit losses (for the quarter)	$	10,000			$	97,000			$	(87,000	)
Net charge-offs (for the quarter)	$	18,785			$	36,084			$	(17,299	)
Net charge-offs to average loans and leases
(for the quarter)		0.40	%			0.75	%
Allowance for loan and lease losses to loans
and leases held for investment		1.82	%			1.82	%
Allowance for credit losses to loans and leases
held for investment		2.27	%			2.33	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		475.8	%			516.9	%
(1) Nonaccrual loans include guaranteed amounts of $13.9 million at December 31, 2020 and $13.8 million at September 30, 2020.

After taking pro-active and decisive steps in the first quarter at the onset of the pandemic to downgrade certain loans, the level of special mention loans and leases, which peaked in the first quarter of 2020, and classified and nonaccrual loans and leases, which peaked in the second quarter of 2020, have declined with the enhanced ongoing monitoring of the loan and lease portfolio during the course of the year. Despite the early actions, enhanced monitoring, and build in the allowance for credit losses, certain credit metrics remain elevated as we continue to manage the credit environment and economic impacts caused by the pandemic.

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:

	December 31, 2020						September 30, 2020						Increase (Decrease)
				Accruing						Accruing							Accruing
				and 30-89						and 30-89							and 30-89
				Days Past						Days Past							Days Past
	Nonaccrual			Due			Nonaccrual			Due			Nonaccrual				Due
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	43,731		$	3,636		$	45,120		$	-		$	(1,389	)		$	3,636
Income producing and other
residential		1,826			600			2,008			1,761			(182	)			(1,161	)
Total real estate mortgage		45,557			4,236			47,128			1,761			(1,571	)			2,475
Real estate construction and land:
Commercial		315			-			324			-			(9	)			-
Residential		-			759			-			3,108			-				(2,349	)
Total real estate
construction and land		315			759			324			3,108			(9	)			(2,349	)
Commercial:
Asset-based		2,679			-			2,817			-			(138	)			-
Venture capital		1,980			540			2,001			2,319			(21	)			(1,779	)
Other commercial		40,243			2,078			32,941			185			7,302				1,893
Total commercial		44,902			2,618			37,759			2,504			7,143				114
Consumer		389			1,260			404			791			(15	)			469
Total held for investment	$	91,163		$	8,873		$	85,615		$	8,164		$	5,548			$	709

During the fourth quarter of 2020, nonaccrual loans and leases increased by $5.5 million due primarily to an addition of one security monitoring loan for $26.3 million, partially offset by the sale of one security monitoring loan for $12.1 million and the paydown of another security monitoring loan for $5.8 million.

CAPITAL

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

	December 31, 2020
				Excluding				September 30,
				PPP				2020
	Actual (1)			Loans (1)				Actual
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio	8.55	%		8.93	%	(3	)	8.66	%
Common equity tier 1 capital ratio	10.53	%		10.53	%			10.45	%
Total capital ratio	13.76	%		13.76	%			13.74	%
Tangible common equity ratio (2)	8.78	%		9.12	%	(3	)	8.71	%
(1) Capital information for December 31, 2020 is preliminary.
(2) Non-GAAP measure.
(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $29 billion in assets headquartered in Los Angeles, California, with executive offices in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 70 full-service branches located in California, one branch located in Durham, North Carolina, and one branch located in Denver, Colorado. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

FORWARD LOOKING STATEMENTS

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

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

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
	December 31,				September 30,				December 31,
		2020				2020				2019
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	150,464			$	187,176			$	172,585
Interest-earning deposits in financial institutions		3,010,197				2,766,020				465,039
Total cash and cash equivalents		3,160,661				2,953,196				637,624
Securities available-for-sale, at estimated fair value		5,235,591				4,532,614				3,797,187
Federal Home Loan Bank stock, at cost		17,250				17,250				40,924
Total investment securities		5,252,841				4,549,864				3,838,111
Gross loans and leases held for investment		19,153,357				19,101,680				18,910,740
Deferred fees, net		(69,980	)			(75,480	)			(63,868	)
Total loans and leases held for investment,
net of deferred fees		19,083,377				19,026,200				18,846,872
Allowance for loan and lease losses		(348,181	)			(345,966	)			(138,785	)
Total loans and leases held for investment, net		18,735,196				18,680,234				18,708,087
Equipment leased to others under operating leases		333,846				286,425				324,084
Premises and equipment, net		39,234				40,544				38,585
Foreclosed assets, net		14,027				13,747				440
Goodwill		1,078,670				1,078,670				2,548,670
Core deposit and customer relationship intangibles, net		23,641				26,813				38,394
Other assets		860,326				797,223				636,811
Total assets	$	29,498,442			$	28,426,716			$	26,770,806
LIABILITIES:
Noninterest-bearing deposits	$	9,193,827			$	9,346,744			$	7,243,298
Interest-bearing deposits		15,746,890				14,618,951				11,989,738
Total deposits		24,940,717				23,965,695				19,233,036
Borrowings		5,000				60,000				1,759,008
Subordinated debentures		465,812				463,282				458,209
Accrued interest payable and other liabilities		491,962				451,508				365,856
Total liabilities		25,903,491				24,940,485				21,816,109
STOCKHOLDERS' EQUITY:
Common stock		1,207				1,208				1,219
Additional paid-in-capital		3,100,633				3,125,554				3,306,006
Retained earnings		409,391				292,561				1,652,248
Treasury stock		(88,803	)			(88,566	)			(83,434	)
Accumulated other comprehensive income		172,523				155,474				78,658
STOCKHOLDERS' EQUITY (1)		3,594,951				3,486,231				4,954,697
Total liabilities and stockholders’ equity	$	29,498,442			$	28,426,716			$	26,770,806
Book value per share	$	30.36			$	29.42			$	41.36
Tangible book value per share (2)	$	21.05			$	20.09			$	19.77
Shares outstanding		118,414,853				118,489,927				119,781,605
(1) Includes net unrealized gain on securities
available-for-sale, net	$	172,523			$	155,474			$	78,658
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
	Three Months Ended												Year Ended
	December 31,				September 30,				December 31,				December 31,
		2020				2020				2019				2020				2019
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	242,198			$	240,811			$	263,402			$	993,138			$	1,097,845
Investment securities		28,843				24,443				28,135				106,770				115,569
Deposits in financial institutions		1,135				654				2,056				3,583				6,479
Total interest income		272,176				265,908				293,593				1,103,491				1,219,893
Interest expense:
Deposits		8,454				9,887				34,802				59,663				148,460
Borrowings		37				27				5,189				8,161				26,961
Subordinated debentures		4,477				4,670				6,983				21,109				29,843
Total interest expense		12,968				14,584				46,974				88,933				205,264
Net interest income		259,208				251,324				246,619				1,014,558				1,014,629
Provision for credit losses		10,000				97,000				3,000				339,000				22,000
Net interest income after
provision for credit losses		249,208				154,324				243,619				675,558				992,629
Noninterest income:
Service charges on deposit accounts		3,119				2,570				3,611				10,351				14,637
Other commissions and fees		9,974				10,541				10,170				40,347				43,623
Leased equipment income		9,440				9,900				10,648				43,628				38,727
Gain on sale of loans and leases		1,671				35				23				2,139				1,114
Gain on sale of securities		4				5,270				184				13,171				25,445
Other income		15,642				9,936				2,540				36,424				19,016
Total noninterest income		39,850				38,252				27,176				146,060				142,562
Noninterest expense:
Compensation		73,171				75,131				74,637				271,494				285,862
Occupancy		14,083				14,771				14,541				57,555				57,407
Data processing		6,718				6,505				6,770				26,779				27,556
Other professional services		6,800				4,713				4,261				19,917				17,803
Insurance and assessments		5,064				3,939				4,168				22,625				16,404
Intangible asset amortization		3,172				3,751				4,153				14,753				18,726
Leased equipment depreciation		7,501				7,057				6,856				28,865				24,016
Foreclosed assets (income) expense, net		(272	)			335				(3,446	)			(17	)			(3,555	)
Acquisition, integration and
reorganization costs		1,060				-				(269	)			1,060				349
Customer related expense		4,430				4,762				3,952				17,532				13,839
Loan expense		3,926				3,499				2,967				13,454				12,931
Goodwill impairment		-				-				-				1,470,000				-
Other expense		10,029				8,939				5,138				40,002				30,913
Total noninterest expense		135,682				133,402				123,728				1,984,019				502,251
Earnings (loss) before income taxes		153,376				59,174				147,067				(1,162,401	)			632,940
Income tax expense		36,546				13,671				29,186				75,173				164,304
Net earnings (loss)	$	116,830			$	45,503			$	117,881			$	(1,237,574	)		$	468,636
Basic and diluted earnings (loss) per share	$	0.99			$	0.38			$	0.98			$	(10.61	)		$	3.90
Dividends declared and paid per share	$	0.25			$	0.25			$	0.60			$	1.35			$	2.40

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS (LOSS) PER SHARE CALCULATIONS
	Three Months Ended												Year Ended
	December 31,				September 30,				December 31,				December 31,
		2020				2020				2019				2020				2019
	(In thousands, except per share data)
Basic Earnings (Loss) Per Share:
Net earnings (loss)	$	116,830			$	45,503			$	117,881			$	(1,237,574	)		$	468,636
Less: earnings allocated to unvested
restricted stock (1)		(1,398	)			(578	)			(1,458	)			(1,782	)			(5,182	)
Net earnings (loss) allocated to
common shares	$	115,432			$	44,925			$	116,423			$	(1,239,356	)		$	463,454
Weighted-average basic shares and
unvested restricted stock outstanding		118,446				118,438				119,804				118,463				120,468
Less: weighted-average unvested
restricted stock outstanding		(1,652	)			(1,684	)			(1,566	)			(1,610	)			(1,502	)
Weighted-average basic shares
outstanding		116,794				116,754				118,238				116,853				118,966
Basic earnings (loss) per share	$	0.99			$	0.38			$	0.98			$	(10.61	)		$	3.90
Diluted Earnings (Loss) Per Share:
Net earnings (loss) allocated to
common shares	$	115,432			$	44,925			$	116,423			$	(1,239,356	)		$	463,454
Weighted-average diluted shares
outstanding		116,794				116,754				118,238				116,853				118,966
Diluted earnings (loss) per share	$	0.99			$	0.38			$	0.98			$	(10.61	)		$	3.90
(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
	December 31, 2020						September 30, 2020						December 31, 2019
			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)	$	18,769,214	$	243,188	5.15%		$	19,195,737	$	241,547	5.01%		$	18,470,583	$	263,783	5.67%
Investment securities (3)	4,888,993		30,757		2.50%		4,107,915		26,015		2.52%		3,811,216		29,509		3.07%
Deposits in financial
institutions	3,576,335		1,135		0.13%		2,554,349		654		0.10%		498,068		2,056		1.64%
Total interest-earning
assets (1)	27,234,542		275,080		4.02%		25,858,001		268,216		4.13%		22,779,867		295,348		5.14%
Other assets	2,100,247						2,077,192						3,600,872
Total assets	$	29,334,789					$	27,935,193					$	26,380,739
Liabilities and
Stockholders' Equity:
Interest checking	$	5,191,435	2,064		0.16%		$	4,904,614	2,019		0.16%		$	3,731,696	10,031		1.07%
Money market	7,636,220		3,225		0.17%		7,170,842		3,081		0.17%		5,117,553		12,063		0.94%
Savings	567,646		35		0.02%		565,395		35		0.02%		509,497		204		0.16%
Time	1,650,150		3,130		0.75%		1,876,072		4,752		1.01%		2,744,156		12,504		1.81%
Total interest-bearing
deposits	15,045,451		8,454		0.22%		14,516,923		9,887		0.27%		12,102,902		34,802		1.14%
Borrowings	237,098		37		0.06%		181,315		27		0.06%		1,179,220		5,189		1.75%
Subordinated debentures	463,951		4,477		3.84%		462,375		4,670		4.02%		456,997		6,983		6.06%
Total interest-bearing
liabilities	15,746,500		12,968		0.33%		15,160,613		14,584		0.38%		13,739,119		46,974		1.36%
Noninterest-bearing
demand deposits	9,589,789						8,812,391						7,338,888
Other liabilities	462,075						464,320						372,550
Total liabilities	25,798,364						24,437,324						21,450,557
Stockholders' equity	3,536,425						3,497,869						4,930,182
Total liabilities and
stockholders' equity	$	29,334,789					$	27,935,193					$	26,380,739
Net interest income (1)			$	262,112					$	253,632					$	248,374
Net interest spread (1)					3.69%						3.75%						3.78%
Net interest margin (1)					3.83%						3.90%						4.33%
Total deposits (4)	$	24,635,240	$	8,454	0.14%		$	23,329,314	$	9,887	0.17%		$	19,441,790	$	34,802	0.71%
(1) Tax equivalent.
(2) Includes discount accretion on acquired loans of $3.8 million, $2.0 million, and $3.0 million for the three months ended December 31, 2020,
September 30, 2020, and December 31, 2019, respectively.
(3) Includes tax-equivalent adjustments of $1.9 million, $1.6 million, and $1.4 million for the three months ended December 31, 2020,
September 30, 2020, and December 31, 2019 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
	December 31,				September 30,				June 30,				March 31,				December 31,
		2020				2020				2020				2020				2019
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	150,464			$	187,176			$	174,059			$	172,570			$	172,585
Interest-earning deposits in financial
institutions		3,010,197				2,766,020				1,747,077				439,690				465,039
Total cash and cash equivalents		3,160,661				2,953,196				1,921,136				612,260				637,624
Securities available-for-sale		5,235,591				4,532,614				3,851,141				3,757,663				3,797,187
Federal Home Loan Bank stock		17,250				17,250				17,250				54,244				40,924
Total investment securities		5,252,841				4,549,864				3,868,391				3,811,907				3,838,111
Gross loans and leases held for investment		19,153,357				19,101,680				19,780,476				19,806,394				18,910,740
Deferred fees, net		(69,980	)			(75,480	)			(85,845	)			(61,089	)			(63,868	)
Total loans and leases held for
investment, net of deferred fees		19,083,377				19,026,200				19,694,631				19,745,305				18,846,872
Allowance for loan and lease losses		(348,181	)			(345,966	)			(301,050	)			(221,292	)			(138,785	)
Total loans and leases held for
investment, net		18,735,196				18,680,234				19,393,581				19,524,013				18,708,087
Equipment leased to others under
operating leases		333,846				286,425				295,191				306,530		-		324,084
Premises and equipment, net		39,234				40,544				42,299				39,799				38,585
Foreclosed assets, net		14,027				13,747				1,449				1,701				440
Goodwill		1,078,670				1,078,670				1,078,670				1,078,670				2,548,670
Core deposit and customer relationship
intangibles, net		23,641				26,813				30,564				34,446				38,394
Other assets		860,326				797,223				734,457				733,941				636,811
Total assets	$	29,498,442			$	28,426,716			$	27,365,738			$	26,143,267			$	26,770,806
LIABILITIES:
Noninterest-bearing deposits	$	9,193,827			$	9,346,744			$	8,629,543			$	7,510,218			$	7,243,298
Interest-bearing deposits		15,746,890				14,618,951				14,299,036				12,065,619				11,989,738
Total deposits		24,940,717				23,965,695				22,928,579				19,575,837				19,233,036
Borrowings		5,000				60,000				60,000				2,295,000				1,759,008
Subordinated debentures		465,812				463,282				460,772				458,994				458,209
Accrued interest payable and other
liabilities		491,962				451,508				463,489				423,047				365,856
Total liabilities		25,903,491				24,940,485				23,912,840				22,752,878				21,816,109
STOCKHOLDERS' EQUITY (1)		3,594,951				3,486,231				3,452,898				3,390,389				4,954,697
Total liabilities and stockholders’
equity	$	29,498,442			$	28,426,716			$	27,365,738			$	26,143,267			$	26,770,806
Book value per share	$	30.36			$	29.42			$	29.17			$	28.75			$	41.36
Tangible book value per share (2)	$	21.05			$	20.09			$	19.80			$	19.31			$	19.77
Shares outstanding		118,414,853				118,489,927				118,374,603				117,916,789				119,781,605
(1) Includes net unrealized gain on
securities available-for-sale, net	$	172,523			$	155,474			$	145,038			$	90,916			$	78,658
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)
	Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
		2020				2020				2020				2020				2019
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	242,198			$	240,811			$	247,851			$	262,278			$	263,402
Investment securities		28,843				24,443				26,038				27,446				28,135
Deposits in financial institutions		1,135				654				186				1,608				2,056
Total interest income		272,176				265,908				274,075				291,332				293,593
Interest expense:
Deposits		8,454				9,887				13,075				28,247				34,802
Borrowings		37				27				1,319				6,778				5,189
Subordinated debentures		4,477				4,670				5,402				6,560				6,983
Total interest expense		12,968				14,584				19,796				41,585				46,974
Net interest income		259,208				251,324				254,279				249,747				246,619
Provision for credit losses		10,000				97,000				120,000				112,000				3,000
Net interest income after
provision for credit losses		249,208				154,324				134,279				137,747				243,619
Noninterest income:
Service charges on deposit accounts		3,119				2,570				2,004				2,658				3,611
Other commissions and fees		9,974				10,541				10,111				9,721				10,170
Leased equipment income		9,440				9,900				12,037				12,251				10,648
Gain on sale of loans and leases		1,671				35				346				87				23
Gain on sale of securities		4				5,270				7,715				182				184
Other income		15,642				9,936				6,645				4,201				2,540
Total noninterest income		39,850				38,252				38,858				29,100				27,176
Noninterest expense:
Compensation		73,171				75,131				61,910				61,282				74,637
Occupancy		14,083				14,771				14,494				14,207				14,541
Data processing		6,718				6,505				7,102				6,454				6,770
Other professional services		6,800				4,713				4,146				4,258				4,261
Insurance and assessments		5,064				3,939				9,373				4,249				4,168
Intangible asset amortization		3,172				3,751				3,882				3,948				4,153
Leased equipment depreciation		7,501				7,057				7,102				7,205				6,856
Foreclosed assets (income) expense, net		(272	)			335				(146	)			66				(3,446	)
Acquisition, integration and
reorganization costs		1,060				-				-				-				(269	)
Customer related expense		4,430				4,762				4,408				3,932				3,952
Loan expense		3,926				3,499				3,379				2,650				2,967
Goodwill impairment		-				-				-				1,470,000				-
Other expense		10,029				8,939				11,315				9,719				5,138
Total noninterest expense		135,682				133,402				126,965				1,587,970				123,728
Earnings (loss) before income taxes		153,376				59,174				46,172				(1,421,123	)			147,067
Income tax expense		36,546				13,671				12,968				11,988				29,186
Net earnings (loss)	$	116,830			$	45,503			$	33,204			$	(1,433,111	)		$	117,881
Basic and diluted earnings (loss) per share	$	0.99			$	0.38			$	0.28			$	(12.23	)		$	0.98
Dividends declared and paid per share	$	0.25			$	0.25			$	0.25			$	0.60			$	0.60

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	December 31,				September 30,				June 30,				March 31,				December 31,
		2020				2020				2020				2020				2019
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		1.58	%			0.65	%			0.50	%			(21.27	)%			1.77	%
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")
return on average assets (1)(2)		2.22	%			2.22	%			2.51	%			2.39	%			2.26	%
Return on average equity (1)		13.14	%			5.18	%			3.87	%			(116.28	)%			9.49	%
Return on average tangible equity (1)(2)		19.63	%			8.20	%			6.39	%			6.88	%			20.68	%
Efficiency ratio		43.6	%			45.1	%			42.9	%			40.6	%			44.8	%
Noninterest expense as a percentage
of average assets (1)		1.84	%			1.90	%			1.92	%			23.57	%			1.86	%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)		5.15	%			5.01	%			5.01	%			5.54	%			5.67	%
Average interest-earning assets (3)		4.02	%			4.13	%			4.53	%			5.02	%			5.14	%
Cost of:
Average interest-bearing deposits		0.22	%			0.27	%			0.40	%			0.95	%			1.14	%
Average total deposits		0.14	%			0.17	%			0.25	%			0.59	%			0.71	%
Average interest-bearing liabilities		0.33	%			0.38	%			0.55	%			1.16	%			1.36	%
Net interest spread (3)		3.69	%			3.75	%			3.98	%			3.86	%			3.78	%
Net interest margin (3)		3.83	%			3.90	%			4.20	%			4.31	%			4.33	%
Average Balances:
Assets:
Loans and leases, net of deferred fees	$	18,769,214			$	19,195,737			$	19,951,603			$	19,065,035			$	18,470,583
Interest-earning assets		27,234,542				25,858,001				24,531,204				23,455,636				22,779,867
Total assets		29,334,789				27,935,193				26,621,227				27,099,040				26,380,739
Liabilities:
Noninterest-bearing deposits		9,589,789				8,812,391				8,292,151				7,357,717				7,338,888
Interest-bearing deposits		15,045,451				14,516,923				13,116,297				11,896,780				12,102,902
Total deposits		24,635,240				23,329,314				21,408,448				19,254,497				19,441,790
Borrowings		237,098				181,315				871,110				2,026,749				1,179,220
Subordinated debentures		463,951				462,375				459,466				458,399				456,997
Interest-bearing liabilities		15,746,500				15,160,613				14,446,873				14,381,928				13,739,119
Stockholders' equity		3,536,425				3,497,869				3,446,850				4,956,778				4,930,182
(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
	December 31,				September 30,				June 30,				March 31,				December 31,
		2020				2020				2020				2020				2019
	(Dollars in thousands)
Credit Quality Ratios:
Nonaccrual loans and leases held for
investment to loans and leases
held for investment		0.48	%			0.45	%			0.84	%			0.48	%			0.49	%
Nonperforming assets to loans and
leases held for investment and
foreclosed assets		0.55	%			0.52	%			0.85	%			0.49	%			0.49	%
Classified loans and leases held for
investment to loans and leases
held for investment		1.39	%			1.44	%			1.49	%			0.75	%			0.93	%
Provision for credit losses (for the
quarter) to average loans and leases
held for investment (annualized)		0.21	%			2.01	%			2.42	%			2.36	%			0.06	%
Net charge-offs (for the quarter) to
average loans and leases held
for investment (annualized)		0.40	%			0.75	%			0.27	%			0.40	%			0.02	%
Trailing 12 months net charge-offs
to average loans and leases
held for investment		0.45	%			0.36	%			0.20	%			0.19	%			0.09	%
Allowance for loan and lease losses to
loans and leases held for investment		1.82	%			1.82	%			1.53	%			1.12	%			0.74	%
Allowance for credit losses to loans
and leases held for investment		2.27	%			2.33	%			1.94	%			1.39	%			0.93	%
Allowance for credit losses to
nonaccrual loans and leases
held for investment		475.8	%			516.9	%			229.7	%			287.5	%			189.1	%
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio (1)		8.55	%			8.66	%			8.93	%			8.63	%			9.74	%
Common equity tier 1 capital ratio (1)		10.53	%			10.45	%			9.97	%			9.22	%			9.78	%
Tier 1 capital ratio (1)		10.53	%			10.45	%			9.97	%			9.22	%			9.78	%
Total capital ratio (1)		13.76	%			13.74	%			13.18	%			12.07	%			12.41	%
Risk-weighted assets (1)	$	22,837,693			$	22,114,040			$	22,781,836			$	24,214,209			$	23,582,495
Equity to assets ratio		12.19	%			12.26	%			12.62	%			12.97	%			18.51	%
Tangible common equity ratio (2)		8.78	%			8.71	%			8.93	%			9.10	%			9.79	%
Book value per share	$	30.36			$	29.42			$	29.17			$	28.75			$	41.36
Tangible book value per share (2)	$	21.05			$	20.09			$	19.80			$	19.31			$	19.77
Pacific Western Bank:
Tier 1 leverage capital ratio (1)		9.53	%			9.70	%			10.03	%			9.71	%			10.95	%
Common equity tier 1 capital ratio (1)		11.73	%			11.70	%			11.18	%			10.38	%			11.00	%
Tier 1 capital ratio (1)		11.73	%			11.70	%			11.18	%			10.38	%			11.00	%
Total capital ratio (1)		12.99	%			12.95	%			12.44	%			11.39	%			11.74	%
(1) Capital information for December 31, 2020 is preliminary.
(2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) 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 return on average tangible equity, tangible common equity ratio, tangible book value per share, and PPNR 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												Year Ended
PPNR and PPNR Return	December 31,				September 30,				December 31,				December 31,
on Average Assets		2020				2020				2019				2020				2019
	(Dollars in thousands)
Net earnings (loss)	$	116,830			$	45,503			$	117,881			$	(1,237,574	)		$	468,636
Add: Provision for credit losses		10,000				97,000				3,000				339,000				22,000
Add: Goodwill impairment		-				-				-				1,470,000				-
Add: Income tax expense		36,546				13,671				29,186				75,173				164,304
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")	$	163,376			$	156,174			$	150,067			$	646,599			$	654,940
Average assets	$	29,334,789			$	27,935,193			$	26,380,739			$	27,752,412			$	26,105,608
Return on average assets (1)		1.58	%			0.65	%			1.77	%			(4.46	)%			1.80	%
PPNR return on average assets (2)		2.22	%			2.22	%			2.26	%			2.33	%			2.51	%
(1) Annualized net earnings (loss) divided by average assets.
(2) Annualized PPNR divided by average assets.

	Three Months Ended												Year Ended
	December 31,				September 30,				December 31,				December 31,
Return on Average Tangible Equity		2020				2020				2019				2020				2019
	(Dollars in thousands)
Net earnings (loss)	$	116,830			$	45,503			$	117,881			$	(1,237,574	)		$	468,636
Add: Intangible asset amortization		3,172				3,751				4,153				14,753				18,726
Add: Goodwill impairment		-				-				-				1,470,000				-
Adjusted net earnings	$	120,002			$	49,254			$	122,034			$	247,179			$	487,362
Average stockholders' equity	$	3,536,425			$	3,497,869			$	4,930,182			$	3,857,610			$	4,864,332
Less: Average intangible assets		1,103,945				1,107,548				2,589,217				1,470,989				2,596,389
Average tangible common equity	$	2,432,480			$	2,390,321			$	2,340,965			$	2,386,621			$	2,267,943
Return on average equity (1)		13.14	%			5.18	%			9.49	%			(32.08	)%			9.63	%
Return on average tangible equity (2)		19.63	%			8.20	%			20.68	%			10.36	%			21.49	%
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.

Tangible Common Equity Ratio/	December 31,				September 30,				June 30,				March 31,				December 31,
Tangible Book Value Per Share		2020				2020				2020				2020				2019
	(Dollars in thousands, except per share data)
Stockholders' equity	$	3,594,951			$	3,486,231			$	3,452,898			$	3,390,389			$	4,954,697
Less: Intangible assets		1,102,311				1,105,483				1,109,234				1,113,116				2,587,064
Tangible common equity	$	2,492,640			$	2,380,748			$	2,343,664			$	2,277,273			$	2,367,633
Total assets	$	29,498,442			$	28,426,716			$	27,365,738			$	26,143,267			$	26,770,806
Less: Intangible assets		1,102,311				1,105,483				1,109,234				1,113,116				2,587,064
Tangible assets	$	28,396,131			$	27,321,233			$	26,256,504			$	25,030,151			$	24,183,742
Equity to assets ratio		12.19	%			12.26	%			12.62	%			12.97	%			18.51	%
Tangible common equity ratio (1)		8.78	%			8.71	%			8.93	%			9.10	%			9.79	%
Book value per share	$	30.36			$	29.42			$	29.17			$	28.75			$	41.36
Tangible book value per share (2)	$	21.05			$	20.09			$	19.80			$	19.31			$	19.77
Shares outstanding		118,414,853				118,489,927				118,374,603				117,916,789				119,781,605
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

Contact:	Matthew P. Wagner	Bart R. Olson
	President and CEO	Executive Vice President and CFO
Phone:	303-802-8900	714-989-4149
Contact:	William J. Black
	Executive Vice President
	Strategy and Corporate Development
Phone:	919-597-7466

FAQ

What were PacWest Bancorp's earnings in the fourth quarter of 2020?

PacWest Bancorp reported earnings of $116.8 million, or $0.99 per diluted share, in Q4 2020.

What was the reason for PacWest's net loss in 2020?

The net loss of $1.24 billion in 2020 was primarily due to a $1.47 billion goodwill impairment.

How did core deposits change for PacWest in the fourth quarter of 2020?

Core deposits increased by $1.1 billion, or 5%, in Q4 2020, totaling $22.3 billion.

What is PACW's CET1 ratio as reported in the fourth quarter of 2020?

PACW reported a CET1 ratio of 10.53% in Q4 2020.

What were the provisions for credit losses for PacWest in the fourth quarter of 2020?

Provisions for credit losses decreased to $10 million in Q4 2020 from $97 million in Q3 2020.