PacWest Bancorp Announces Results for the Second Quarter 2023

Rhea-AI Summary

Los Angeles - Financial results for the second quarter of 2023 were released by the company. Net loss available to common stockholders was $207.4 million, or a loss of $1.75 per diluted share, impacted by loan sales and restructuring. Adjusted earnings were $36.0 million and adjusted diluted earnings per common share were $0.22. The company executed its strategic plan to divest non-core loan portfolios, enhancing liquidity and capital. The operational efficiency initiative is ongoing, with continued optimization of resources, contracts, facilities, and processes.

Positive

• The company successfully executed its strategic plan to divest non-core loan portfolios, improving liquidity and capital ratios.
• The reduction in risk-weighted assets resulted in much improved capital ratios, with the CET1 capital ratio improving from 9.21% to 11.16%.
• Efficiency ratio increased to 527.0% from 49.5% due to severance, asset write-off, and contract termination expenses.

Negative

• None.

SECOND QUARTER 2023 HIGHLIGHTS

• Net loss available to common stockholders of $207.4 million, or a loss of $1.75 per diluted share as the quarter was impacted by items related to loan sales and restructuring of our Civic subsidiary
• Adjusted earnings of $36.0 million and adjusted diluted earnings per common share of $0.22, which exclude the effect of loan sales, lower of cost or market held for sale (“LOCOM HFS”) adjustments, and reorganization costs as detailed below
• Executed on strategic plan to divest non-core loan portfolios including selling
  • National Construction portfolio, including $2.6 billion of loans and $2.3 billion of unfunded commitments
  • Lender Finance portfolio, including $2.1 billion of loans and $0.2 billion of unfunded commitments
  • A portion of the Civic portfolio, including $521 million of loans and $24 million of unfunded commitments
• Second quarter results were marked by enhanced liquidity and capital
  • Immediately-available liquidity (on-balance sheet liquidity and unused borrowing capacity) of $17.9 billion, which exceeded uninsured deposits of $5.3 billion, with a coverage ratio of 335% at June 30, 2023
  • Total insured deposits represented approximately 81% of total deposits as of June 30, 2023, up from 48% at December 31, 2022
• All risk-based capital ratios increased from March 31, 2023, with CET1 increasing from 9.21% to 11.16%
• Loans to deposits ratio decreased to 81.5% at June 30, 2023 from 101.0% at March 31, 2023
• Operational efficiency initiative is ongoing with continued optimization of resources, contracts, facilities, and processes

ADJUSTED EARNINGS AND RELATED METRICS

	Three Months Ended
	June 30,			March 31,			June 30,
	2023			2023			2022
	(Dollars in thousands, except per share amounts)
Earnings Summary:
Net (loss) earnings	$	(197,414)		$	(1,195,424)		$	122,360
Diluted earnings per common share	$	(1.75)		$	(10.22)		$	1.02
Return on average assets		(1.84)%			(11.34)%			1.23%
Return on average tangible common equity (1)		(37.62)%			14.45%			24.24%
Efficiency ratio		527.0%			58.2%			49.5%
Adjusted Earnings Summary (1):
Adjusted earnings	$	35,957		$	89,436		$	122,360
Adjusted diluted earnings per common share		0.22		$	0.66		$	1.02
Adjusted return on average assets		0.34%			0.85%			1.23%
Adjusted return on average tangible common
equity		5.08%			15.62%			24.24%
Adjusted efficiency ratio		86.9%			58.2%			49.5%
(1) Non-GAAP measure.

LOS ANGELES, July 25, 2023 (GLOBE NEWSWIRE) -- Financial results for the second quarter of 2023 were impacted by $277.7 million of losses on the sale of loans and unfunded commitments and LOCOM HFS adjustments, Civic loan sale charge-offs of $22.4 million, and $12.4 million of reorganization costs. Financial results for the first quarter of 2023 were impacted by a goodwill impairment of $1.38 billion and reorganization costs of $8.5 million. Excluding these amounts, adjusted earnings were $36.0 million, or $0.22 per diluted share, for the second quarter of 2023 and $89.4 million, or $0.66 per diluted share, for the first quarter of 2023. A reconciliation of adjusted earnings to net (loss) earnings according to generally accepted accounting principles in the United States (“GAAP”) is provided in the financial tables at the end of this press release.

CEO COMMENTARY

Paul Taylor, President and CEO, commented, “At the end of the first quarter, we communicated our strategic plan to exit non-core products and services and strengthen our community banking business which would improve our capital ratios, liquidity, and operational efficiency. We expected to execute this plan over several quarters, however, given that market conditions changed, we pivoted to shrink the balance sheet through the sale of three significant non-core loan portfolios. These loan sales accelerated our balance sheet restructuring, reducing risk in our loan portfolio, and improving our capital ratios and liquidity. The significant reduction in risk-weighted assets resulted in much improved capital ratios, and our CET1 capital ratio improved from 9.21% at March 31, 2023 to 11.16% at June 30, 2023.”

Mr. Taylor continued, “We are continuing the work we started last year to improve the overall efficiency of the Bank, which resulted in severance, asset write-off, and contract termination expense of $12.4 million in the second quarter of 2023. Since the beginning of the year, we have reduced our employee count by 560 employees, primarily at our Civic subsidiary. We have identified many other areas to improve efficiency across the Bank and will be executing on these measures in the coming months.”

Mr. Taylor concluded, “Due to the competitive marketplace for deposits, we are introducing new products and technology solutions to successfully grow customer deposits. At the end of the second quarter, we introduced a digital account opening tool to efficiently gather new deposits. In the third quarter, we expect to implement a new on-line channel for gathering deposits directly from consumers.”

FINANCIAL HIGHLIGHTS

	At or For the												At or For the
	Three Months Ended												Six Months Ended
	June 30,				March 31,				Increase				June 30,								Increase
Financial Highlights	2023				2023				(Decrease)				2023				2022				(Decrease)
	(Dollars in thousands, except per share amounts)
Net (loss) earnings available
to common stockholders	$	(207,361	)		$	(1,205,371	)		$	998,010			$	(1,412,732	)		$	242,488			$	(1,655,220	)
Diluted (loss) earnings per
common share	$	(1.75	)		$	(10.22	)		$	8.47			$	(11.96	)		$	2.03			$	(13.99	)
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (1)	$	(262,443	)		$	119,396			$	(381,839	)		$	(143,047	)		$	336,735			$	(479,782	)
Return on average assets		(1.84	)%			(11.34	)%			9.50				(6.55	)%			1.22	%			(7.77	)
PPNR return on average
assets (1)		(2.45	)%			1.13	%			(3.58	)			(0.67	)%			1.70	%			(2.37	)
Return on average
tangible common equity (1)		(37.62	)%			14.45	%			(52.07	)			(11.00	)%			22.40	%			(33.40	)
Yield on average loans and
leases (tax equivalent)		6.08	%			6.14	%			(0.06	)			6.11	%			4.66	%			1.45
Cost of average total
deposits		2.62	%			1.98	%			0.64				2.27	%			0.13	%			2.14
Net interest margin ("NIM")
(tax equivalent)		1.82	%			2.89	%			(1.07	)			2.34	%			3.50	%			(1.16	)
Efficiency ratio		527.0	%			58.2	%			468.8				130.5	%			49.8	%			80.7
Total assets	$	38,337,250			$	44,302,981			$	(5,965,731	)		$	38,337,250			$	40,950,723			$	(2,613,473	)
Loans and leases held
for investment,
net of deferred fees	$	22,258,210			$	25,672,381			$	(3,414,171	)		$	22,258,210			$	26,501,137			$	(4,242,927	)
Noninterest-bearing
demand deposits	$	6,055,358			$	7,030,759			$	(975,401	)		$	6,055,358			$	13,338,029			$	(7,282,671	)
Interest-bearing deposits	$	21,841,725			$	21,156,802			$	684,923			$	21,841,725			$	20,630,123			$	1,211,602
Total deposits	$	27,897,083			$	28,187,561			$	(290,478	)		$	27,897,083			$	33,968,152			$	(6,071,069	)
As percentage of total
deposits:
Noninterest-bearing
demand deposits		22	%			25	%			(3	)			22	%			39	%			(17	)
Interest-bearing deposits		78	%			75	%			3				78	%			61	%			17
Equity to assets ratio		6.61	%			6.26	%			0.35				6.61	%			9.72	%			(3.11	)
Common equity tier 1
capital ratio		11.16	%			9.21	%			1.95				11.16	%			8.24	%			2.92
Tier 1 capital ratio		13.70	%			11.15	%			2.55				13.70	%			10.15	%			3.55
Total capital ratio		17.61	%			14.21	%			3.40				17.61	%			13.12	%			4.49
Tangible common equity
ratio (1)		5.24	%			5.07	%			0.17				5.24	%			5.15	%			0.09
Tangible book value per
common share (1)	$	16.71			$	18.66			$	(1.95	)		$	16.71			$	16.93			$	(0.22	)
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income decreased by $93.2 million to $186.1 million for the second quarter of 2023 compared to $279.3 million for the first quarter of 2023 due mainly to higher interest expense on deposits and borrowings and lower interest income on loans and leases, offset partially by higher interest income on deposits in financial institutions. Interest income on deposits in financial institutions increased by $43.9 million in the second quarter of 2023 due mainly to a $3.2 billion increase in the average balance of deposits in financial institutions and a 37 basis points increase in the yield. Interest income on loans and leases decreased by $21.7 million in the second quarter of 2023 due to a $1.6 billion decrease in the average balance of loans and leases and a six basis points decrease in the tax equivalent yield on loans and leases compared to the first quarter of 2023. The tax equivalent yield on loans and leases was 6.08% in the second quarter of 2023 compared to 6.14% in the first quarter of 2023. The decrease in the tax equivalent yield on loans and leases was due primarily to lower levels of higher-yielding Civic and construction loans and a smaller tax equivalent adjustment in the second quarter. Interest expense on deposits increased by $22.9 million in the second quarter of 2023 due mainly to increased market rates and an increased use of brokered deposits that contributed to a 44 basis points increase in the cost of total deposits. Interest expense on borrowings increased by $91.8 million due to a $6.2 billion increase in the average balance and a 34 basis points increase in the cost of borrowings attributable mainly to the result of the borrowings under the Bank Term Funding Program and repurchase agreement being in effect for a full quarter, as these borrowings were entered into in March 2023.

The tax equivalent NIM was 1.82% for the second quarter of 2023 compared to 2.89% for the first quarter of 2023. The decrease in the NIM was due mainly to a shift in our funding mix during the second quarter of 2023. Average borrowings as a percentage of average interest-bearing liabilities was 34% for the second quarter of 2023 compared to 19% for the first quarter of 2023. The tax-equivalent NIM was further impacted by a higher cost of total deposits and borrowings and a lower yield on loans and leases, offset partially by a higher yield on deposits in financial institutions.

The cost of total deposits was 2.62% for the second quarter of 2023 compared to 1.98% for the first quarter of 2023 due mainly to higher market interest rates and a higher average balance of brokered deposits.

PROVISION FOR CREDIT LOSSES

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

	Three Months Ended
	June 30,				March 31,				Increase
Provision for Credit Losses	2023				2023				(Decrease)
	(In thousands)
Addition to allowance for
loan and lease losses	$	40,000			$	18,500			$	21,500
Reduction in reserve for
unfunded loan commitments		(38,000	)			(15,500	)			(22,500	)
Total loan-related provision		2,000				3,000				(1,000	)
Total provision for credit losses	$	2,000			$	3,000			$	(1,000	)

The provision for credit losses was $2.0 million for the second quarter of 2023 compared to $3.0 million for the first quarter of 2023. The provision for the second quarter of 2023 reflected the impact of an updated forecast, higher net charge-offs and higher reserves for downgraded loans largely offset by lower reserves needed for lower loan and unfunded commitment balances. During the first quarter of 2023, while loans and leases held for investment and unfunded loan commitments declined, a $3.0 million provision was recognized due to an increase in qualitative reserves for loans secured by commercial real estate and higher net charge-offs.

NONINTEREST INCOME

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

	Three Months Ended
	June 30,				March 31,				Increase
Noninterest Income	2023				2023				(Decrease)
	(In thousands)
Service charges on deposit accounts	$	4,315			$	3,573			$	742
Other commissions and fees		11,241				10,344				897
Leased equipment income		22,387				13,857				8,530
(Loss) gain on sale of loans and leases		(158,881	)			2,962				(161,843	)
Gain (loss) on sale of securities		-				-				-
Dividends and gains on equity investments		2,658				1,098				1,560
Warrant loss		(124	)			(333	)			209
LOCOM HFS adjustment		(11,943	)			-				(11,943	)
Other income		2,265				4,890				(2,625	)
Total noninterest (loss) income	$	(128,082	)		$	36,391			$	(164,473	)

Noninterest income decreased by $164.5 million to a loss of $128.1 million for the second quarter of 2023 compared to income of $36.4 million for the first quarter of 2023 due primarily to a decrease of $161.8 million in gain on sale of loans and leases and a $11.9 million LOCOM HFS loss adjustment, offset partially by an increase of $8.5 million in leased equipment income. The second quarter loss on sale of loans and leases resulted from the sale of $5.2 billion of loans for a net loss of $158.9 million in the second quarter of 2023 compared to the sale of $287.3 million of loans for a net gain of $3.0 million in the first quarter of 2023. The $11.9 million LOCOM HFS loss adjustment was related to the lower of cost or market adjustment that we made to our $478.1 million loans held for sale at June 30, 2023. The increase in leased equipment income was due mainly to $8.8 million of early lease termination gains recognized in the second quarter of 2023 compared to the linked quarter.

NONINTEREST EXPENSE

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

	Three Months Ended
	June 30,			March 31,				Increase
Noninterest Expense	2023			2023				(Decrease)
	(In thousands)
Compensation	$	82,881		$	88,476			$	(5,595	)
Occupancy		15,383			15,067				316
Data processing		10,963			10,938				25
Other professional services		9,973			6,073				3,900
Insurance and assessments		25,635			11,717				13,918
Intangible asset amortization		2,389			2,411				(22	)
Leased equipment depreciation		9,088			9,375				(287	)
Foreclosed assets expense, net		2			363				(361	)
Customer related expense		27,302			24,005				3,297
Loan expense		5245			6524				(1,279	)
Other		119,182			12,804				106378
Total operating expense		308,043			187,753				120,290
Acquisition, integration and reorganization costs		12,394			8,514				3,880
Goodwill impairment		-			1,376,736				(1,376,736	)
Total noninterest expense	$	320,437		$	1,573,003			$	(1,252,566	)

Noninterest expense decreased by $1.25 billion to $320.4 million in the second quarter of 2023 compared to $1.57 billion for the first quarter of 2023 due primarily to the $1.38 billion goodwill impairment charge recorded in the first quarter of 2023. Excluding the goodwill impairment and acquisition, integration and reorganization costs, operating expense increased by $120.3 million to $308.0 million. The $120.3 million increase was due mainly to an increase of $106.4 million in other expense and an increase of $13.9 million in insurance and assessments expense. The increase in other expense was due mainly to $106.8 million of unfunded commitments fair value loss adjustments in the second quarter of 2023. The increase in insurance and assessments was due mainly to higher FDIC assessment expense attributable to an increased assessment rate due to lower core earnings, lower core deposits, and a higher level of criticized loans and leases.

INCOME TAXES

The effective income tax rate was 25.3% for the second quarter of 2023 compared to 5.2% for the first quarter of 2023. Excluding goodwill impairment, the effective income tax rate for the first quarter of 2023 was 28.4%. The decrease from the first quarter of 2023 adjusted rate was due primarily to higher disallowed interest expense, higher disallowed FDIC assessment expense, and higher shortfalls from restricted stock vesting in the second quarter of 2023. Excluding goodwill impairment, the effective tax rate for the full year 2023 is currently estimated to be in the range of 22% to 24%.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

The following tables present the composition of our deposit portfolio as of the dates indicated:

	June 30, 2023			March 31, 2023			June 30, 2022
		% of			% of			% of
Deposits By Account Type	Balance	Total		Balance	Total		Balance	Total
	(Dollars in thousands)
Noninterest-bearing	$     6,055,358	22%		$     7,030,759	25%		$   13,338,029	39%
Interest-bearing:
Transaction (NOW)	7,112,807	26%		5,360,622	19%		6,372,460	19%
Money market	5,678,323	20%		8,195,670	29%		11,039,455	32%
Savings	897,277	3%		671,918	2%		653,950	2%
Time deposits (1)	8,153,318	29%		6,928,592	25%		2,564,258	8%
Total interest-bearing	21,841,725	78%		21,156,802	75%		20,630,123	61%
Total deposits	$   27,897,083	100%		$   28,187,561	100%		$   33,968,152	100%
(1) Includes time deposits over $250,000 of $853.4 million, $1.1 billion, and $665.9 million at June 30, 2023, March 31, 2023,
and June 30, 2022, respectively.

	June 30, 2023			March 31, 2023			June 30, 2022
		% of			% of			% of
Deposits By Customer Type	Balance	Total		Balance	Total		Balance	Total
	(Dollars in thousands)
Noninterest-bearing	$     6,055,358	22%		$     7,030,759	25%		$   13,338,029	39%
Interest-bearing:
Consumer and commercial:
Reciprocal	7,935,479	29%		6,744,447	24%		3,447,382	10%
Non-reciprocal	6,257,971	22%		7,958,001	28%		13,787,432	41%
Brokered	7,648,275	27%		6,454,354	23%		3,395,309	10%
Total interest-bearing	21,841,725	78%		21,156,802	75%		20,630,123	61%
Total deposits	$   27,897,083	100%		$   28,187,561	100%		$   33,968,152	100%

Total deposits decreased by $290.5 million or 1.0% in the second quarter of 2023 due to a $975.4 million decrease in noninterest-bearing deposits, offset partially by a $684.9 million increase in interest-bearing deposits. At June 30, 2023, noninterest-bearing deposits totaled $6.1 billion or 22% of total deposits and interest-bearing deposits totaled $21.8 billion or 78% of total deposits.

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

	June 30, 2023						March 31, 2023
				% of						% of			Increase
Deposits By Division	Balance			Total			Balance			Total			(Decrease)
	(Dollars in thousands)
Community Banking	$	14,353,851		51	%		$	14,917,027		53	%		$	(563,176	)
Venture Banking		5,764,220		21	%			6,584,554		23	%			(820,334	)
Wholesale Deposits		7,779,012		28	%			6,685,980		24	%			1,093,032
Total deposits	$	27,897,083		100	%			28,187,561		100	%			(290,478	)

As of June 30, 2023, FDIC-insured deposits represented approximately 81% of total deposits and FDIC-insured venture-specific deposits accounted for approximately 83% of total venture-specific deposits. The Bank’s spot deposit rates increased from 2.32% at March 31, 2023 to 2.71% at June 30, 2023. Since May 10, 2023 (the date of our last deposit disclosure in our March 31, 2023 Form 10-Q filing) through July 21, 2023, our total non-brokered deposits were up approximately $1.0 billion.

In addition to deposit products, we also offer alternative, non-depository cash investment options for select clients. These alternative options include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds decreased from $1.2 billion as of March 31, 2023 to $0.8 billion at June 30, 2023, of which $0.4 billion was managed by PWAM.

BORROWINGS

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

	June 30, 2023				March 31, 2023
			Weighted				Weighted
			Average				Average		Increase
Borrowing Type	Balance		Rate		Balance		Rate		(Decrease)
	(Dollars in thousands)
FHLB secured advances	$	-	-		$	5,450,000	5.07%		$	(5,450,000	)
Bank Term Funding Program		4,910,000	4.38%			4,910,000	4.38%			-
Repurchase agreement (1)		1,324,273	8.50%			1,393,337	8.50%			(69,064	)
Credit-linked notes		123,065	15.77%			128,375	15.24%			(5,310	)
Total borrowings	$	6,357,338	5.46%		$	11,881,712	5.30%		$	(5,524,374	)
(1) Balance is net of unamortized issuance costs of $14.3 million and $2.7 million of accrued exit fees.
Rate calculation does not include the effects of issuance costs and exit fees.

The $5.5 billion decrease in borrowings in the second quarter of 2023 was due mainly to the payoff of FHLB secured advances with the proceeds of the loan sales. Available borrowing capacity was approximately $11.4 billion at June 30, 2023.

LOANS AND LEASES

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

	Three Months Ended								Six Months Ended
Roll Forward of Loans and Leases Held	June 30,				March 31,				June 30,
for Investment, Net of Deferred Fees	2023				2023				2023
	(Dollars in thousands)
Balance, beginning of period	$	25,672,381			$	28,609,129			$	28,609,129
Additions:
Production		189,201				468,671				657,872
Disbursements		1,143,347				1,622,898				2,766,245
Total production and disbursements		1,332,548				2,091,569				3,424,117
Reductions:
Payoffs		(942,962	)			(1,021,652	)			(1,964,614	)
Paydowns		(817,033	)			(965,537	)			(1,782,570	)
Total payoffs and paydowns		(1,759,995	)			(1,987,189	)			(3,747,184	)
Sales		(3,038,672	)			(231,798	)			(3,270,470	)
Transfers to foreclosed assets		(6,657	)			(2,568	)			(9,225	)
Charge-offs		(31,708	)			(10,397	)			(42,105	)
Transfers to loans held for sale		(280,062	)			(2,796,365	)			(3,076,427	)
Total reductions		(5,117,094	)			(5,028,317	)			(10,145,411	)
Transfers from loans held for sale		370,375				-				370,375
Net (decrease) increase		(3,414,171	)			(2,936,748	)			(6,350,919	)
Balance, end of period	$	22,258,210			$	25,672,381			$	21,887,835
Weighted average rate on production (1)		7.64	%			8.44	%			8.21	%
(1) The weighted average rate on production presents contractual rates on a tax equivalent basis
and excludes amortized fees. Amortized fees added approximately 17 basis points to loan
yields in 2023.

Loans and leases held for investment, net of deferred fees, decreased by $3.4 billion, or 13.3% in the second quarter of 2023 to $22.3 billion at June 30, 2023. The overall decrease in the loans and leases balance for the second quarter of 2023 was due primarily to the sale of the $2.6 billion National Construction portfolio and $521 million of the Civic portfolio in the second quarter.

The weighted average rate on the $189.2 million of production for the second quarter of 2023 decreased to 7.64% from 8.44% for the first quarter of 2023 due primarily to the loan mix (lower percentage of Civic production).

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

	June 30, 2023					March 31, 2023					June 30, 2022
			% of					% of					% of
Loan and Lease Portfolio	Balance		Total			Balance		Total			Balance		Total
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	3,610,320	16	%		$	3,808,751	15	%		$	3,670,515	14	%
Multi-family		5,304,544	24	%			5,523,320	21	%			5,062,422	19	%
Other residential		5,373,178	24	%			6,075,540	24	%			5,321,148	20	%
Total real estate mortgage		14,288,042	64	%			15,407,611	60	%			14,054,085	53	%
Real estate construction and land:
Commercial		415,997	2	%			910,327	4	%			837,423	3	%
Residential		2,049,526	9	%			3,698,113	14	%			2,649,177	10	%
Total real estate construction
and land		2,465,523	11	%			4,608,440	18	%			3,486,600	13	%
Total real estate		16,753,565	75	%			20,016,051	78	%			17,540,685	66	%
Commercial:
Asset-based		2,357,098	11	%			2,068,327	8	%			5,068,112	19	%
Venture capital		1,723,476	8	%			2,058,237	8	%			2,179,190	8	%
Other commercial		1,014,212	4	%			1,102,543	4	%			1,229,504	5	%
Total commercial		5,094,786	23	%			5,229,107	20	%			8,476,806	32	%
Consumer		409,859	2	%			427,223	2	%			483,646	2	%
Total loans and leases held for
investment, net of deferred fees		22258210	100	%			25672381	100	%		$	26,501,137	100	%
Total unfunded loan commitments	$	5,845,375				$	9,776,789				$	11,866,437

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

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

	Three Months Ended June 30, 2023
Allowance for Credit	Allowance for				Reserve for				Total
Losses on Loans and	Loan and				Unfunded Loan				Allowance for
Leases Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	210,055			$	75,571			$	285,626
Civic loan sale charge-offs		(22,446	)			-				(22,446	)
Other charge-offs		(9,262	)			-				(9,262	)
Total charge-offs		(31,708	)			-				(31,708	)
Recoveries		887				-				887
Net charge-offs		(30,821	)			-				(30,821	)
Provision		40,000				(38,000	)			2,000
Ending balance	$	219,234			$	37,571			$	256,805

	Three Months Ended June 30, 2023
Allowance for Credit	Allowance for				Reserve for				Total
Losses on Loans and	Loan and				Unfunded Loan				Allowance for
Leases Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	200,732			$	91,071			$	291,803
Charge-offs		(10,397	)			-				(10,397	)
Recoveries		1,220				-				1,220
Net charge-offs		(9,177	)			-				(9,117	)
Provision		18,500				(15,500	)			3,000
Ending balance	$	210,055			$	75,571			$	285,626

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

Allowance for Credit Losses	June 30,				March 31,				Increase
on Loans and Leases	2023				2023				(Decrease)
	(Dollars in thousands)
Allowance for loan and lease losses	$	219,234			$	210,055			$	9,179
Reserve for unfunded loan commitments		37,571				75,571				(38,000	)
Allowance for credit losses	$	256,805			$	285,626			$	(28,821	)
Provision for credit losses (for the quarter)	$	2,000			$	3,000			$	(1,000	)
Net charge-offs (for the quarter)	$	30,821			$	9,177			$	21,644
Net charge-offs to average loans
and leases (for the quarter)		0.46	%			0.13	%
Allowance for loan and lease losses to loans
and leases held for investment		0.98	%			0.82	%
Allowance for credit losses to loans and leases
held for investment		1.15	%			1.11	%

The allowance for credit losses decreased by $28.8 million in the second quarter of 2023 to $256.8 million at June 30, 2023. This decrease was attributable mainly to lower reserves needed due to the decrease in loans and leases held for investment and unfunded loan commitments and $22.4 million of charge-offs related to Civic loan sales, offset partially by the impact of an updated forecast and higher reserves needed for downgraded loans.

Net charge-offs over the trailing twelve months were $45.0 million, which resulted in net charge-offs to average loans and leases over the trailing twelve months of 0.17%.

CREDIT QUALITY

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

	June 30,				March 31,				Increase
Credit Quality Metrics	2023				2023				(Decrease)
	(Dollars in thousands)
Nonperforming Assets:
Nonaccrual loans and leases held for investment (1)	$	104,886			$	87,124			$	17,762
Accruing loans contractually past due 90 days or more		-				-				-
Foreclosed assets, net		8,426				2,135				6,291
Total nonperforming assets ("NPAs")	$	113,312			$	89,259			$	24,053
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.47	%			0.34	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.51	%			0.35	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		244.8	%			327.8	%
Loan and Lease Credit Risk Ratings:
Pass	$	21,679,908			$	24,959,805			$	(3,279,897	)
Special mention		366,368				580,153				(213,785	)
Classified		211,934				132,423				79,511
Total loans and leases held for investment,
net of deferred fees	$	22,258,210			$	25,672,381			$	(3,414,171	)
Special mention loans and leases held for investment
to loans and leases held for investment		1.65	%			2.26	%
Classified loans and leases held for investment
to loans and leases held for investment		0.95	%			0.52	%
(1) Nonaccrual loans include SBA guaranteed amounts of $14.8 million at June 30, 2023 and $11.8 million
at March 31, 2023.

Nonaccrual loans and leases increased by $17.8 million to $104.9 million in the second quarter of 2023 due primarily to an increase in nonaccrual Civic loans and nonaccrual SBA guarantied real estate loans. The increase in classified loans (and subsequent decrease in special mention) was driven by downgrades in Multifamily loans as the result of rising interest rates and the related stress on debt service.  All of the Multifamily loans downgraded remain well collateralized and current at quarter-end.

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

	June 30, 2023							March 31, 2023							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	$	37,191		$	-			$	32,996		$	1,650			$	4,195			$	(1,650	)
Multi-family		-			-				-			-				-				-
Other residential		63,626			45,805				50,060			125,458				13,566				(79,653	)
Total real estate mortgage		100,817			45,805				83,056			127,108				17,761				(81,303	)
Real estate construction and land:
Commercial		-			-				-			-				-				-
Residential		-			-				-			-				-				-
Total real estate
construction and land		-			-				-			-				-				-
Commercial:
Asset-based		385			-				420			-				(35	)			-
Venture capital		-			1,845				-			-				-				1,845
Other commercial		3,479			147				3,123			618				356				(471	)
Total commercial		3,864			1,992				3,543			618				321				1,374
Consumer		205			2,024				525			1,593				(320	)			431
Total held for investment	$	104,886		$	49,821			$	87,124		$	129,319			$	17,762			$	(79,498	)

Loans and leases accruing and 30-89 days past due generally fluctuate from period to period. The $79.5 million decrease to $49.8 million in the second quarter of 2023 was due mainly to a decrease in Civic delinquent loans which included $46.5 million being transferred to held for sale in the second quarter.

CAPITAL

The following table presents capital ratios as of the dates indicated:

	June 30,				March 31,				June 30,
	2023				2023				2022
PacWest Bancorp Consolidated:
Common equity tier 1 capital ratio (1)		11.16	%			9.21	%			8.24	%
Tier 1 capital ratio (1)		13.70	%			11.15	%			10.15	%
Total capital ratio (1)		17.61	%			14.21	%			13.12	%
Tier 1 leverage capital ratio (1)		7.76	%			8.33	%			8.52	%
Risk-weighted assets (1) (in thousands)	$	24,768,687			$	32,507,454			$	33,009,455
Tangible common equity ratio (2)		5.24	%			5.07	%			5.15	%
Tangible common equity ratio excluding
the impact of AOCI for securities (2)		7.26	%			6.73	%			6.79	%
(1) Capital information for June 30, 2023 is preliminary.
(2) Non-GAAP measure.

CHANGE IN CONFERENCE CALL

As a result of today’s merger announcement, the previously announced PacWest Bancorp conference call scheduled for 8:00 AM PT/ 11:00 AM ET on Wednesday, July 26, 2023, to discuss the Company’s performance for the second quarter of 2023 has been cancelled. PacWest Bancorp and Banc of California, Inc. will conduct a live conference call and webcast to discuss the transaction later today at 2:30 PM PT/ 5:30 PM ET. To listen to the live call, please dial 888-317-6003 and enter 2706567 for the conference ID. The webcast, along with the related slides, will be available on both the PacWest website (www.pacwestbancorp.com) and the Banc of California, Inc. website (www.bancofcal.com). A replay of the conference call will also be available via these websites.

PACWEST BANCORP

PacWest is a bank holding company headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). Pacific Western Bank is a relationship-based community bank focused on providing business banking and treasury management services to small, middle-market, and venture-backed businesses. The Bank offers a broad range of loan and lease and deposit products and services through full-service branches throughout California and in Durham, North Carolina and Denver, Colorado, and loan production offices around the country. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

FORWARD-LOOKING STATEMENTS

This communication contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of PacWest’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those expressed in them. Continued deterioration in general business, economic, and political conditions, geopolitical tensions, uncertainty in U.S. fiscal monetary policy, including the interest rate policies of the Federal Reserve Board, and volatility and disruptions in credit and capital markets could lead to a tightening of credit and an increase in credit losses, adversely affect PacWest’s revenues and the values of our assets and liabilities, increase stock price volatility, and adversely impact our ability to raise capital. In addition, PacWest and its results could be adversely affected by changes in interest rates, continued high inflation, and unemployment rates, our ability to attract and retain deposits and other sources of funding and liquidity particularly in a rising or high interest rate environment, the impact of bank failures or other adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks, the safety of deposits, and depositor behavior, the quality and composition of our deposits, deterioration in the credit quality of our loan portfolio or in the value of the collateral securing those loans, especially the risks associated with concentrations in real estate related loans, deterioration in the value of our investment securities as a result of rising interest rates or otherwise, our ability to successfully execute on our strategic plan and digital and innovation initiatives, the effectiveness of our risk management framework and quantitative models, 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
	June 30,				March 31,				June 30,
	2023				2023				2022
	(Dollars in thousands, except per share amounts)
ASSETS:
Cash and due from banks	$	208,300			$	218,830			$	197,027
Interest-earning deposits in financial institutions		6,489,847				6,461,306				2,192,877
Total cash and cash equivalents		6,698,147				6,680,136				2,389,904
Securities available-for-sale, at estimated fair value		4,708,519				4,848,607				6,780,648
Securities held-to-maturity, at amortized cost,
net of allowance for credit losses		2,278,202				2,273,650				2,260,367
Federal Home Loan Bank stock, at cost		17,250				147,150				33,210
Total investment securities		7,003,971				7,269,407				9,074,225
Loans held for sale		478,146				2,796,208				-
Gross loans and leases held for investment		22,311,292				25,770,912				26,608,541
Deferred fees, net		(53,082	)			(98,531	)			(107,404	)
Total loans and leases held for investment,
net of deferred fees		22,258,210				25,672,381				26,501,137
Allowance for loan and lease losses		(219,234	)			(210,055	)			(188,705	)
Total loans and leases held for investment, net		22,038,976				25,462,326				26,312,432
Equipment leased to others under operating leases		380,022				399,972				324,233
Premises and equipment, net		57,078				60,358				51,083
Foreclosed assets, net		8,426				2,135				-
Goodwill		-				-				1,405,736
Core deposit and customer relationship intangibles, net		26,581				28,970				37,659
Deferred tax asset, net		426,304				342,557				254,090
Other assets		1,219,599				1,260,912				1,101,361
Total assets	$	38,337,250			$	44,302,981			$	40,95,0723
LIABILITIES:
Noninterest-bearing deposits	$	6,055,358			$	7,030,759			$	13,338,029
Interest-bearing deposits		21,841,725				21,156,802				20,630,123
Total deposits		27,897,083				28,187,561				33,968,152
Borrowings		6,357,338				11,881,712				1,592,000
Subordinated debt		870,378				868,815				863,756
Accrued interest payable and other liabilities		679,256				593,416				548,412
Total liabilities		35,804,055				41,531,504				36,972,320
STOCKHOLDERS' EQUITY (1)		2,533,195				2,771,477				3,978,403
Total liabilities and stockholders’ equity	$	38,337,250			$	44,302,981			$	40,950,723
Book value per common share	$	16.93			$	18.90			$	28.93
Tangible book value per common share (2)	$	16.71			$	18.66			$	16.93
Common shares outstanding		120,169,012				120,244,214				120,288,024
(1) Includes net unrealized loss on:
Securities available-for-sale, net	$	(583,684	)		$	(537,307	)		$	(428,242	)
Securities held to maturity	$	(193,058	)		$	(198,753	)		$	(216,508	)
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
	2023				2023				2022				2023				2022
	(In thousands, except per share amounts)
Interest income:
Loans and leases	$	408,972			$	430,685			$	293,286			$	839,657			$	561,045
Investment securities		44,153				44,237				52,902				88,390				106,324
Deposits in financial institutions		86,763				42,866				4,330				129,629				6,053
Total interest income		539,888				517,788				350,518				1,057,676				673,422
Interest expense:
Deposits		178,789				155,892				15,362				334,681				21,570
Borrowings		160,914				69,122				2,441				230,036				2,602
Subordinated debt		14,109				13,502				8,790				27,611				16,608
Total interest expense		353,812				238,516				26,593				592,328				40,780
Net interest income		186,076				279,272				323,925				465,348				632,642
Provision for credit losses		2,000				3,000				11,500				5,000				11,500
Net interest income after provision
for credit losses		184,076				276,272				312,425				460,348				621,142
Noninterest income:
Service charges on deposit accounts		4,315				3,573				3,634				7,888				7,205
Other commissions and fees		11,241				10,344				10,813				21,585				22,393
Leased equipment income		22,387				13,857				12,335				36,244				25,429
(Loss) gain on sale of loans and leases		(158,881	)			2,962				12				(155,919	)			72
Loss on sale of securities		-				-				(1,209	)			-				(1,105	)
Dividends and gains (losses) on equity investments		2,658				1,098				4,097				3,756				(7,278	)
Warrant (loss) income		(124	)			(333	)			1,615				(457	)			2,244
LOCOM HFS adjustment		(11,943	)			-				-				(11,943	)			-
Other income		2,265				4,890				3,049				7,155				6,204
Total noninterest (loss) income		(128,082	)			36,391				34,346				(91,691	)			55,164
Noninterest expense:
Compensation		82,881				88,476				102,542				171,357				194,782
Occupancy		15,383				15,067				15,268				30,450				30,468
Data processing		10,963				10,938				9,258				21,901				18,887
Other professional services		9,973				6,073				6,726				16,046				12,680
Insurance and assessments		25,635				11,717				5,632				37,352				11,122
Intangible asset amortization		2,389				2,411				3,649				4,800				7,298
Leased equipment depreciation		9,088				9,375				8,934				18,463				18,123
Foreclosed assets expense (income), net		2				363				(28	)			365				(3,381	)
Acquisition, integration and reorganization costs		12,394				8,514				-				20,908				-
Customer related expense		27,302				24,005				11,748				51,307				24,403
Loan expense		5,245				6,524				7,037				11,769				12,194
Goodwill impairment		-				1,376,736				-				1,376,736				-
Other expense		119,182				12,804				12,879				131,986				24,495
Total noninterest expense		320,437				1,573,003				183,645				1,893,440				351,071
(Loss) earnings before income taxes		(264,443	)			(1,260,340	)			163,126				(1,524,783	)			325,235
Income tax (benefit) expense		(67,029	)			(64,916	)			40,766				(131,945	)			82,747
Net (loss) earnings		(197,414	)			(1,195,424	)			122,360				(1,392,838	)			242,488
Preferred stock dividends		9,947				9,947				-				19,894				-
Net (loss) earnings available to
common stockholders	$	(207,361	)		$	(1,205,371	)		$	122,360			$	(1,412,732	)		$	242,488
Basic and diluted (loss) earnings per
common share	$	(1.75	)			-10.22				1.02			$	(11.96	)		$	2.03
Dividends declared and paid per common share	$	0.01			$	0.25			$	0.25			$	0.26			$	0.50

 

PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
	Three Months Ended
	June 30, 2023									March 31, 2023									June 30, 2022
				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)(3)	$	26,992,283		$	408,972		6.08	%		$	28,583,265		$	433,029		6.14	%		$	25,449,773		$	295,154		4.65	%
Investment securities (3)		7,183,986			44,153		2.47	%			7,191,362			44,237		2.49	%			9,488,653			54,910		2.32	%
Deposits in financial
institutions		6,835,075			86,763		5.09	%			3,682,228			42,866		4.72	%			1,984,751			4,330		0.88	%
Total interest-earning
assets (1)		41,011,344			539,888		5.28	%			39,456,855			520,132		5.35	%			36,923,177			354,394		3.85	%
Other assets		2,028,985									3,311,859									3,108,714
Total assets	$	43,040,329								$	42,768,714								$	40,031,891
Liabilities and
Stockholders' Equity:
Interest checking	$	6,601,034			46,798		2.84	%		$	7,089,102			55,957		3.20	%		$	6,517,381			3,816		0.23	%
Money market		6,590,615			47,008		2.86	%			8,932,059			56,224		2.55	%			10,553,942			8,448		0.32	%
Savings		733,818			3,678		2.01	%			597,287			599		0.41	%			650,479			41		0.03	%
Time		7,492,094			81,305		4.35	%			5,123,955			43,112		3.41	%			1,939,816			3,057		0.63	%
Total interest-bearing
deposits		21,417,561			178,789		3.35	%			21,742,403			155,892		2.91	%			19,661,618			15,362		0.31	%
Borrowings		11,439,742			160,914		5.64	%			5,289,429			69,122		5.30	%			1,356,616			2,441		0.72	%
Subordinated debt		869,419			14,109		6.51	%			867,637			13,502		6.31	%			863,653			8,790		4.08	%
Total interest-bearing
liabilities		33,726,722			353,812		4.21	%			27,899,469			238,516		3.47	%			21,881,887			26,593		0.49	%
Noninterest-bearing
demand deposits		5,968,625									10,233,434									13,987,398
Other liabilities		625,610									637,124									510,238
Total liabilities		40,320,957									38,770,027									36,379,523
Stockholders' equity		2,719,372									3,998,687									3,652,368
Total liabilities and
stockholders' equity	$	43,040,329								$	42,768,714								$	40,031,891
Net interest income (1)				$	186,076								$	281,616								$	327,801
Net interest spread (1)							1.07	%								1.88	%								3.36	%
Net interest margin (1)							1.82	%								2.89	%								3.56	%
Total deposits (4)	$	27,386,186		$	178,789		2.62	%		$	31,975,837		$	155,892		1.98	%		$	33,649,016		$	15,362		0.18	%
(1) Tax equivalent.
(2) Includes net loan premium amortization of $1.6 million, $2.8 million, and $5.8 million for the three months ended June 30, 2023,
March 31, 2023, and June 30, 2022, respectively.
(3) Includes tax-equivalent adjustments of $0.0 million, $2.3 million, and $1.9 million for the three months ended June 30, 2023,
March 31, 2023, and June 30, 2022 related to tax-exempt income on loans.
Includes tax-equivalent adjustments of $0.0 million, $0.0 million, and $2.0 million for the three months ended June 30, 2023,
March 31, 2023, and June 30, 2022 related to tax-exempt income on investment securities.
The federal statutory tax rate utilized was 21%.
(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is
calculated as annualized interest expense on total deposits divided by average total deposits.

 

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
	June 30,				March 31,				December 31,				September 30,				June 30,
	2023				2023				2022				2022				2022
	(Dollars in thousands, except per share amounts)
ASSETS:
Cash and due from banks	$	208,300			$	218,830			$	212,273			$	216,436			$	197,027
Interest-earning deposits in financial
institutions		6,489,847				6,461,306				2,027,949				2,244,272				2,192,877
Total cash and cash equivalents		6,698,147				6,680,136				2,240,222				2,460,708				2,389,904
Securities available-for-sale		4,708,519				4,848,607				4,843,487				5,891,328				6,780,648
Securities held-to-maturity		2,278,202				2,273,650				2,269,135				2,264,601				2,260,367
Federal Home Loan Bank stock		17,250				147,150				34,290				36,990				33,210
Total investment securities		7,003,971				7,269,407				7,146,912				8,192,919				9,074,225
Loans held for sale		478,146				2,796,208				65,076				15,534				-
Gross loans and leases held for investment		22,311,292				25,770,912				28,726,016				27,775,962				26,608,541
Deferred fees, net		(53,082	)			(98,531	)			(116,887	)			(115,921	)			(107,404	)
Total loans and leases held for
investment, net of deferred fees		22,258,210				25,672,381				28,609,129				27,660,041				26,501,137
Allowance for loan and lease losses		(219,234	)			(210,055	)			(200,732	)			(189,327	)			(188,705	)
Total loans and leases held for
investment, net		22,038,976				25,462,326				28,408,397				27,470,714				26,312,432
Equipment leased to others under
operating leases		380,022				399,972				404,245				338,691		-		324,233
Premises and equipment, net		57,078				60,358				54,315				50,781				51,083
Foreclosed assets, net		8,426				2,135				5,022				2,967				-
Goodwill		-				-				1,376,736				1,405,736				1,405,736
Core deposit and customer relationship
intangibles, net		26,581				28,970				31,381				34,010				37,659
Deferred tax asset, net		426,304				342,557				281,848				321,650				254,090
Other assets		1,219,599				1,260,912				1,214,782				1,110,882				1,101,361
Total assets	$	38,337,250			$	44,302,981			$	41,228,936			$	41,4045,92			$	40,950,723
LIABILITIES:
Noninterest-bearing deposits	$	6,055,358			$	7,030,759			$	11,212,357			$	12,775,756			$	13,338,029
Interest-bearing deposits		21,841,725				21,156,802				22,723,977				21,420,116				20,630,123
Total deposits		27,897,083				28,187,561				33,936,334				34,195,872				33,968,152
Borrowings		6,357,338				11,881,712				1,764,030				1,864,815				1,592,000
Subordinated debt		870,378				868,815				867,087				863,379				863,756
Accrued interest payable and other
liabilities		679,256				593,416				710,954				604,581				548,412
Total liabilities		35,804,055				41,531,504				37,278,405				37,528,647				36,972,320
STOCKHOLDERS' EQUITY (1)		2,533,195				2,771,477				3,950,531				3,875,945				3,978,403
Total liabilities and stockholders’
equity	$	38,337,250			$	44,302,981			$	41,228,936			$	41,404,592			$	40,950,723
Book value per common share	$	16.93			$	18.90			$	28.71			$	28.07			$	28.93
Tangible book value per common share (2)	$	16.71			$	18.66			$	17.00			$	16.11			$	16.93
Common shares outstanding		120,169,012				120,244,214				120,222,057				120,314,023				120,288,024
(1) Includes net unrealized loss on:
Securities available-for-sale, net	$	(583,684	)		$	(537,307	)		$	(586,450	)		$	(637,346	)		$	(428,242	)
Securities held to maturity	$	(193,058	)		$	(198,753	)		$	(204,453	)		$	(210,868	)		$	(216,508	)
(2) Non-GAAP measure.

 

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2023				2023				2022				2022				2022
	(In thousands, except per share amounts)
Interest income:
Loans and leases	$	408,972			$	430,685			$	404,985			$	346,550			$	293,286
Investment securities		44,153				44,237				50,292				53,135				52,902
Deposits in financial institutions		86,763				42,866				17,746				10,359				4,330
Total interest income		539,888				517,788				473,023				410,044				350,518
Interest expense:
Deposits		178,789				155,892				117,591				61,288				15,362
Borrowings		160,914				69,122				19,962				3,081				2,441
Subordinated debt		14,109				13,502				12,531				10,494				8,790
Total interest expense		353,812				238,516				150,084				74,863				26,593
Net interest income		186,076				279,272				322,939				335,181				323,925
Provision for credit losses		2,000				3,000				10,000				3,000				11,500
Net interest income after provision
for credit losses		184,076				276,272				312,939				332,181				312,425
Noninterest income:
Service charges on deposit accounts		4,315				3,573				3,178				3,608				3,634
Other commissions and fees		11,241				10,344				11,208				10,034				10,813
Leased equipment income		22,387				13,857				12,322				12,835				12,335
(Loss) gain on sale of loans and leases		(158,881	)			2,962				388				58				12
(Loss) gain on sale of securities		-				-				(49,302	)			86				(1,209	)
Dividends and gains on equity investments		2,658				1,098				661				3,228				4,097
Warrant (loss) income		(124	)			(333	)			(46	)			292				1,615
LOCOM HFS adjustment		(11,943	)			-				-				-				-
Other income		2,265				4,890				2,635				8,478				3,049
Total noninterest (loss) income		(128,082	)			36,391				(18,956	)			38,619				34,346
Noninterest expense:
Compensation		82,881				88,476				106,124				105,933				102,542
Occupancy		15,383				15,067				14,922				15,574				15,268
Data processing		10,963				10,938				9,722				9,568				9,258
Other professional services		9,973				6,073				6,924				10,674				6,726
Insurance and assessments		25,635				11,717				7,205				7,159				5,632
Intangible asset amortization		2,389				2,411				2,629				3,649				3,649
Leased equipment depreciation		9,088				9,375				8,627				8,908				8,934
Foreclosed assets expense (income), net		2				363				(108	)			(248	)			(28	)
Acquisition, integration and reorganization costs		12,394				8,514				5,703				-				-
Customer related expense		27,302				24,005				18,197				12,673				11,748
Loan expense		5,245				6,524				6,150				6,228				7,037
Goodwill impairment		-				1,376,736				29,000				-				-
Other expense		119,182				12,804				11,737				15,500				12,879
Total noninterest expense		320,437				1,573,003				226,832				195,618				183,645
(Loss) earnings before income taxes		(264,443	)			(1,260,340	)			67,151				175,182				163,126
Income tax (benefit) expense		(67,029	)			(64,916	)			17,642				43,566				40,766
Net (loss) earnings		(197,414	)			(1,195,424	)			49,509				131,616				122,360
Preferred stock dividends		9,947				9,947				9,947				9,392				-
Net (loss) earnings available to
common stockholders	$	(207,361	)		$	(1,205,371	)		$	39,562			$	122,224			$	122,360
Basic and diluted (loss) earnings per
common share	$	(1.75	)		$	(10.22	)		$	0.33			$	1.02			$	1.02
Dividends declared and paid per common share	$	0.01			$	0.25			$	0.25			$	0.25			$	0.25

 

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2023				2023				2022				2022				2022
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		(1.84	)%			(11.34	)%			0.48	%			1.28	%			1.23	%
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR") return
on average assets (1)(2)		(2.45	)%			1.13	%			1.02	%			1.73	%			1.75	%
Return on average equity (1)		(29.12	)%			(121.24	)%			5.04	%			13.02	%			13.44	%
Return on average tangible common
equity (1)(2)		(37.62	)%			14.45	%			12.71	%			23.93	%			24.24	%
Efficiency ratio		527.0	%			58.2	%			53.3	%			51.0	%			49.5	%
Noninterest expense as a percentage
of average assets (1)		2.99	%			14.92	%			2.19	%			1.90	%			1.84	%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)		6.08	%			6.14	%			5.73	%			5.12	%			4.65	%
Average investment securities (3)		2.47	%			2.49	%			2.57	%			2.45	%			2.32	%
Average interest-earning assets (3)		5.28	%			5.35	%			4.98	%			4.36	%			3.85	%
Cost of:
Average interest-bearing deposits		3.35	%			2.91	%			2.14	%			1.15	%			0.31	%
Average total deposits		2.62	%			1.98	%			1.37	%			0.70	%			0.18	%
Average interest-bearing liabilities		4.21	%			3.47	%			2.45	%			1.32	%			0.49	%
Net interest spread (3)		1.07	%			1.88	%			2.53	%			3.04	%			3.36	%
Net interest margin (3)		1.82	%			2.89	%			3.41	%			3.57	%			3.56	%
Average Balances:
Assets:
Loans and leases, net of deferred fees	$	26,992,283			$	28,583,265			$	28,192,953			$	27,038,873			$	25,449,773
Investment securities		7,183,986				7,191,362				7,824,915				8,803,349				9,488,653
Deposits in financial institutions		6,835,075				3,682,228				1,881,950				1,809,809				1,984,751
Interest-earning assets		41,011,344				39,456,855				37,899,818				37,652,031				36,923,177
Total assets		43,040,329				42,768,714				41,151,963				40,841,272				40,031,891
Liabilities:
Noninterest-bearing deposits		5,968,625				10,233,434				12,325,902				13,653,177				13,987,398
Interest-bearing deposits		21,417,561				21,742,403				21,760,402				21,214,265				19,661,618
Total deposits		27,386,186				31,975,837				34,086,304				34,867,442				33,649,016
Borrowings		11,439,742				5,289,429				1,675,738				505,482				1,356,616
Subordinated debt		869,419				867,637				864,581				863,719				863,653
Interest-bearing liabilities		33,726,722				27,899,469				24,300,721				22,583,466				21,881,887
Stockholders' equity		2,719,372				3,998,687				3,898,800				4,011,179				3,652,368
(1) Annualized.
(2) Non-GAAP measure.
(3) Tax equivalent.

 

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2023				2023				2022				2022				2022
	(Dollars in thousands, except per share amounts)
Credit Quality Metrics for Loans
and Leases Held for Investment:
Nonaccrual loans and leases	$	104,886			$	87,124			$	103,778			$	89,742			$	78,527
Nonperforming assets		113,312				89,259				108,800				92,709				78,527
Special mention loans and leases		366,368				580,153				566,259				463,994				480,261
Classified loans and leases		211,934				132,423				118,271				96,685				104,264
Allowance for loan and lease losses		219,234				210,055				200,732				189,327				188,705
Allowance for credit losses		256,805				285,626				291,803				284,398				283,776
For the quarter:
Provision for credit losses		2,000				3,000				10,000				3,000				10,000
Net charge-offs (recoveries)		30,821				9,177				2,595				2,378				(1,307	)
Nonaccrual loans and leases to loans
and leases		0.47	%			0.34	%			0.36	%			0.32	%			0.30	%
Nonperforming assets to loans and
leases and foreclosed assets		0.51	%			0.35	%			0.38	%			0.34	%			0.30	%
Special mention loans and leases to
loans and leases		1.65	%			2.26	%			1.98	%			1.68	%			1.81	%
Classified loans and leases to loans
and leases		0.95	%			0.52	%			0.41	%			0.35	%			0.39	%
Allowance for loan and lease losses
to loans and leases		0.98	%			0.82	%			0.70	%			0.68	%			0.71	%
Allowance for credit losses to loans
and leases		1.15	%			1.11	%			1.02	%			1.03	%			1.07	%
Allowance for credit losses to
nonaccrual loans and leases		244.84	%			327.84	%			281.18	%			316.91	%			361.37	%
Net charge-offs (recoveries)
to average loans and leases		0.46	%			0.13	%			0.04	%			0.03	%			(0.02	)%
Trailing 12 months net charge-offs
(recoveries) to average loans and
leases		0.17	%			0.05	%			0.02	%			0.01	%			0.00	%
PacWest Bancorp Consolidated:
Common equity tier 1 capital ratio (1)		11.16	%			9.21	%			8.70	%			8.56	%			8.24	%
Tier 1 capital ratio (1)		13.70	%			11.15	%			10.61	%			10.46	%			10.15	%
Total capital ratio (1)		17.61	%			14.21	%			13.61	%			13.43	%			13.12	%
Tier 1 leverage capital ratio (1)		7.76	%			8.33	%			8.61	%			8.63	%			8.52	%
Risk-weighted assets (1)	$	24,768,687			$	32,507,454			$	33,030,960			$	33,042,173			$	33,009,455
Equity to assets ratio		6.61	%			6.26	%			9.58	%			9.36	%			9.72	%
Tangible common equity ratio (2)		5.24	%			5.07	%			5.13	%			4.85	%			5.15	%
Book value per common share	$	16.93			$	18.90			$	28.71			$	28.07			$	28.93
Tangible book value per common share (2)	$	16.71			$	18.66			$	17.00			$	16.11			$	16.93
Pacific Western Bank:
Common equity tier 1 capital ratio (1)		13.48	%			10.89	%			10.32	%			10.17	%			9.78	%
Tier 1 capital ratio (1)		13.48	%			10.89	%			10.32	%			10.17	%			9.78	%
Total capital ratio (1)		16.07	%			12.94	%			12.34	%			12.16	%			11.77	%
Tier 1 leverage capital ratio (1)		7.62	%			8.14	%			8.39	%			8.39	%			8.21	%
(1) Capital information for June 30, 2023 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-goodwill impairment, pre-tax net revenue (“PPNR”), (2) PPNR return on average assets (3) return on average tangible common equity, (4) tangible common equity ratio, and (5) tangible book value per common 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 common equity, tangible common equity ratio, and tangible book value per common share is prevalent among banking regulators, investors, and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures (or those calculated from GAAP measures) of: (1) net earnings, (2) return on average assets, (3) return on average equity, (4) equity to assets ratio, (5) book value per common share, and (6) efficiency ratio.

The Company recorded significant non-operating charges in the three months ended June 30, 2023 and March 31, 2023 and six months ended June 30, 2023. Thus, to supplement information regarding the Company’s operational performance and to enhance investors’ overall understanding of such performance, this press release includes non-GAAP financial measures for (1) adjusted return on average tangible common equity, (2) adjusted earnings, (3) adjusted earnings per share, (4) adjusted return on average assets, and (5) adjusted efficiency ratio. These measures help the reader to compare the recent periods with the historical periods more readily. These non-GAAP financial measures should not be considered a substitute for financial measures presented in accordance with GAAP and may be different from the non-GAAP financial measures used by other companies.

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

	Three Months Ended												Six Months Ended
PPNR and PPNR Return	June 30,				March 31,				June 30,				June 30,
on Average Assets	2023				2023				2022				2023				2022
	(Dollars in thousands)
Net (loss) earnings	$	(197,414	)		$	(1,195,424	)		$	122,360			$	(1,392,838	)		$	242,488
Net interest income	$	186,076			$	279,272			$	323,925			$	465,348			$	632,642
Add: Noninterest (loss) income		(128,082	)			36,391				34,346				(91,691	)			55,164
Less: Noninterest expense		(320,437	)			(1,573,003	)			(183,645	)			(1,893,440	)			(351,071	)
Add: Goodwill impairment		-				1,376,736				-				1,376,736				-
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")	$	(262,443	)		$	119,396			$	174,626			$	(143,047	)		$	336,735
Average assets	$	43,040,329			$	42,768,714			$	40,031,891			$	42,905,272			$	39,958,008
Return on average assets (1)		(1.84	)%			(11.34	)%			1.23	%			(6.55	)%			1.22	%
PPNR return on average assets (2)		(2.45	)%			1.13	%			1.75	%			(0.67	)%			1.70	%
(1) Annualized net earnings divided by average assets.
(2) Annualized PPNR divided by average assets.

	Three Months Ended												Six Months Ended
Return on Average	June 30,				March 31,				June 30,				June 30,
Tangible Common Equity	2023				2023				2022				2023				2022
	(Dollars in thousands)
Net (loss) earnings	$	(197,414	)		$	(1,195,424	)		$	122,360			$	(1,392,838	)		$	242,488
(Loss) earnings before income taxes	$	(264,443	)		$	(1,260,340	)		$	163,126			$	(1,524,783	)		$	325,235
Add: Goodwill impairment		-				1,376,736				-				1,376,736				-
Add: Intangible asset amortization		2,389				2,411				3,649				4,800				7,298
Adjusted earnings before income taxes		(262,054	)			118,807				166,775				(143,247	)			332,533
Adjusted income tax expense (1)		-66300				33741				41694				-45839				84463
Adjusted net earnings		(195,754	)			85,066				125,081				(97,408	)			248,070
Less: Preferred stock dividends		9,947				9,947				-				19,894				-
Adjusted net earnings available to
common stockholders		-205701				75119				125081				-117302				248070
Average stockholders' equity	$	2,719,372			$	3,998,687			$	3,652,368			$	3,355,495			$	3,749,386
Less: Average intangible assets		27,824				1,391,857				1,445,333				706,072				1,447,184
Less: Average preferred stock		498,516				498,516				137,100				498,516				68,929
Average tangible common equity	$	2,193,032			$	2,108,314			$	2,069,935			$	2,150,907			$	2,233,273
Return on average equity (2)		(29.12	)%			(121.24	)%			13.44	%			(83.71	)%			13.04	%
Return on average tangible
common equity (3)		(37.62	)%			14.45	%			24.24	%			(11.00	)%			22.40	%
(1) Effective tax rates of 25.3% and 25.0% used for three months ended June 30, 2023 and June 30, 2022; adjusted effective
tax rate of 28.4% used to normalize the effect of goodwill impairment for three months ended March 31, 2023.
Adjusted effective tax rate of 32.0% used to normalize the effect of goodwill impairment for six months ended June 30, 2023;
effective tax rate of 25.4% used for six months ended June 30, 2022.
(2) Annualized net (loss) earnings divided by average stockholders' equity.
(3) Annualized adjusted net earnings available to common stockholders divided by average
tangible common equity.

	Three Months Ended												Six Months Ended
Adjusted Return on Average	June 30,				March 31,				June 30,				June 30,
Tangible Common Equity	2023				2023				2022				2023				2022
	(Dollars in thousands)
(Loss) earnings before income taxes	$	(264,443	)		$	(1,260,340	)		$	163,126			$	(1,524,783	)		$	325,235
Add: Goodwill impairment		-				1,376,736				-				1,376,736				-
Add: Intangible asset amortization		2,389				2,411				3,649				4,800				7,298
Add: Acquisition, integration, and
reorganization costs		12,394				8,514				-				20,908				-
Add: Loan fair value loss adjustments		170,971				-				-				170,971				-
Add: Unfunded commitments fair value
loss adjustments		106,767				-				-				106,767				-
Add: Civic loan sale charge-offs		22,446				-				-				22,446				-
Adjusted earnings before income taxes		50,524				127,321				166,775				177,845				332,533
Adjusted income tax expense (1)		12783				36159				41694				56910				84463
Adjusted net earnings		37,741				91,162				125,081				120,935				248,070
Less: Preferred stock dividends		9,947				9,947				-				19,894				-
Adjusted net earnings available to
common stockholders	$	27,794			$	81,215			$	125,081			$	101,041			$	248,070
Average stockholders' equity	$	2,719,372			$	3,998,687			$	3,652,368			$	3,355,495			$	3,749,386
Less: Average intangible assets		27,824				1,391,857				1,445,333				706,072				1,447,184
Less: Average preferred stock		498,516				498,516				137,100				498,516				68,929
Average tangible common equity	$	2,193,032			$	2,108,314			$	2,069,935			$	2,150,907			$	2,233,273
Adjusted return on average tangible
common equity (2)		5.08	%			15.62	%			24.24	%			9.47	%			22.40	%
(1) Effective tax rates of 25.3% and 25.0% used for three months ended June 30, 2023 and June 30, 2022; adjusted effective
tax rate of 28.4% used to normalize the effect of goodwill impairment for three months ended March 31, 2023.
Adjusted effective tax rate of 32.0% used to normalize the effect of goodwill impairment for six months ended June 30, 2023;
effective tax rate of 25.4% used for six months ended June 30, 2022.
(2) Annualized adjusted net earnings available to common stockholders divided by average
tangible common equity.

 

Tangible Common Equity Ratio/
Tangible Book Value Per	June 30,				March 31,				December 31,				September 30,				June 30,
Common Share	2023				2023				2022				2022				2022
	(Dollars in thousands, except per share amounts)
Stockholders' equity	$	2,533,195			$	2,771,477			$	3,950,531			$	3,875,945			$	3,978,403
Less: Preferred stock		498,516				498,516				498,516				498,516				498,516
Total common equity		2,034,679				2,272,961				3,452,015				3,377,429				3,479,887
Less: Intangible assets		26,581				28,970				1,408,117				1,439,746				1,443,395
Tangible common equity		2,008,098				2,243,991				2,043,898				1,937,683				2,036,492
Add: Accumulated other comprehensive
loss		773,803				736,060				790,903				848,214				644,750
Adjusted tangible common equity	$	2,781,901			$	2,980,051			$	2,834,801			$	2,785,897			$	2,681,242
Total assets	$	38,337,250			$	44,302,981			$	41,228,936			$	41,404,592			$	40,950,723
Less: Intangible assets		26,581				28,970				1,408,117				1,439,746				1,443,395
Tangible assets	$	38,310,669			$	44,274,011			$	39,820,819			$	39,964,846			$	39,507,328
Equity to assets ratio		6.61	%			6.26	%			9.58	%			9.36	%			9.72	%
Tangible common equity ratio (1)		5.24	%			5.07	%			5.13	%			4.85	%			5.15	%
Tangible common equity ratio,
excluding AOCI (2)		7.26	%			6.73	%			7.12	%			6.97	%			6.79	%
Book value per common share (3)	$	16.93			$	18.90			$	28.71			$	28.07			$	28.93
Tangible book value per common share (4)	$	16.71			$	18.66			$	17.00			$	16.11			$	16.93
Tangible book value per common share,
excluding AOCI (5)	$	23.15			$	24.78			$	23.58			$	23.16			$	22.29
Common shares outstanding		120,169,012				120,244,214				120,222,057				120,314,023				120,288,024
(1) Tangible common equity divided by tangible assets.
(2) Adjusted tangible common equity divided by tangible assets.
(3) Total common equity divided by common shares outstanding.
(4) Tangible common equity divided by common shares outstanding.
(5) Adjusted tangible common equity divided by common shares outstanding.

	Three Months Ended												Six Months Ended
Adjusted Earnings, Earnings Per	June 30,				March 31,				June 30,				June 30,
Share, and Return on Average Assets	2023				2023				2022				2023				2022
	(In thousands, except per share amounts)
(Loss) earnings before income taxes	$	(264,443	)		$	(1,260,340	)		$	163,126			$	(1,524,783	)		$	325,235
Add: Goodwill impairment		-				1,376,736				-				1,376,736				-
Add: Acquisition, integration, and
reorganization costs		12,394				8,514				-				20,908				-
Add: Loan fair value loss adjustments		170,971				-				-				170,971				-
Add: Unfunded commitments fair value
loss adjustments		106,767				-				-				106,767				-
Add: Civic loan sale charge-offs		22,446				-				-				22,446				-
Adjusted earnings before income taxes		48,135				124,910				163,126				173,045				325,235
Adjusted income tax expense (1)		12178				35474				40766				55374				82747
Adjusted earnings		35,957				89,436				122,360				117,671				242,488
Less: Preferred stock dividends		(9,947	)			(9,947	)			-				(19,894	)			-
Adjusted earnings available to
common stockholders		26,010				79,489				122,360				97,777				242,488
Less: Earnings allocated to unvested
restricted stock		(313	)			(1,210	)			(2,351	)			(1,372	)			(4,389	)
Adjusted earnings allocated to
common shares	$	25,697			$	78,279			$	120,009			$	96,405			$	238,099
Weighted average shares outstanding		118,255				117,930				117,562				118,094				117,456
Adjusted diluted earnings per common
share (2)	$	0.22			$	0.66			$	1.02			$	0.82			$	2.03
Average assets	$	43,040,329			$	42,768,714			$	40,031,891			$	42,905,272			$	39,958,008
Adjusted return on average assets (3)		0.34	%			0.85	%			1.23	%			0.55	%			1.22	%
(1) Effective tax rates of 25.3% and 25.0% used for three months ended June 30, 2023 and June 30, 2022; adjusted effective
tax rate of 28.4% used to normalize the effect of goodwill impairment for three months ended March 31, 2023.
Adjusted effective tax rate of 32.0% used to normalize the effect of goodwill impairment for six months ended June 30, 2023;
effective tax rate of 25.4% used for six months ended June 30, 2022.
(2) Adjusted earnings allocated to common shares divided by weighted average shares
outstanding.
(3) Annualized adjusted earnings divided by average assets.

	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
Adjusted Efficiency Ratio	2023				2023				2022				2023				2022
	(Dollars in thousands)
Noninterest expense	$	320,437			$	1,573,003			$	183,645			$	1,893,440			$	351,071
Less: Intangible asset amortization		2389				2411				3649				4800				7298
Less: Foreclosed assets expense
(income), net		2				363				(28	)			365				(3,381	)
Less: Goodwill impairment		0				1376736				0				1376736				0
Less: Acquisition, integration, and
reorganization costs		12,394				8,514				-				20,908				-
Noninterest expense used for
efficiency ratio		305,652				184,979				180,024				490,631				347,154
Less: Unfunded commitments fair value
loss adjustments		106,767				-				-				106,767				-
Noninterest expense used for
adjusted efficiency ratio		198885				184979				180024				383864				347154
Net interest income (tax equivalent)	$	186,076			$	281,616			$	327,801			$	467,692			$	640,452
Noninterest income (loss)		(128,082	)			36,391				34,346				(91,691	)			55,164
Net revenues		57,994				318,007				362,147				376,001				695,616
Less: Gain (loss) on sale of securities		-				-				(1,209	)			-				(1,105	)
Net revenues used for efficiency ratio		57,994				318,007				363,356				376,001				696,721
Add: Loan fair value loss adjustments		170,971				-				-				170,971				-
Net revenues used for adjusted
efficiency ratio	$	228,965			$	318,007			$	363,356			$	546,972			$	696,721
Efficiency ratio (1)		5.27				0.582				0.495				1.305				0.498
Adjusted efficiency ratio (2)		86.9	%			58.2	%			49.5	%			70.2	%			49.8	%
(1) Noninterest expense used for efficiency ratio divided by net revenues used for efficiency ratio.
(2) Noninterest expense used for adjusted efficiency ratio divided by net revenues used for adjusted efficiency ratio.

Non-GAAP Adjustment		Location on Income Statement
Loan fair value loss adjustments		(Loss) gain on sale of loans and leases/LOCOM HFS adjustment
Civic loan sale charge-offs		Provision for credit losses
Acquisition, integration, and reorganization costs		Acquisition, integration, and reorganization costs
Unfunded commitments fair value loss adjustments		Other expense

CONTACTS

Kevin L. Thompson Executive Vice President, Chief Financial Officer 303.802.8934

William J. Black Executive Vice President, Strategy and Corporate Development 919.597.7466

FAQ

What were the financial highlights for the second quarter of 2023?

The net loss available to common stockholders was $207.4 million, or a loss of $1.75 per diluted share. Adjusted earnings were $36.0 million and adjusted diluted earnings per common share were $0.22.

What strategic plan did the company execute in the second quarter of 2023?

The company divested non-core loan portfolios, including selling National Construction portfolio, Lender Finance portfolio, and a portion of the Civic portfolio.

What was the impact of the operational efficiency initiative?

The initiative resulted in severance, asset write-off, and contract termination expenses of $12.4 million in the second quarter of 2023. The company reduced its employee count by 560 employees, primarily at its Civic subsidiary.