PacWest Bancorp Announces Results for the Second Quarter of 2021

Rhea-AI Summary

PacWest Bancorp (PACW) reported a strong financial performance for Q2 2021, with net earnings of $180.5 million or $1.52 per diluted share, an increase from Q1. Core deposits rose $1.5 billion (22.9% annualized), comprising 91% of total deposits. Loan growth reached $527 million (11.1% annualized), and excluding PPP loans, it increased by $997 million (22.3% annualized). The allowance for credit losses decreased to $300.2 million, with a provision benefit of $88 million.

Despite challenges including decreased net interest margin, the bank's capital position remained robust with a CET1 ratio of 10.41%.

Positive

• Net earnings increased to $180.5 million from $150.4 million in Q1.
• Core deposits rose by $1.5 billion (22.9% annualized), making up 91% of total deposits.
• Loan growth of $527 million (11.1% annualized), with non-PPP loans growing by $997 million (22.3% annualized).
• Provision for credit losses benefited by $88 million, reflecting improved credit quality.
• Strong capital position with a CET1 ratio of 10.41%.

Negative

• Net interest margin decreased to 3.40%, down from 3.69% in Q1, due to excess liquidity's negative impact.
• Noninterest income fell by $4.5 million to $40.4 million, primarily from a decrease in gains on equity investments.

LOS ANGELES, July 19, 2021 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) -

SECOND QUARTER 2021 RESULTS

$180.5M		$1.52					$154.9M		29.25%
Net Earnings		Diluted Earnings per Share					PPNR		ROATE

SECOND QUARTER 2021 HIGHLIGHTS

• Net Earnings of $180.5 Million or $1.52 Per Diluted Share
• Core Deposits Up $1.5 Billion or 22.9% annualized in 2Q21; Represents 91% of Total Deposits
• Loan Growth of $527.0 Million or 11.1% annualized, Excluding PPP Loan Activity, Growth of $997.1 Million or 22.3% annualized
• Civic Loan Production of $423 Million in 2Q21, Compared to $231 Million for Two Months in 1Q21
• Provision for Credit Losses Benefit of $88.0 Million in 2Q21 Compared to Benefit of $48.0 Million in 1Q21
• Net Interest Income (TE) of $270.1 Million, Compared To $264.6 Million in 1Q21
• Noninterest Income of $40.4 Million With Continued Strength in Warrant Income
• Noninterest Expense of $151.8 Million, Up 1% From 1Q21, Driven By Three Months of Civic Financial Services (“Civic”) Operations Compared to Two Months in 1Q21 and Higher Variable Compensation From Strong Growth Across the Company
• Classified and Special Mention Loans Fell $15.9 Million and $96.9 Million, Respectively, From 1Q21
• ACL Ratio of 1.54% and ALLL Ratio of 1.16%; Excluding PPP Loans, ACL Ratio of 1.59% and ALLL Ratio of 1.19%
• Net Recoveries of $5.2 Million (11bps of Average Loans and Leases)
• Cost of Deposits Decreased 1 bp to 10 bps
• Loan and Lease Production of $1.7 Billion Up From $1.6 Billion in 1Q21; WAC of 4.55% vs. 4.36% in 1Q21
• Strong Capital Position – CET1 Ratio of 10.41%
• Total Capital Ratio Increased From 13.60% at 1Q21 to 14.99% at 2Q21
• Tangible Book Value Per Share Increased From $20.39 at 1Q21 to $21.95 at 2Q21

CEO COMMENTARY
Matt Wagner, President and CEO, commented, “We continued to experience strong deposit growth in the second quarter driven by outstanding growth from our venture banking as well as our commercial banking clients resulting in increased liquidity. The excess liquidity at the Fed continues to be a drag on our net interest margin, which had a negative impact of approximately 73 basis points in the second quarter, however, net interest income is growing as we continue to deploy the excess liquidity.”

“We had significant loan growth in the second quarter as the economy begins to re-open after the pandemic. This loan growth was despite a $470 million reduction in the PPP loan portfolio due to increased forgiveness activity by the SBA. Excluding PPP loan activity, our loans grew by $997 million or 22.3% annualized.”

“The continued improvement in credit quality as evidenced by the net recoveries for the first half of the year and continued decreases in nonaccrual, special mention and classified loans and leases along with improved economic conditions related to the CECL forecast resulted in a provision benefit for the second consecutive quarter. Our ACL ratio, excluding PPP loans, decreased from 2.14% in the first quarter to 1.59% as of the end of the second quarter. Our second quarter results produced a return on average assets of 2.11% and a return on average tangible equity of 29.25%.”

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/0623d789-0178-417f-bc6c-55dc09803da8

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 (1)		2021				2021			(Decrease)					2021				2020			(Decrease)
	(Dollars in thousands, except per share data)
Net earnings (loss)	$	180,512			$	150,406			$	30,106			$	330,918			$	(1,399,907	)		$	1,730,825
Diluted earnings (loss)
per share	$	1.52			$	1.27			$	0.25			$	2.78			$	(11.98	)		$	14.76
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (2)	$	154,929			$	155,962			$	(1,033	)		$	310,891			$	327,049			$	(16,158	)
Return on average assets		2.11	%			1.94	%			0.17				2.03	%			(10.48	)%			12.51
PPNR return on average
assets (2)		1.81	%			2.01	%			(0.20	)			1.91	%			2.45	%			(0.54	)
Return on average
tangible equity (2)		29.25	%			25.67	%			3.58				27.51	%			6.64	%			20.87
Yield on average loans and
leases (tax equivalent)		5.18	%			5.20	%			(0.02	)			5.19	%			5.27	%			(0.08	)
Cost of average total
deposits		0.10	%			0.11	%			(0.01	)			0.11	%			0.41	%			(0.30	)
Net interest margin ("NIM")
(tax equivalent)		3.40	%			3.69	%			(0.29	)			3.53	%			4.26	%			(0.73	)
Efficiency ratio		47.9	%			46.4	%			1.5				47.2	%			41.8	%			5.4
Total assets	$	34,867,987			$	32,856,533			$	2,011,454			$	34,867,987			$	27,365,738			$	7,502,249
Loans and leases held
for investment,
net of deferred fees	$	19,506,257			$	18,979,228			$	527,029			$	19,506,257			$	19,694,631			$	(188,374	)
Noninterest-bearing
demand deposits	$	11,252,286			$	11,017,462			$	234,824			$	11,252,286			$	8,629,543			$	2,622,743
Core deposits	$	27,038,161			$	25,576,348			$	1,461,813			$	27,038,161			$	19,535,814			$	7,502,347
Total deposits	$	29,647,034			$	28,223,291			$	1,423,743			$	29,647,034			$	22,928,579			$	6,718,455
As percentage of total
deposits:
Noninterest-bearing
demand deposits		38	%			39	%			(1	)			38	%			38	%			-
Core deposits		91	%			91	%			-				91	%			85	%			6
Equity to assets ratio		11.03	%			11.12	%			(0.09	)			11.03	%			12.62	%			(1.59	)
Common equity tier 1
capital ratio		10.41	%			10.39	%			0.02				10.41	%			9.97	%			0.44
Total capital ratio		14.99	%			13.60	%			1.39				14.99	%			13.18	%			1.81
Tangible common equity
ratio (2)		7.80	%			7.68	%			0.12				7.80	%			8.93	%			(1.13	)
Book value per share	$	32.17			$	30.68			$	1.49			$	32.17			$	29.17			$	3.00
Tangible book value per
share (2)	$	21.95			$	20.39			$	1.56			$	21.95			$	19.80			$	2.15
(1) The operations of Civic are included from its February 1, 2021 acquisition date.
(2) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income increased by $5.0 million to $266.3 million for the second quarter of 2021 compared to $261.3 million for the first quarter of 2021 due mainly to higher income on investment securities and loans and leases, partially offset by higher interest expense resulting from the $400 million of subordinated debt issued on April 30, 2021. The tax equivalent yield on average loans and leases was 5.18% for the second quarter of 2021 compared to 5.20% for the first quarter of 2021. The decrease in the tax equivalent yield on average loans and leases was primarily due to lower amortized loan fee income of $1.4 million and lower loan discount accretion of $0.4 million.

The tax equivalent NIM was 3.40% for the second quarter of 2021 compared to 3.69% for the first quarter of 2021. The decrease in the NIM was primarily due to the change in the earning assets mix driven by the increase in the investment portfolio and cash at the Federal Reserve as a percentage of earning assets. The average balance of deposits in financial institutions increased by $1.6 billion to $6.3 billion, the average balance of investment securities increased by $1.1 billion to $6.5 billion, and the average balance of loans and leases increased by $130.1 million in the second quarter of 2021. This excess liquidity had a negative impact on the second quarter tax equivalent NIM of approximately 73 basis points.

The cost of average total deposits decreased to 0.10% in the second quarter of 2021 from 0.11% for the first quarter of 2021. The lower cost of average total deposits was due primarily to the increased average balance of noninterest-bearing 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		2021				2021			(Decrease)
	(In thousands)
(Reduction in) addition to allowance for loan
and lease losses	$	(72,000	)		$	(53,000	)		$	(19,000	)
(Reduction in) addition to reserve for
unfunded loan commitments		(16,000	)			5,000				(21,000	)
Total provision for credit losses	$	(88,000	)		$	(48,000	)		$	(40,000	)

The provision for credit losses decreased by $40.0 million to a benefit of $88.0 million for the second quarter of 2021 compared to a $48.0 million benefit for the first quarter of 2021. This reduction reflected improvement in both macro-economic forecast variables and loan portfolio credit quality metrics along with decreased provisions for individually evaluated loans and leases and for unfunded commitments.

NONINTEREST INCOME

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

	Three Months Ended
	June 30,			March 31,			Increase
Noninterest Income	2021			2021			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	3,452		$	2,934		$	518
Other commissions and fees		10,704			9,158			1,546
Leased equipment income		10,847			11,354			(507	)
Gain on sale of loans and leases		1,422			139			1,283
Gain on sale of securities		-			101			(101	)
Other income:
Dividends and gains on equity investments		5,394			10,904			(5,510	)
Warrant income		5,650			6,123			(473	)
Other		2,902			4,116			(1,214	)
Total noninterest income	$	40,371		$	44,829		$	(4,458	)

Noninterest income decreased by $4.5 million to $40.4 million for the second quarter of 2021 compared to $44.8 million for the first quarter of 2021 due primarily to a decrease of $5.5 million in dividends and gains on equity investments and a $1.2 million decrease in other income, offset partially by increases of $1.5 million in other commissions and fees and $1.3 million in gain on sale of loans and leases. The decrease in dividends and gains on equity investments was due primarily to a $10.1 million gain on one equity investment in the first quarter of 2021, offset partially by higher net fair value gains on equity investments still held. The decrease in other income was due primarily to lower foreign currency translation gains and negative fair value adjustments related to servicing assets. The increase in other commissions and fees was due primarily to higher foreign exchange transaction fees and customer success fees. The increase in the gain on sale of loans and leases resulted from the sales of $52.2 million of loans for gains of $1.4 million in the second quarter of 2021 compared to sales of $72.6 million for gains of $0.1 million in the first quarter of 2021. Warrant income decreased slightly in the second quarter of 2021, but remained at elevated levels and was the third highest quarter ever.

NONINTEREST EXPENSE

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

	Three Months Ended
	June 30,				March 31,			Increase
Noninterest Expense		2021			2021			(Decrease)
	(In thousands)
Compensation	$	90,807			$	79,882		$	10,925
Occupancy		14,784				14,054			730
Data processing		7,758				6,957			801
Other professional services		5,256				5,126			130
Insurance and assessments		3,745				4,903			(1,158	)
Intangible asset amortization		2,889				3,079			(190	)
Leased equipment depreciation		8,614				8,969			(355	)
Foreclosed assets (income) expense, net		(119	)			1			(120	)
Acquisition, integration and reorganization costs		200				3,425			(3,225	)
Customer related expense		4,973				4,818			155
Loan expense		4,031				3,193			838
Other		8,812				15,729			(6,917	)
Total noninterest expense	$	151,750			$	150,136		$	1,614

Noninterest expense increased by $1.6 million to $151.8 million for the second quarter of 2021 compared to $150.1 million for the first quarter of 2021 due primarily to an increase of $10.9 million in compensation expense, offset partially by decreases of $6.9 million in other expense, $3.2 million in acquisition, integration and reorganization costs and $1.1 million in insurance and assessments expense. The increase in compensation expense was mostly due to compensation expense related to the Civic operations as a result of three months of activity in the second quarter of 2021 compared to two months of activity in the first quarter of 2021, in addition to increases in loan production across the Company which contributed to an increase in variable compensation during the second quarter of 2021. The decrease in other expense was largely due to a legal settlement accrual in the first quarter of 2021. The decrease in acquisition, integration and reorganization costs was due to lower advisory services and integration expenses related to the closed Civic acquisition and the pending acquisition of MUFG Union Bank’s Homeowners Association Services Division. The decrease in insurance and assessments expense was primarily due to lower FDIC assessment expense resulting from a lower assessment rate partially offset by a higher assessment base.

INCOME TAXES

The effective income tax rate was 25.7% in the second quarter of 2021 compared to 26.3% for the first quarter of 2021. The decrease in the effective tax rate is due mainly to tax benefits resulting from the vesting of restricted stock and return-to-provision adjustments recorded in the second quarter of 2021. The effective income tax rate for the full year 2021 is estimated to be in the range of 25% to 27%.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

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

	June 30, 2021					March 31, 2021					June 30, 2020
			% of					% of					% of
Deposit Composition	Balance		Total			Balance		Total			Balance		Total
	(Dollars in thousands)
Noninterest-bearing demand	$	11,252,286	38	%		$	11,017,462	39	%		$	8,629,543	38	%
Interest checking		7,394,472	25	%			6,862,398	25	%			4,858,168	21	%
Money market		7,777,199	26	%			7,112,610	25	%			5,498,150	24	%
Savings		614,204	2	%			583,878	2	%			549,953	2	%
Total core deposits		27,038,161	91	%			25,576,348	91	%			19,535,814	85	%
Non-core non-maturity deposits		1,122,971	4	%			1,162,590	4	%			1,217,266	5	%
Total non-maturity deposits		28,161,132	95	%			26,738,938	95	%			20,753,080	90	%
Time deposits $250,000 and under		913,371	3	%			940,340	3	%			1,522,928	7	%
Time deposits over $250,000		572,531	2	%			544,013	2	%			652,571	3	%
Total time deposits		1,485,902	5	%			1,484,353	5	%			2,175,499	10	%
Total deposits	$	29,647,034	100	%		$	28,223,291	100	%		$	22,928,579	100	%

At June 30, 2021, core deposits totaled $27.0 billion or 91% of total deposits, including $11.3 billion of noninterest-bearing demand deposits or 38% of total deposits. Core deposits increased by $1.5 billion or 22.9% annualized in the second quarter of 2021 driven by continued strong deposit growth from our venture banking clients.

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 at June 30, 2021 were $1.3 billion, of which $1.0 billion was managed by PWAM.

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 (1)		2021				2021				2021
	(Dollars in thousands)
Balance, beginning of period	$	18,979,228			$	19,083,377			$	19,083,377
Additions:
Production		1,663,151				1,612,777				3,275,928
Disbursements		1,662,644				1,022,986				2,685,630
Total production and disbursements		3,325,795				2,635,763				5,961,558
Reductions:
Payoffs		(1,969,118	)			(1,635,264	)			(3,604,382	)
Paydowns		(802,222	)			(1,067,418	)			(1,869,640	)
Total payoffs and paydowns		(2,771,340	)			(2,702,682	)			(5,474,022	)
Sales		(26,610	)			(72,641	)			(99,251	)
Transfers to foreclosed assets		-				(647	)			(647	)
Charge-offs		(816	)			(3,988	)			(4,804	)
Transfers to loans held for sale		-				(25,554	)			(25,554	)
Total reductions		(2,798,766	)			(2,805,512	)			(5,604,278	)
Loans acquired through Civic acquisition		-				65,600				65,600
Net increase (decrease)		527,029				(104,149	)			422,880
Balance, end of period	$	19,506,257			$	18,979,228			$	19,506,257
Weighted average rate on production (2)		4.55	%			4.36	%			4.46	%
(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 41 basis points to loan yields in 2021.

Loans and leases held for investment, net of deferred fees, increased by $527.0 million or 11.1% annualized in the second quarter of 2021 to $19.5 billion at June 30, 2021. Excluding PPP loan activity, loans grew by $997.1 million or 22.3% annualized. The increase in the loans and leases balance for the second quarter of 2021 was primarily due to increases in the income producing and other residential, asset-based and venture capital portfolios partially offset by a reduction in the other commercial portfolio due to increased PPP loan forgiveness. The PPP forgiveness in the second quarter of 2021 was $506 million, up from $354 million in the first quarter of 2021. Remaining PPP loans total $609 million as of June 30, 2021 with $15.6 million of net fees to amortize over the remaining life of the loans. The weighted average rate on the $1.7 billion of new production for the second quarter of 2021 increased to 4.55% from 4.36% in the first quarter of 2021 due mainly to a lower amount of PPP loan originations in the second quarter compared to the first quarter.

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, 2021					March 31, 2021					June 30, 2020
			% of					% of					% of
Loan and Lease Portfolio	Balance		Total			Balance		Total			Balance		Total
	(In thousands)
Real estate mortgage:
Commercial	$	3,792,198	19	%		$	3,941,610	21	%		$	4,222,075	22	%
Income producing and other
residential		4,620,822	24	%			4,045,603	21	%			3,733,659	19	%
Total real estate mortgage		8,413,020	43	%			7,987,213	42	%			7,955,734	41	%
Real estate construction and land:
Commercial		930,785	5	%			990,035	5	%			1,167,609	6	%
Residential		2,574,799	13	%			2,575,788	14	%			2,172,919	11	%
Total real estate construction
and land		3,505,584	18	%			3,565,823	19	%			3,340,528	17	%
Total real estate		11,918,604	61	%			11,553,036	61	%			11,296,262	58	%
Commercial:
Asset-based		3,550,903	18	%			3,383,403	18	%			3,412,431	17	%
Venture capital		1,749,432	9	%			1,495,798	8	%			1,814,341	9	%
Other commercial		1,921,909	10	%			2,206,639	11	%			2,760,278	14	%
Total commercial		7,222,244	37	%			7,085,840	37	%			7,987,050	40	%
Consumer		365,409	2	%			340,352	2	%			411,319	2	%
Total loans and leases held for
investment, net of deferred fees	$	19,506,257	100	%		$	18,979,228	100	%		$	19,694,631	100	%
Total unfunded loan commitments	$	7,891,875				$	8,127,999				$	7,745,921

ALLOWANCE FOR CREDIT LOSSES

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

	Three Months Ended June 30, 2021
	Allowance for				Reserve for				Total
Allowance for Credit	Loan and				Unfunded Loan				Allowance for
Losses Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	292,445			$	90,571			$	383,016
Charge-offs		(816	)			-				(816	)
Recoveries		5,971				-				5,971
Net recoveries		5,155				-				5,155
Provision		(72,000	)			(16,000	)			(88,000	)
Ending balance	$	225,600			$	74,571			$	300,171
	Three Months Ended March 31, 2021
	Allowance for				Reserve for				Total
Allowance for Credit	Loan and				Unfunded Loan				Allowance for
Losses Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	348,181			$	85,571			$	433,752
Charge-offs		(3,988	)			-				(3,988	)
Recoveries		1,252				-				1,252
Net charge-offs		(2,736	)			-				(2,736	)
Provision		(53,000	)			5,000				(48,000	)
Ending balance	$	292,445			$	90,571			$	383,016

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

	June 30,				March 31,				Increase
Allowance for Credit Losses		2021				2021			(Decrease)
	(Dollars in thousands)
Allowance for loan and lease losses	$	225,600			$	292,445			$	(66,845	)
Reserve for unfunded loan commitments		74,571				90,571				(16,000	)
Allowance for credit losses	$	300,171			$	383,016			$	(82,845	)
Provision for credit losses (for the quarter)	$	(88,000	)		$	(48,000	)		$	(40,000	)
Net (recoveries) charge-offs (for the quarter)	$	(5,155	)		$	2,736			$	(7,891	)
Net (recoveries) charge-offs to average loans and leases
(for the quarter)		(0.11	)%			0.06	%
Allowance for loan and lease losses to loans
and leases held for investment		1.16	%			1.54	%
Allowance for loan and lease losses to loans
and leases held for investment, excluding PPP loans		1.19	%			1.63	%
Allowance for credit losses to loans and leases
held for investment		1.54	%			2.02	%
Allowance for credit losses to loans and leases
held for investment, excluding PPP loans		1.59	%			2.14	%

The allowance for credit losses decreased by $82.8 million in the second quarter of 2021 to $300.2 million at June 30, 2021. The decrease in the allowance for credit losses during the second quarter of 2021 was attributable to a provision for credit losses benefit of $88.0 million partially offset by $5.2 million in net recoveries. The allowance for credit losses ratio, excluding PPP loans, of 1.59% remains robust and significantly higher than the pre-pandemic level of 0.97% as of the January 1, 2020 CECL adoption date.

Net recoveries were $5.2 million for the second quarter of 2021. Gross charge-offs of $0.8 million were reduced by recoveries of $6.0 million.

Net charge-offs were $2.7 million for the first quarter of 2021. Gross charge-offs of $4.0 million were reduced by recoveries of $1.3 million.

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		2021				2021			(Decrease)
	(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)	$	56,803			$	67,652			$	(10,849	)
Accruing loans contractually past due 90 days or more		-				-				-
Foreclosed assets, net		13,227				14,298				(1,071	)
Total nonperforming assets ("NPAs")	$	70,030			$	81,950			$	(11,920	)
Performing TDRs held for investment	$	40,129			$	27,999			$	12,130
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.29	%			0.36	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.36	%			0.43	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		528.4	%			566.2	%
Loan and Lease Credit Risk Ratings:
Pass	$	18,822,938			$	18,183,114			$	639,824
Special mention		536,052				632,997				(96,945	)
Classified		147,267				163,117				(15,850	)
Total loans and leases held for investment,
net of deferred fees	$	19,506,257			$	18,979,228			$	527,029
Classified loans and leases held for investment
to loans and leases held for investment		0.75	%			0.86	%
(1) Nonaccrual loans include SBA guaranteed amounts of $24.2 million at June 30, 2021 and $18.4 million at March 31, 2021.

Since pro-actively downgrading certain loans at the onset of the pandemic in the first quarter of 2020, special mention loans and leases have decreased $362.6 million from their peak in the first quarter of 2020, while classified loans and leases have decreased $146.0 million from their peak in the second quarter of 2020, and each have continued their steady decline in the second quarter of 2021. Classified and nonaccrual loans and leases are below their pre-pandemic levels and are at their lowest levels since December 31, 2013.

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, 2021						March 31, 2021						Increase (Decrease)
				Accruing						Accruing							Accruing
				and 30-89						and 30-89							and 30-89
				Days Past						Days Past							Days Past
	Nonaccrual			Due			Nonaccrual			Due			Nonaccrual				Due
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	32,065		$	-		$	46,436		$	5		$	(14,371	)		$	(5	)
Income producing and other
residential		6,133			2,179			2,471			6,339			3,662				(4,160	)
Total real estate mortgage		38,198			2,179			48,907			6,344			(10,709	)			(4,165	)
Real estate construction and land:
Commercial		284			-			302			-			(18	)			-
Residential		1,934			22,714			416			1,241			1,518				21,473
Total real estate
construction and land		2,218			22,714			718			1,241			1,500				21,473
Commercial:
Asset-based		1,973			-			2,379			-			(406	)			-
Venture capital		2,717			-			2,432			6,750			285				(6,750	)
Other commercial		11,337			270			12,660			1,251			(1,323	)			(981	)
Total commercial		16,027			270			17,471			8,001			(1,444	)			(7,731	)
Consumer		360			1,454			556			954			(196	)			500
Total held for investment	$	56,803		$	26,617		$	67,652		$	16,540		$	(10,849	)		$	10,077

During the second quarter of 2021, nonaccrual loans and leases decreased by $10.8 million due primarily to the payoff of one retail commercial real estate loan.

CAPITAL

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

	June 30, 2021
				Excluding				March 31,
				PPP				2021
	Actual (1)			Loans (1)				Actual
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio	7.67	%		7.89	%	(3	)	7.95	%
Common equity tier 1 capital ratio	10.41	%		10.41	%			10.39	%
Total capital ratio	14.99	%		14.99	%			13.60	%
Tangible common equity ratio (2)	7.80	%		7.94	%	(3	)	7.68	%
(1) Capital information for June 30, 2021 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 $34 billion in assets headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank 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 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 has adversely affected PacWest, its employees, customers and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity and prospects is uncertain. The risks from the COVID-19 pandemic have decreased as the pandemic subsides, however, new variants may continue to impact key macro-economic indicators such as unemployment and GDP and may have a material impact on our allowance for credit losses and related provision for credit losses. Continued deterioration in general business and economic conditions could adversely affect PacWest’s revenues and the values of its assets, including goodwill, and liabilities, lead to a tightening of credit, and increase stock price volatility. In addition, PacWest’s results could be adversely affected by changes in interest rates, sustained high unemployment rates, deterioration in the credit quality of its loan portfolio or in the value of the collateral securing those loans, deterioration in the value of its investment securities, 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 PacWest 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
	June 30,				March 31,				June 30,
		2021				2021				2020
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	179,505			$	177,199			$	174,059
Interest-earning deposits in financial institutions		5,678,587				5,517,667				1,747,077
Total cash and cash equivalents		5,858,092				5,694,866				1,921,136
Securities available-for-sale, at estimated fair value		7,198,608				5,941,690				3,851,141
Federal Home Loan Bank stock, at cost		17,250				17,250				17,250
Total investment securities		7,215,858				5,958,940				3,868,391
Loans held for sale		-				25,554				-
Gross loans and leases held for investment		19,580,731				19,055,165				19,780,476
Deferred fees, net		(74,474	)			(75,937	)			(85,845	)
Total loans and leases held for investment,
net of deferred fees		19,506,257				18,979,228				19,694,631
Allowance for loan and lease losses		(225,600	)			(292,445	)			(301,050	)
Total loans and leases held for investment, net		19,280,657				18,686,783				19,393,581
Equipment leased to others under operating leases		313,574				327,413				295,191
Premises and equipment, net		39,541				39,622				42,299
Foreclosed assets, net		13,227				14,298				1,449
Goodwill		1,204,118				1,204,092				1,078,670
Core deposit and customer relationship intangibles, net		18,423				21,312				30,564
Other assets		924,497				883,653				734,457
Total assets	$	34,867,987			$	32,856,533			$	27,365,738
LIABILITIES:
Noninterest-bearing deposits	$	11,252,286			$	11,017,462			$	8,629,543
Interest-bearing deposits		18,394,748				17,205,829				14,299,036
Total deposits		29,647,034				28,223,291				22,928,579
Borrowings		6,625				19,750				60,000
Subordinated debentures		861,788				465,814				460,772
Accrued interest payable and other liabilities		505,859				493,541				463,489
Total liabilities		31,021,306				29,202,396				23,912,840
STOCKHOLDERS' EQUITY (1)		3,846,681				3,654,137				3,452,898
Total liabilities and stockholders’ equity	$	34,867,987			$	32,856,533			$	27,365,738
Book value per share	$	32.17			$	30.68			$	29.17
Tangible book value per share (2)	$	21.95			$	20.39			$	19.80
Shares outstanding		119,555,102				119,105,642				118,374,603
(1) Includes net unrealized gain on securities
available-for-sale, net	$	145,516			$	106,381			$	145,038
(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,
		2021				2021				2020				2021				2020
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	244,529			$	241,544			$	247,851			$	486,073			$	510,129
Investment securities		33,954				30,265				26,038				64,219				53,484
Deposits in financial institutions		2,022				1,528				186				3,550				1,794
Total interest income		280,505				273,337				274,075				553,842				565,407
Interest expense:
Deposits		7,269				7,500				13,075				14,769				41,322
Borrowings		265				193				1,319				458				8,097
Subordinated debentures		6,663				4,375				5,402				11,038				11,962
Total interest expense		14,197				12,068				19,796				26,265				61,381
Net interest income		266,308				261,269				254,279				527,577				504,026
Provision for credit losses		(88,000	)			(48,000	)			120,000				(136,000	)			232,000
Net interest income after provision
for credit losses		354,308				309,269				134,279				663,577				272,026
Noninterest income:
Service charges on deposit accounts		3,452				2,934				2,004				6,386				4,662
Other commissions and fees		10,704				9,158				10,111				19,862				19,832
Leased equipment income		10,847				11,354				12,037				22,201				24,288
Gain on sale of loans and leases		1,422				139				346				1,561				433
Gain on sale of securities		-				101				7,715				101				7,897
Other income		13,946				21,143				6,645				35,089				10,846
Total noninterest income		40,371				44,829				38,858				85,200				67,958
Noninterest expense:
Compensation		90,807				79,882				61,910				170,689				123,192
Occupancy		14,784				14,054				14,494				28,838				28,701
Data processing		7,758				6,957				7,102				14,715				13,556
Other professional services		5,256				5,126				4,146				10,382				8,404
Insurance and assessments		3,745				4,903				9,373				8,648				13,622
Intangible asset amortization		2,889				3,079				3,882				5,968				7,830
Leased equipment depreciation		8,614				8,969				7,102				17,583				14,307
Foreclosed assets (income) expense, net		(119	)			1				(146	)			(118	)			(80	)
Acquisition, integration and
reorganization costs		200				3,425				-				3,625				-
Customer related expense		4,973				4,818				4,408				9,791				8,340
Loan expense		4,031				3,193				3,379				7,224				6,029
Goodwill impairment		-				-				-				-				1,470,000
Other expense		8,812				15,729				11,315				24,541				21,034
Total noninterest expense		151,750				150,136				126,965				301,886				1,714,935
Earnings (loss) before income taxes		242,929				203,962				46,172				446,891				(1,374,951	)
Income tax expense		62,417				53,556				12,968				115,973				24,956
Net earnings (loss)	$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Basic and diluted earnings (loss) per share	$	1.52			$	1.27			$	0.28			$	2.78			$	(11.98	)
Dividends declared and paid per share	$	0.25			$	0.25			$	0.25			$	0.50			$	0.85

 

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS (LOSS) PER SHARE CALCULATIONS
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
		2021				2021				2020				2021				2020
	(In thousands, except per share data)
Basic Earnings (Loss) Per Share:
Net earnings (loss)	$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Less: earnings allocated to
unvested restricted stock (1)		(3,172	)			(2,355	)			(362	)			(5,495	)			(1,251	)
Net earnings (loss) allocated to
common shares	$	177,340			$	148,051			$	32,842			$	325,423			$	(1,401,158	)
Weighted-average basic shares
and unvested restricted stock
outstanding		119,386				118,852				118,192				119,121				118,484
Less: weighted-average unvested
restricted stock outstanding		(2,356	)			(2,003	)			(1,606	)			(2,181	)			(1,551	)
Weighted-average basic shares
outstanding		117,030				116,849				116,586				116,940				116,933
Basic earnings (loss) per share	$	1.52			$	1.27			$	0.28			$	2.78			$	(11.98	)
Diluted Earnings (Loss) Per Share:
Net earnings (loss) allocated to
common shares	$	177,340			$	148,051			$	32,842			$	325,423			$	(1,401,158	)
Weighted-average diluted shares
outstanding		117,030				116,849				116,586				116,940				116,933
Diluted earnings (loss) per share	$	1.52			$	1.27			$	0.28			$	2.78			$	(11.98	)
(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
	June 30, 2021							March 31, 2021							June 30, 2020
			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)	$	19,057,420	$	246,147	5.18	%		$	18,927,314	$	242,846	5.20	%		$	19,951,603	$	248,474	5.01	%
Investment securities (3)		6,492,721		36,111	2.23	%			5,383,140		32,329	2.44	%			3,846,459		27,430	2.87	%
Deposits in financial
institutions		6,347,764		2,022	0.13	%			4,790,231		1,528	0.13	%			733,142		186	0.10	%
Total interest-earning
assets (1)		31,897,905		284,280	3.57	%			29,100,685		276,703	3.86	%			24,531,204		276,090	4.53	%
Other assets		2,428,207							2,315,197							2,090,023
Total assets	$	34,326,112						$	31,415,882						$	26,621,227
Liabilities and
Stockholders' Equity:
Interest checking	$	7,235,726		2,394	0.13	%		$	6,401,869		2,232	0.14	%		$	4,001,750		1,573	0.16	%
Money market		8,484,933		3,318	0.16	%			7,975,996		3,278	0.17	%			6,114,354		2,856	0.19	%
Savings		598,225		36	0.02	%			572,959		35	0.02	%			524,335		33	0.03	%
Time		1,498,169		1,521	0.41	%			1,493,267		1,955	0.53	%			2,475,858		8,613	1.40	%
Total interest-bearing
deposits		17,817,053		7,269	0.16	%			16,444,091		7,500	0.18	%			13,116,297		13,075	0.40	%
Borrowings		225,446		265	0.47	%			226,053		193	0.35	%			871,110		1,319	0.61	%
Subordinated debentures		735,725		6,663	3.63	%			466,101		4,375	3.81	%			459,466		5,402	4.73	%
Total interest-bearing
liabilities		18,778,224		14,197	0.30	%			17,136,245		12,068	0.29	%			14,446,873		19,796	0.55	%
Noninterest-bearing
demand deposits		11,304,757							10,173,459							8,292,151
Other liabilities		504,089							488,930							435,353
Total liabilities		30,587,070							27,798,634							23,174,377
Stockholders' equity		3,739,042							3,617,248							3,446,850
Total liabilities and
stockholders' equity	$	34,326,112						$	31,415,882						$	26,621,227
Net interest income (1)			$	270,083						$	264,635						$	256,294
Net interest spread (1)					3.27	%						3.57	%						3.98	%
Net interest margin (1)					3.40	%						3.69	%						4.20	%
Total deposits (4)	$	29,121,810	$	7,269	0.10	%		$	26,617,550	$	7,500	0.11	%		$	21,408,448	$	13,075	0.25	%
(1) Tax equivalent.
(2) Includes net loan premium amortization of $1.5 million and $1.2 million and net loan discount accretion of $1.2 million for the three months ended
June 30, 2021, March 31, 2021, and June 30, 2020, respectively.
(3) Includes tax-equivalent adjustments of $2.2 million, $2.1 million, and $1.4 million for the three months ended June 30, 2021,
March 31, 2021, and June 30, 2020 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,
		2021				2021				2020				2020				2020
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	179,505			$	177,199			$	150,464			$	187,176			$	174,059
Interest-earning deposits in financial
institutions		5,678,587				5,517,667				3,010,197				2,766,020				1,747,077
Total cash and cash equivalents		5,858,092				5,694,866				3,160,661				2,953,196				1,921,136
Securities available-for-sale		7,198,608				5,941,690				5,235,591				4,532,614				3,851,141
Federal Home Loan Bank stock		17,250				17,250				17,250				17,250				17,250
Total investment securities		7,215,858				5,958,940				5,252,841				4,549,864				3,868,391
Loans held for sale		-				25,554				-				-				-
Gross loans and leases held for investment		19,580,731				19,055,165				19,153,357				19,101,680				19,780,476
Deferred fees, net		(74,474	)			(75,937	)			(69,980	)			(75,480	)			(85,845	)
Total loans and leases held for
investment, net of deferred fees		19,506,257				18,979,228				19,083,377				19,026,200				19,694,631
Allowance for loan and lease losses		(225,600	)			(292,445	)			(348,181	)			(345,966	)			(301,050	)
Total loans and leases held for
investment, net		19,280,657				18,686,783				18,735,196				18,680,234				19,393,581
Equipment leased to others under
operating leases		313,574				327,413				333,846				286,425				295,191
Premises and equipment, net		39,541				39,622				39,234				40,544				42,299
Foreclosed assets, net		13,227				14,298				14,027				13,747				1,449
Goodwill		1,204,118				1,204,092				1,078,670				1,078,670				1,078,670
Core deposit and customer relationship
intangibles, net		18,423				21,312				23,641				26,813				30,564
Other assets		924,497				883,653				860,326				797,223				734,457
Total assets	$	34,867,987			$	32,856,533			$	29,498,442			$	28,426,716			$	27,365,738
LIABILITIES:
Noninterest-bearing deposits	$	11,252,286			$	11,017,462			$	9,193,827			$	9,346,744			$	8,629,543
Interest-bearing deposits		18,394,748				17,205,829				15,746,890				14,618,951				14,299,036
Total deposits		29,647,034				28,223,291				24,940,717				23,965,695				22,928,579
Borrowings		6,625				19,750				5,000				60,000				60,000
Subordinated debentures		861,788				465,814				465,812				463,282				460,772
Accrued interest payable and other
liabilities		505,859				493,541				491,962				451,508				463,489
Total liabilities		31,021,306				29,202,396				25,903,491				24,940,485				23,912,840
STOCKHOLDERS' EQUITY (1)		3,846,681				3,654,137				3,594,951				3,486,231				3,452,898
Total liabilities and stockholders’
equity	$	34,867,987			$	32,856,533			$	29,498,442			$	28,426,716			$	27,365,738
Book value per share	$	32.17			$	30.68			$	30.36			$	29.42			$	29.17
Tangible book value per share (2)	$	21.95			$	20.39			$	21.05			$	20.09			$	19.80
Shares outstanding		119,555,102				119,105,642				118,414,853				118,489,927				118,374,603
(1) Includes net unrealized gain on
securities available-for-sale, net	$	145,516			$	106,381			$	172,523			$	155,474			$	145,038
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,			June 30,
		2021				2021				2020				2020			2020
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	244,529			$	241,544			$	242,198			$	240,811		$	247,851
Investment securities		33,954				30,265				28,843				24,443			26,038
Deposits in financial institutions		2,022				1,528				1,135				654			186
Total interest income		280,505				273,337				272,176				265,908			274,075
Interest expense:
Deposits		7,269				7,500				8,454				9,887			13,075
Borrowings		265				193				37				27			1,319
Subordinated debentures		6,663				4,375				4,477				4,670			5,402
Total interest expense		14,197				12,068				12,968				14,584			19,796
Net interest income		266,308				261,269				259,208				251,324			254,279
Provision for credit losses		(88,000	)			(48,000	)			10,000				97,000			120,000
Net interest income after provision
for credit losses		354,308				309,269				249,208				154,324			134,279
Noninterest income:
Service charges on deposit accounts		3,452				2,934				3,119				2,570			2,004
Other commissions and fees		10,704				9,158				9,974				10,541			10,111
Leased equipment income		10,847				11,354				9,440				9,900			12,037
Gain on sale of loans and leases		1,422				139				1,671				35			346
Gain on sale of securities		-				101				4				5,270			7,715
Other income		13,946				21,143				15,642				9,936			6,645
Total noninterest income		40,371				44,829				39,850				38,252			38,858
Noninterest expense:
Compensation		90,807				79,882				73,171				75,131			61,910
Occupancy		14,784				14,054				14,083				14,771			14,494
Data processing		7,758				6,957				6,718				6,505			7,102
Other professional services		5,256				5,126				6,800				4,713			4,146
Insurance and assessments		3,745				4,903				5,064				3,939			9,373
Intangible asset amortization		2,889				3,079				3,172				3,751			3,882
Leased equipment depreciation		8,614				8,969				7,501				7,057			7,102
Foreclosed assets (income) expense, net		(119	)			1				(272	)			335			(146	)
Acquisition, integration and
reorganization costs		200				3,425				1,060				-			-
Customer related expense		4,973				4,818				4,430				4,762			4,408
Loan expense		4,031				3,193				3,926				3,499			3,379
Other expense		8,812				15,729				10,029				8,939			11,315
Total noninterest expense		151,750				150,136				135,682				133,402			126,965
Earnings before income taxes		242,929				203,962				153,376				59,174			46,172
Income tax expense		62,417				53,556				36,546				13,671			12,968
Net earnings	$	180,512			$	150,406			$	116,830			$	45,503		$	33,204
Basic and diluted earnings per share	$	1.52			$	1.27			$	0.99			$	0.38		$	0.28
Dividends declared and paid per share	$	0.25			$	0.25			$	0.25			$	0.25		$	0.25

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
		2021				2021				2020				2020				2020
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		2.11	%			1.94	%			1.58	%			0.65	%			0.50	%
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")
return on average assets (1)(2)		1.81	%			2.01	%			2.22	%			2.22	%			2.51	%
Return on average equity (1)		19.36	%			16.86	%			13.14	%			5.18	%			3.87	%
Return on average tangible equity (1)(2)		29.25	%			25.67	%			19.63	%			8.20	%			6.39	%
Efficiency ratio		47.9	%			46.4	%			43.6	%			45.1	%			42.9	%
Noninterest expense as a percentage
of average assets (1)		1.77	%			1.94	%			1.84	%			1.90	%			1.92	%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)		5.18	%			5.20	%			5.15	%			5.01	%			5.01	%
Average investment securities (3)		2.23	%			2.44	%			2.50	%			2.52	%			2.87	%
Average interest-earning assets (3)		3.57	%			3.86	%			4.02	%			4.13	%			4.53	%
Cost of:
Average interest-bearing deposits		0.16	%			0.18	%			0.22	%			0.27	%			0.40	%
Average total deposits		0.10	%			0.11	%			0.14	%			0.17	%			0.25	%
Average interest-bearing liabilities		0.30	%			0.29	%			0.33	%			0.38	%			0.55	%
Net interest spread (3)		3.27	%			3.57	%			3.69	%			3.75	%			3.98	%
Net interest margin (3)		3.40	%			3.69	%			3.83	%			3.90	%			4.20	%
Average Balances:
Assets:
Loans and leases, net of deferred fees	$	19,057,420			$	18,927,314			$	18,769,214			$	19,195,737			$	19,951,603
Investment securities		6,492,721				5,383,140				4,888,993				4,107,915				3,846,459
Deposits in financial institutions		6,347,764				4,790,231				3,576,335				2,554,349				733,142
Interest-earning assets		31,897,905				29,100,685				27,234,542				25,858,001				24,531,204
Total assets		34,326,112				31,415,882				29,334,789				27,935,193				26,621,227
Liabilities:
Noninterest-bearing deposits		11,304,757				10,173,459				9,589,789				8,812,391				8,292,151
Interest-bearing deposits		17,817,053				16,444,091				15,045,451				14,516,923				13,116,297
Total deposits		29,121,810				26,617,550				24,635,240				23,329,314				21,408,448
Borrowings		225,446				226,053				237,098				181,315				871,110
Subordinated debentures		735,725				466,101				463,951				462,375				459,466
Interest-bearing liabilities		18,778,224				17,136,245				15,746,500				15,160,613				14,446,873
Stockholders' equity		3,739,042				3,617,248				3,536,425				3,497,869				3,446,850
(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,
		2021				2021				2020				2020				2020
	(Dollars in thousands)
Credit Quality Ratios:
Nonaccrual loans and leases held for
investment to loans and leases
held for investment		0.29	%			0.36	%			0.48	%			0.45	%			0.84	%
Nonperforming assets to loans and
leases held for investment and
foreclosed assets		0.36	%			0.43	%			0.55	%			0.52	%			0.85	%
Classified loans and leases held for
investment to loans and leases
held for investment		0.75	%			0.86	%			1.39	%			1.44	%			1.49	%
Provision for credit losses (for the
quarter) to average loans and leases
held for investment (annualized)		(1.85	)%			(1.03	)%			0.21	%			2.01	%			2.42	%
Net charge-offs (for the quarter) to
average loans and leases held
for investment (annualized)		(0.11	)%			0.06	%			0.40	%			0.75	%			0.27	%
Trailing 12 months net charge-offs
to average loans and leases
held for investment		0.27	%			0.37	%			0.45	%			0.36	%			0.20	%
Allowance for loan and lease losses to
loans and leases held for investment		1.16	%			1.54	%			1.82	%			1.82	%			1.53	%
Allowance for credit losses to loans
and leases held for investment		1.54	%			2.02	%			2.27	%			2.33	%			1.94	%
Allowance for credit losses to
nonaccrual loans and leases
held for investment		528.4	%			566.2	%			475.8	%			516.9	%			229.7	%
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio (1)		7.67	%			7.95	%			8.55	%			8.66	%			8.93	%
Common equity tier 1 capital ratio (1)		10.41	%			10.39	%			10.53	%			10.45	%			9.97	%
Tier 1 capital ratio (1)		10.41	%			10.39	%			10.53	%			10.45	%			9.97	%
Total capital ratio (1)		14.99	%			13.60	%			13.76	%			13.74	%			13.18	%
Risk-weighted assets (1)	$	24,274,256			$	23,012,350			$	22,837,693			$	22,114,040			$	22,781,836
Equity to assets ratio		11.03	%			11.12	%			12.19	%			12.26	%			12.62	%
Tangible common equity ratio (2)		7.80	%			7.68	%			8.78	%			8.71	%			8.93	%
Book value per share	$	32.17			$	30.68			$	30.36			$	29.42			$	29.17
Tangible book value per share (2)	$	21.95			$	20.39			$	21.05			$	20.09			$	19.80
Pacific Western Bank:
Tier 1 leverage capital ratio (1)		8.47	%			8.83	%			9.53	%			9.70	%			10.03	%
Common equity tier 1 capital ratio (1)		11.51	%			11.54	%			11.73	%			11.70	%			11.18	%
Tier 1 capital ratio (1)		11.51	%			11.54	%			11.73	%			11.70	%			11.18	%
Total capital ratio (1)		14.22	%			12.80	%			12.99	%			12.95	%			12.44	%
(1) Capital information for June 30, 2021 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 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												Six Months Ended
PPNR and PPNR Return	June 30,				March 31,				June 30,				June 30,
on Average Assets		2021				2021				2020				2021				2020
	(Dollars in thousands)
Net earnings (loss)	$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Add: Provision for credit losses		(88,000	)			(48,000	)			120,000				(136,000	)			232,000
Add: Goodwill impairment		-				-				-				-				1,470,000
Add: Income tax expense		62,417				53,556				12,968				115,973				24,956
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")	$	154,929			$	155,962			$	166,172			$	310,891			$	327,049
Average assets	$	34,326,112			$	31,415,882			$	26,621,227			$	32,879,037			$	26,860,133
Return on average assets (1)		2.11	%			1.94	%			0.50	%			2.03	%			(10.48	)%
PPNR return on average assets (2)		1.81	%			2.01	%			2.51	%			1.91	%			2.45	%
(1) Annualized net earnings (loss) divided by average assets.
(2) Annualized PPNR divided by average assets.

	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
Return on Average Tangible Equity		2021				2021				2020				2021				2020
	(Dollars in thousands)
Net earnings (loss)	$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Add: Intangible asset amortization		2,889				3,079				3,882				5,968				7,830
Add: Goodwill impairment		-				-				-				-				1,470,000
Adjusted net earnings	$	183,401			$	153,485			$	37,086			$	336,886			$	77,923
Average stockholders' equity	$	3,739,042			$	3,617,248			$	3,446,850			$	3,678,481			$	4,201,814
Less: Average intangible assets		1,224,208				1,192,780				1,111,302				1,208,581				1,840,246
Average tangible common equity	$	2,514,834			$	2,424,468			$	2,335,548			$	2,469,900			$	2,361,568
Return on average equity (1)		19.36	%			16.86	%			3.87	%			18.14	%			(67.00	)%
Return on average tangible equity (2)		29.25	%			25.67	%			6.39	%			27.51	%			6.64	%
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.

Tangible Common Equity Ratio/	June 30,				March 31,				December 31,				September 30,				June 30,
Tangible Book Value Per Share		2021				2021				2020				2020				2020
	(Dollars in thousands, except per share data)
Stockholders' equity	$	3,846,681			$	3,654,137			$	3,594,951			$	3,486,231			$	3,452,898
Less: Intangible assets		1,222,541				1,225,404				1,102,311				1,105,483				1,109,234
Tangible common equity	$	2,624,140			$	2,428,733			$	2,492,640			$	2,380,748			$	2,343,664
Total assets	$	34,867,987			$	32,856,533			$	29,498,442			$	28,426,716			$	27,365,738
Less: Intangible assets		1,222,541				1,225,404				1,102,311				1,105,483				1,109,234
Tangible assets	$	33,645,446			$	31,631,129			$	28,396,131			$	27,321,233			$	26,256,504
Equity to assets ratio		11.03	%			11.12	%			12.19	%			12.26	%			12.62	%
Tangible common equity ratio (1)		7.80	%			7.68	%			8.78	%			8.71	%			8.93	%
Book value per share	$	32.17			$	30.68			$	30.36			$	29.42			$	29.17
Tangible book value per share (2)	$	21.95			$	20.39			$	21.05			$	20.09			$	19.80
Shares outstanding		119,555,102				119,105,642				118,414,853				118,489,927				118,374,603
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

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

FAQ

What were PacWest Bancorp's net earnings for Q2 2021?

PacWest Bancorp reported net earnings of $180.5 million for Q2 2021.

How much did core deposits increase in Q2 2021 for PACW?

Core deposits increased by $1.5 billion, or 22.9% annualized, in Q2 2021.

What was the loan growth for PACW in Q2 2021?

PacWest Bancorp experienced loan growth of $527 million, or 11.1% annualized, in Q2 2021.

How much did the provision for credit losses benefit in Q2 2021 for PACW?

The provision for credit losses benefited by $88 million in Q2 2021.

What is the CET1 ratio for PACW as of Q2 2021?

The CET1 ratio for PacWest Bancorp was 10.41% as of Q2 2021.