PacWest Bancorp Announces Results for the Third Quarter Of 2021

Rhea-AI Summary

PacWest Bancorp (PACW) reported third-quarter 2021 net earnings of $140 million, equating to $1.17 per diluted share. Core deposits rose by $1.1 billion (4.1%), representing 92% of total deposits. Loan growth reached $1 billion (5.2%), with a notable 7.1% increase excluding PPP loans. The pre-provision net revenue (PPNR) grew to $167.8 million, an 8.3% increase from Q2 2021. The company experienced a $20 million provision for credit losses benefit, reflecting improved loan quality. Additionally, the acquisition of MUFG Union Bank's HOA Services Division added $4.1 billion in low-cost deposits.

Positive

• Net earnings of $140 million for Q3 2021, $1.17 per diluted share.
• Core deposits increased by $1.1 billion (4.1%), making up 92% of total deposits.
• Loan growth reached $1 billion (5.2%), with a 7.1% increase excluding PPP loans.
• Pre-provision net revenue (PPNR) rose to $167.8 million, up 8.3% from Q2 2021.
• Provision for credit losses benefit of $20 million reflects improved loan quality.
• Acquisition of MUFG Union Bank's HOA Services adds $4.1 billion in deposits.

Negative

• Net earnings decreased by $40.5 million compared to Q2 2021.
• Return on average tangible equity fell to 21.03%, down 8.22% from Q2 2021.
• Net interest margin decreased to 3.33%, down from 3.40% in Q2 2021.
• Noninterest expense rose by 5% to $159.4 million, primarily driven by compensation increases.

LOS ANGELES, Oct. 18, 2021 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) -

THIRD QUARTER 2021 RESULTS

$140.0M	$1.17		$167.8M	21.03%
Net Earnings	Diluted Earnings per Share		PPNR	ROATE

THIRD QUARTER 2021 HIGHLIGHTS

• Net Earnings of $140.0 Million or $1.17 Per Diluted Share
• Core Deposits Up $1.1 Billion or 4.1% in 3Q21; Represents 92% of Total Deposits
• Loan Growth of $1.0 Billion or 5.2%; Excluding PPP Loan Activity, Loan Growth of $1.3 Billion or 7.1%
• Civic Loan Production of $481 Million in 3Q21, Compared to $423 Million in 2Q21
• PPNR of $167.8 Million, Up 8.3% Compared to 2Q21
• Provision for Credit Losses Benefit of $20.0 Million in 3Q21 Compared to Benefit of $88.0 Million in 2Q21
• Net Interest Income (TE) of $279.8 Million in 3Q21, Compared to $270.1 Million in 2Q21
• Noninterest Income of $51.3 Million in 3Q21, Compared to $40.4 Million in 2Q21, With Continued Strength in Warrant Income
• Noninterest Expense of $159.4 Million in 3Q21, Up 5% From 2Q21, Driven Mainly By Higher Compensation Expense
• Classified and Special Mention Loans Fell $5.7 Million and $39.7 Million, Respectively, From 2Q21
• ACL Ratio of 1.36% and ALLL Ratio of 0.99%; Excluding PPP Loans, ACL Ratio of 1.38% and ALLL Ratio of 1.01%
• Net Charge-offs of $0.4 Million (1 bp of Average Loans and Leases)
• Cost of Deposits Decreased 2 bps to 8 bps
• Loan and Lease Production of $2.4 Billion, Up From $1.7 Billion in 2Q21; WAC of 4.24% vs. 4.55% in 2Q21
• Strong Capital Position – CET1 Ratio of 10.15% and Total Capital Ratio of 14.36% at 3Q21
• Tangible Book Value Per Share Increased From $21.95 at 2Q21 to $22.57 at 3Q21

CEO COMMENTARY

Matt Wagner, President and CEO, commented, “For the second consecutive quarter, we experienced significant loan growth as loans grew $1.0 billion to an all-time high of $20.5 billion. Deploying approximately $3 billion of excess liquidity into higher-yielding securities and loans during the third quarter resulted in a $9.5 million increase in net interest income and helped drive a $12.8 million increase in our pre-tax pre-provision net revenue compared to the second quarter.”

“We continued to experience strong deposit growth as core deposits grew by $1.1 billion during the third quarter while our cost of average total deposits moved into the single digits at 8 basis points.”

“Credit quality continues to improve with net recoveries year-to-date and continued decreases in special mention and classified loans and leases, along with improved economic conditions related to the CECL forecast which resulted in a provision benefit for the third consecutive quarter.”

“We are excited about the acquisition of the Homeowners Association Services Division of MUFG Union Bank, N.A. which closed on October 8^th. The approximately $4.1 billion of stable, low-cost deposits enhances our franchise value, further diversifies our deposit portfolio, and will become more valuable in a rising rate environment.”

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/60516d02-d69d-4910-aaa9-0d9ace006bd6

FINANCIAL HIGHLIGHTS

`	At or For the									At or For the
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			Increase			September 30,						Increase
Financial Highlights (1)	2021			2021			(Decrease)			2021			2020			(Decrease)
	(Dollars in thousands, except per share data)
Net earnings (loss)	$	139,996		$	180,512		$	(40,516)		$	470,914		$	(1,354,404)		$	1,825,318
Diluted earnings (loss)
per share	$	1.17		$	1.52		$	(0.35)		$	3.96		$	(11.60)		$	15.56
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (2)	$	167,766		$	154,929		$	12,837		$	478,657		$	483,223		$	(4,566)
Return on average assets	1.55%			2.11%			(0.56)			1.86%			(6.65)%			8.51
PPNR return on average
assets (2)	1.86%			1.81%			0.05			1.89%			2.37%			(0.48)
Return on average
tangible equity (2)	21.03%			29.25%			(8.22)			25.20%			7.16%			18.04
Yield on average loans and
leases (tax equivalent)	5.01%			5.18%			(0.17)			5.13%			5.18%			(0.05)
Cost of average total
deposits	0.08%			0.10%			(0.02)			0.10%			0.32%			(0.22)
Net interest margin ("NIM")
(tax equivalent)	3.33%			3.40%			(0.07)			3.46%			4.13%			(0.67)
Efficiency ratio	47.2%			47.9%			(0.7)			47.2%			42.9%			4.3
Total assets	$	35,885,676		$	34,867,987		$	1,017,689		$	35,885,676		$	28,426,716		$	7,458,960
Loans and leases held
for investment,
net of deferred fees	$	20,511,020		$	19,506,257		$	1,004,763		$	20,511,020		$	19,026,200		$	1,484,820
Noninterest-bearing
demand deposits	$	12,881,806		$	11,252,286		$	1,629,520		$	12,881,806		$	9,346,744		$	3,535,062
Core deposits	$	28,140,708		$	27,038,161		$	1,102,547		$	28,140,708		$	21,117,629		$	7,023,079
Total deposits	$	30,559,745		$	29,647,034		$	912,711		$	30,559,745		$	23,965,695		$	6,594,050
As percentage of total
deposits:
Noninterest-bearing
demand deposits	42%			38%			4			42%			39%			3
Core deposits	92%			91%			1			92%			88%			4
Equity to assets ratio	10.92%			11.03%			(0.11)			10.92%			12.26%			(1.34)
Common equity tier 1
capital ratio	10.15%			10.41%			(0.26)			10.15%			10.45%			(0.30)
Total capital ratio	14.36%			14.99%			(0.63)			14.36%			13.74%			0.62
Tangible common equity
ratio (2)	7.79%			7.80%			(0.01)			7.79%			8.71%			(0.92)
Book value per share	$	32.77		$	32.17		$	0.60		$	32.77		$	29.42		$	3.35
Tangible book value per
share (2)	$	22.57		$	21.95		$	0.62		$	22.57		$	20.09		$	2.48
(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 $9.5 million to $275.8 million for the third quarter of 2021 compared to $266.3 million for the second quarter of 2021 due mainly to higher income on investment securities and loans and leases primarily resulting from higher average balances as we deploy our excess liquidity. Income on investment securities increased by $6.8 million in the third quarter of 2021 due to a $1.6 billion increase in the average balance of investment securities, partially offset by an 11 basis point decrease in the yield on average investment securities. Income on loans and leases increased $2.2 million in the third quarter of 2021 due to a $613.3 million increase in the average balance of loans and leases, partially offset by a 17 basis point decrease in the yield on average loans and leases. The tax equivalent yield on average loans and leases was 5.01% for the third quarter of 2021 compared to 5.18% for the second quarter of 2021. The decrease in the tax equivalent yield on average loans and leases was due primarily to lower nonaccrual interest recapture of $2.6 million, lower loan prepayment fees of $1.7 million, and higher loan premium amortization of $0.8 million.

The tax equivalent NIM was 3.33% for the third quarter of 2021 compared to 3.40% for the second quarter of 2021. The decrease in the NIM was due primarily to the change in the earning assets mix driven by the increase in the investment portfolio as a percentage of earning assets. The average balance of investment securities increased by $1.6 billion to $8.0 billion, the average balance of deposits in financial institutions decreased by $690.0 million to $5.7 billion, and the average balance of loans and leases increased by $613.3 million in the third quarter of 2021. The increase in average balances of investment securities and loans and leases was the result of prudently deploying some of our excess liquidity ahead of the closing of the acquisition of the HOA Services Division of MUFG Union Bank that added approximately $4.1 billion of deposits on October 8^th. Excess liquidity continues to negatively impact the tax equivalent NIM, however, we saw the impact decrease from approximately 73 basis points in the second quarter of 2021 to approximately 57 basis points in the third quarter of 2021.

The cost of average total deposits decreased to 0.08% in the third quarter of 2021 from 0.10% in the second quarter of 2021. The lower cost of average total deposits was due primarily to the $894 million increase in the 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
	September 30,			June 30,			Increase
Provision for Credit Losses	2021			2021			(Decrease)
	(In thousands)
(Reduction in) addition to allowance for loan
and lease losses	$	(21,500)		$	(72,000)		$	50,500
Addition to (reduction in) reserve for
unfunded loan commitments	1,500			(16,000)			17,500
Total provision for credit losses	$	(20,000)		$	(88,000)		$	68,000

The provision for credit losses benefit was $20.0 million for the third quarter of 2021 compared to a benefit of $88.0 million for the second quarter of 2021. The third quarter benefit reflected improvement in both macro-economic forecast variables and loan portfolio credit quality metrics, partially offset by increased provisions for unfunded commitments and loan growth.

Noninterest Income

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

	Three Months Ended
	September 30,			June 30,			Increase
Noninterest Income	2021			2021			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	3,407		$	3,452		$	(45)
Other commissions and fees	11,792			10,704			1,088
Leased equipment income	10,943			10,847			96
Gain on sale of loans and leases	-			1,422			(1,422)
Gain on sale of securities	515			-			515
Other income:
Dividends and gains on equity investments	8,387			5,394			2,993
Warrant income	13,578			5,650			7,928
Other	2,723			2,902			(179)
Total noninterest income	$	51,345		$	40,371		$	10,974

Noninterest income increased by $11.0 million to $51.3 million for the third quarter of 2021 compared to $40.4 million for the second quarter of 2021 due primarily to increases of $7.9 million in warrant income and $3.0 million in dividends and gains on equity investments. Warrant income increased due to a higher number of and dollar amount of gains on warrant exercises given the active capital markets. Dividends and gains on equity investments increased due primarily to higher gains on sales of equity investments and higher income distributions on SBIC investments, offset partially by lower net fair value gains on equity investments still held.

Noninterest Expense

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

	Three Months Ended
	September 30,			June 30,			Increase
Noninterest Expense	2021			2021			(Decrease)
	(In thousands)
Compensation	$	98,061		$	90,807		$	7,254
Occupancy	14,928			14,784			144
Data processing	7,391			7,758			(367)
Other professional services	5,164			5,256			(92)
Insurance and assessments	3,685			3,745			(60)
Intangible asset amortization	2,890			2,889			1
Leased equipment depreciation	8,603			8,614			(11)
Foreclosed assets expense (income), net	165			(119)			284
Acquisition, integration and reorganization costs	200			200			-
Customer related expense	4,538			4,973			(435)
Loan expense	4,180			4,031			149
Other	9,616			8,812			804
Total noninterest expense	$	159,421		$	151,750		$	7,671

Noninterest expense increased by $7.7 million to $159.4 million for the third quarter of 2021 compared to $151.8 million for the second quarter of 2021 due primarily to an increase of $7.3 million in compensation expense attributable mainly to higher bonus and incentives expense related to increased warrant income, the growth in loans and deposits in the third quarter of 2021, and overall year-to-date performance.

Income Taxes

The effective income tax rate was 25.4% in the third quarter of 2021 compared to 25.7% 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:

	September 30, 2021				June 30, 2021				September 30, 2020
			% of				% of				% of
Deposit Composition	Balance		Total		Balance		Total		Balance		Total
	(Dollars in thousands)
Noninterest-bearing demand	$	12,881,806	42%		$	11,252,286	38%		$	9,346,744	39%
Interest checking	7,168,472		24%		7,394,472		25%		4,657,511		20%
Money market	7,463,261		24%		7,777,199		26%		6,539,313		27%
Savings	627,169		2%		614,204		2%		574,061		2%
Total core deposits	28,140,708		92%		27,038,161		91%		21,117,629		88%
Non-core non-maturity deposits	960,438		3%		1,122,971		4%		1,123,909		5%
Total non-maturity deposits	29,101,146		95%		28,161,132		95%		22,241,538		93%
Time deposits $250,000 and under	882,551		3%		913,371		3%		1,047,621		4%
Time deposits over $250,000	576,048		2%		572,531		2%		676,536		3%
Total time deposits	1,458,599		5%		1,485,902		5%		1,724,157		7%
Total deposits	$	30,559,745	100%		$	29,647,034	100%		$	23,965,695	100%

At September 30, 2021, core deposits totaled $28.1 billion or 92% of total deposits, including $12.9 billion of noninterest-bearing demand deposits or 42% of total deposits. Core deposits increased by $1.1 billion or 4.1% in the third quarter of 2021 driven by continued strong deposit growth from our venture banking and community 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 September 30, 2021 were $1.4 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						Nine Months Ended
Roll Forward of Loans and Leases Held	September 30,			June 30,			September 30,
for Investment, Net of Deferred Fees (1)	2021			2021			2021
	(Dollars in thousands)
Balance, beginning of period	$	19,506,257		$	18,979,228		$	19,083,377
Additions:
Production	2,406,024			1,663,151			5,681,952
Disbursements	1,349,333			1,662,644			4,034,963
Total production and disbursements	3,755,357			3,325,795			9,716,915
Reductions:
Payoffs	(1,732,621)			(1,969,118)			(5,337,003)
Paydowns	(1,013,867)			(802,222)			(2,883,507)
Total payoffs and paydowns	(2,746,488)			(2,771,340)			(8,220,510)
Sales	(2,175)			(26,610)			(101,426)
Transfers to foreclosed assets	(415)			-			(1,062)
Charge-offs	(1,516)			(816)			(6,320)
Transfers to loans held for sale	-			-			(25,554)
Total reductions	(2,750,594)			(2,798,766)			(8,354,872)
Loans acquired through Civic acquisition	-			-			65,600
Net increase (decrease)	1,004,763			527,029			1,427,643
Balance, end of period	$	20,511,020		$	19,506,257		$	20,511,020
Weighted average rate on production (2)	4.24%			4.55%			4.37%
(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 40 basis points to loan yields in 2021.

Loans and leases held for investment, net of deferred fees, increased by $1.0 billion or 5.2% in the third quarter of 2021 to $20.5 billion at September 30, 2021. Excluding PPP loan activity, loans grew by $1.3 billion or 7.1%. The overall increase in the loans and leases balance for the third quarter of 2021 was primarily due to increases in the income producing and other residential, real estate construction and land and asset-based portfolios partially offset by a reduction in the venture capital portfolio and other commercial portfolio due to PPP loan forgiveness. The PPP forgiveness in the third quarter of 2021 was $338 million, down from $506 million in the second quarter of 2021. Net fees for PPP loans were $7.9 million in the third quarter of 2021 down slightly from the $8.8 million in the second quarter of 2021. Remaining PPP loans totaled $272 million as of September 30, 2021 with $7.7 million of net fees to amortize over the remaining life of the loans. The weighted average rate on the $2.4 billion of new production for the third quarter of 2021 decreased to 4.24% from 4.55% in the second quarter of 2021 due to the loan mix.

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:

	September 30, 2021				June 30, 2021				September 30, 2020
			% of				% of				% of
Loan and Lease Portfolio	Balance		Total		Balance		Total		Balance		Total
	(In thousands)
Real estate mortgage:
Commercial	$	3,694,597	18%		$	3,792,198	19%		$	4,192,466	22%
Income producing and other
residential	5,886,360		29%		4,620,822		24%		3,684,579		19%
Total real estate mortgage	9,580,957		47%		8,413,020		43%		7,877,045		41%
Real estate construction and land:
Commercial	992,003		5%		930,785		5%		1,241,647		7%
Residential	2,659,870		13%		2,574,799		13%		2,182,100		11%
Total real estate construction
and land	3,651,873		18%		3,505,584		18%		3,423,747		18%
Total real estate	13,232,830		65%		11,918,604		61%		11,300,792		59%
Commercial:
Asset-based	3,661,769		18%		3,550,903		18%		3,153,048		17%
Venture capital	1,632,861		8%		1,749,432		9%		1,637,132		9%
Other commercial	1,577,592		7%		1,921,909		10%		2,572,994		13%
Total commercial	6,872,222		33%		7,222,244		37%		7,363,174		39%
Consumer	405,968		2%		365,409		2%		362,234		2%
Total loans and leases held for
investment, net of deferred fees	$	20,511,020	100%		$	19,506,257	100%		$	19,026,200	100%
Total unfunded loan commitments	$	8,480,599			$	7,891,875			$	7,178,506

Allowance for Credit Losses

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

	Three Months Ended September 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	$	225,600		$	74,571		$	300,171
Charge-offs	(1,516)			-			(1,516)
Recoveries	1,149			-			1,149
Net charge-offs	(367)			-			(367)
Provision	(21,500)			1,500			(20,000)
Ending balance	$	203,733		$	76,071		$	279,804
Net recoveries
	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

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

	September 30,			June 30,			Increase
Allowance for Credit Losses	2021			2021			(Decrease)
	(Dollars in thousands)
Allowance for loan and lease losses	$	203,733		$	225,600		$	(21,867)
Reserve for unfunded loan commitments	76,071			74,571			1,500
Allowance for credit losses	$	279,804		$	300,171		$	(20,367)
Provision for credit losses (for the quarter)	$	(20,000)		$	(88,000)		$	68,000
Net charge-offs (recoveries) (for the quarter)	$	367		$	(5,155)		$	5,522
Net charge-offs (recoveries) to average loans
and leases (for the quarter)	0.01%			(0.11)%
Allowance for loan and lease losses to loans
and leases held for investment	0.99%			1.16%
Allowance for loan and lease losses to loans
and leases held for investment, excluding PPP loans	1.01%			1.19%
Allowance for credit losses to loans and leases
held for investment	1.36%			1.54%
Allowance for credit losses to loans and leases
held for investment, excluding PPP loans	1.38%			1.59%

The allowance for credit losses decreased by $20.4 million in the third quarter of 2021 to $279.8 million at September 30, 2021. The decrease in the allowance for credit losses during the third quarter of 2021 was attributable to a provision for credit losses benefit of $20.0 million and $0.4 million in net charge-offs. The allowance for credit losses ratio, excluding PPP loans, of 1.38% remains robust and significantly higher than the pre-pandemic level of 0.97% as of the January 1, 2020 CECL adoption date.

Net charge-offs were $0.4 million for the third quarter of 2021. Gross charge-offs of $1.5 million were reduced by recoveries of $1.1 million.

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.

On a year-to-date basis for the nine months ended September 30, 2021, net recoveries were $2.1 million. Gross charge-offs of $6.3 million were reduced by recoveries of $8.4 million.

CREDIT QUALITY

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

	September 30,			June 30,			Increase
Credit Quality Metrics	2021			2021			(Decrease)
	(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)	$	64,507		$	56,803		$	7,704
Accruing loans contractually past due 90 days or more	-			-			-
Foreclosed assets, net	13,364			13,227			137
Total nonperforming assets ("NPAs")	$	77,871		$	70,030		$	7,841
Performing TDRs held for investment	$	36,750		$	40,129		$	(3,379)
Nonaccrual loans and leases held for investment
to loans and leases held for investment	0.31%			0.29%
Nonperforming assets to loans and leases
held for investment and foreclosed assets	0.38%			0.36%
Allowance for credit losses to nonaccrual loans
and leases held for investment	433.8%			528.4%
Loan and Lease Credit Risk Ratings:
Pass	$	19,873,050		$	18,822,938		$	1,050,112
Special mention	496,366			536,052			(39,686)
Classified	141,604			147,267			(5,663)
Total loans and leases held for investment,
net of deferred fees	$	20,511,020		$	19,506,257		$	1,004,763
Classified loans and leases held for investment
to loans and leases held for investment	0.69%			0.75%
(1) Nonaccrual loans include SBA guaranteed amounts of $20.1 million at September 30, 2021 and $24.2 million at June 30, 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 by $402.3 million from their peak in the first quarter of 2020, while classified loans and leases have decreased by $151.6 million from their peak in the second quarter of 2020, and each have continued a steady decline in the third quarter of 2021. Nonaccrual loans and leases increased by $7.7 million to $64.5 million in the third quarter of 2021 due primarily to an increase in nonaccrual short-term, single-family residential renovation loans, however $7.5 million of such nonaccrual loans paid off in the first week of October.

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:

	September 30, 2021						June 30, 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	$	25,615		$	676		$	32,065		$               -			$	(6,450)		$	676
Income producing and other
residential	7,547			3,760			6,133			2,179			1,414			1,581
Total real estate mortgage	33,162			4,436			38,198			2,179			(5,036)			2,257
Real estate construction and land:
Commercial	-			-			284			-			(284)			-
Residential	19,918			12,809			1,934			22,714			17,984			(9,905)
Total real estate
construction and land	19,918			12,809			2,218			22,714			17,700			(9,905)
Commercial:
Asset-based	1,605			-			1,973			-			(368)			-
Venture capital	2,348			1,670			2,717			-			(369)			1,670
Other commercial	6,979			340			11,337			270			(4,358)			70
Total commercial	10,932			2,010			16,027			270			(5,095)			1,740
Consumer	495			1,042			360			1,454			135			(412)
Total held for investment	$	64,507		$	20,297		$	56,803		$	26,617		$	7,704		$	(6,320)

 CAPITAL

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

	September 30, 2021
			Excluding		June 30,
			PPP		2021
	Actual (1)		Loans (1)		Actual
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio	8.05%	(3)	8.15%	(4)	7.67%
Common equity tier 1 capital ratio	10.15%		10.15%		10.41%
Tier 1 capital ratio	10.65%	(3)	10.65%		10.41%
Total capital ratio	14.36%		14.36%		14.99%
Tangible common equity ratio (2)	7.79%		7.85%	(4)	7.80%
(1) Capital information for September 30, 2021 is preliminary.
(2) Non-GAAP measure.
(3) The increase in our consolidated Tier 1 capital ratio during the third quarter of 2021 was due in part to a reassessment of a Basel III implementation rule that permitted the grandfathering of certain trust preferred securities as Tier 1 capital. As a result, $131 million of trust preferred securities were reclassified from Tier 2 capital to Tier 1 capital during the third quarter of 2021. This change increased the Tier 1 leverage capital ratio by approximately 38 basis points and increased the Tier 1 capital ratio by approximately 50 basis points.
(4) PPP loans have been excluded from total assets in the denominator as they are zero risk-weighted.

 ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $35 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 69 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 provides venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. The Bank also offers financing of non-owner-occupied investor properties through Civic Financial Services a wholly-owned subsidiary. The Bank also offers a specialized suite of services for the HOA industry. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

FORWARD LOOKING STATEMENTS

This communication contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. The ongoing 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
	September 30,			June 30,			September 30,
	2021			2021			2020
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	174,585		$	179,505		$	187,176
Interest-earning deposits in financial institutions	3,524,613			5,678,587			2,766,020
Total cash and cash equivalents	3,699,198			5,858,092			2,953,196
Securities available-for-sale, at estimated fair value	9,276,926			7,198,608			4,532,614
Federal Home Loan Bank stock, at cost	17,250			17,250			17,250
Total investment securities	9,294,176			7,215,858			4,549,864
Loans held for sale	-			-			-
Gross loans and leases held for investment	20,588,255			19,580,731			19,101,680
Deferred fees, net	(77,235)			(74,474)			(75,480)
Total loans and leases held for investment,
net of deferred fees	20,511,020			19,506,257			19,026,200
Allowance for loan and lease losses	(203,733)			(225,600)			(345,966)
Total loans and leases held for investment, net	20,307,287			19,280,657			18,680,234
Equipment leased to others under operating leases	334,275			313,574			286,425
Premises and equipment, net	47,246			39,541			40,544
Foreclosed assets, net	13,364			13,227			13,747
Goodwill	1,204,118			1,204,118			1,078,670
Core deposit and customer relationship intangibles, net	15,533			18,423			26,813
Other assets	970,479			924,497			797,223
Total assets	$	35,885,676		$	34,867,987		$	28,426,716
LIABILITIES:
Noninterest-bearing deposits	$	12,881,806		$	11,252,286		$	9,346,744
Interest-bearing deposits	17,677,939			18,394,748			14,618,951
Total deposits	30,559,745			29,647,034			23,965,695
Borrowings	-			6,625			60,000
Subordinated debt	862,447			861,788			463,282
Accrued interest payable and other liabilities	545,050			505,859			451,508
Total liabilities	31,967,242			31,021,306			24,940,485
STOCKHOLDERS' EQUITY (1)	3,918,434			3,846,681			3,486,231
Total liabilities and stockholders’ equity	$	35,885,676		$	34,867,987		$	28,426,716
Book value per share	$	32.77		$	32.17		$	29.42
Tangible book value per share (2)	$	22.57		$	21.95		$	20.09
Shares outstanding	119,579,566			119,555,102			118,489,927
(1) Includes net unrealized gain on securities
available-for-sale, net	$	98,859		$	145,516		$	155,474
(2) Non-GAAP measure.

 

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2021			2021			2020			2021			2020
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	246,722		$	244,529		$	240,811		$	732,795		$	750,940
Investment securities	40,780			33,954			24,443			104,999			77,927
Deposits in financial institutions	2,580			2,022			654			6,130			2,448
Total interest income	290,082			280,505			265,908			843,924			831,315
Interest expense:
Deposits	6,417			7,269			9,887			21,186			51,209
Borrowings	101			265			27			559			8,124
Subordinated debt	7,722			6,663			4,670			18,760			16,632
Total interest expense	14,240			14,197			14,584			40,505			75,965
Net interest income	275,842			266,308			251,324			803,419			755,350
Provision for credit losses	(20,000)			(88,000)			97,000			(156,000)			329,000
Net interest income after provision
for credit losses	295,842			354,308			154,324			959,419			426,350
Noninterest income:
Service charges on deposit accounts	3,407			3,452			2,570			9,793			7,232
Other commissions and fees	11,792			10,704			10,541			31,654			30,373
Leased equipment income	10,943			10,847			9,900			33,144			34,188
Gain on sale of loans and leases	-			1,422			35			1,561			468
Gain on sale of securities	515			-			5,270			616			13,167
Other income	24,688			13,946			9,936			59,777			20,782
Total noninterest income	51,345			40,371			38,252			136,545			106,210
Noninterest expense:
Compensation	98,061			90,807			75,131			268,750			198,323
Occupancy	14,928			14,784			14,771			43,766			43,472
Data processing	7,391			7,758			6,505			22,106			20,061
Other professional services	5,164			5,256			4,713			15,546			13,117
Insurance and assessments	3,685			3,745			3,939			12,333			17,561
Intangible asset amortization	2,890			2,889			3,751			8,858			11,581
Leased equipment depreciation	8,603			8,614			7,057			26,186			21,364
Foreclosed assets expense (income), net	165			(119)			335			47			255
Acquisition, integration and
reorganization costs	200			200			-			3,825			-
Customer related expense	4,538			4,973			4,762			14,329			13,102
Loan expense	4,180			4,031			3,499			11,404			9,528
Goodwill impairment	-			-			-			-			1,470,000
Other expense	9,616			8,812			8,939			34,157			29,973
Total noninterest expense	159,421			151,750			133,402			461,307			1,848,337
Earnings (loss) before income taxes	187,766			242,929			59,174			634,657			(1,315,777)
Income tax expense	47,770			62,417			13,671			163,743			38,627
Net earnings (loss)	$	139,996		$	180,512		$	45,503		$	470,914		$	(1,354,404)
Basic and diluted earnings (loss) per share	$	1.17		$	1.52		$	0.38		$	3.96		$	(11.60)
Dividends declared and paid per share	$	0.25		$	0.25		$	0.25		$	0.75		$	1.10

 

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2021			2021			2020			2021			2020
	(In thousands, except per share data)
Basic Earnings (Loss) Per Share:
Net earnings (loss)	$	139,996		$	180,512		$	45,503		$	470,914		$	(1,354,404)
Less: earnings allocated to
unvested restricted stock (1)	(2,417)			(3,172)			(578)			(7,930)			(1,603)
Net earnings (loss) allocated to
common shares	$	137,579		$	177,340		$	44,925		$	462,984		$	(1,356,007)
Weighted average basic shares
and unvested restricted stock
outstanding	119,569			119,386			118,438			119,272			118,469
Less: weighted average unvested
restricted stock outstanding	(2,340)			(2,356)			(1,684)			(2,235)			(1,596)
Weighted average basic shares
outstanding	117,229			117,030			116,754			117,037			116,873
Basic earnings (loss) per share	$	1.17		$	1.52		$	0.38		$	3.96		$	(11.60)
Diluted Earnings (Loss) Per Share:
Net earnings (loss) allocated to
common shares	$	137,579		$	177,340		$	44,925		$	462,984		$	(1,356,007)
Weighted average diluted shares
outstanding	117,229			117,030			116,754			117,037			116,873
Diluted earnings (loss) per share	$	1.17		$	1.52		$	0.38		$	3.96		$	(11.60)
(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
	September 30, 2021						June 30, 2021						September 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)	$	19,670,671	$	248,485	5.01%		$	19,057,420	$	246,147	5.18%		$	19,195,737	$	241,547	5.01%
Investment securities (3)	8,047,098		42,952		2.12%		6,492,721		36,111		2.23%		4,107,915		26,015		2.52%
Deposits in financial
institutions	5,657,768		2,580		0.18%		6,347,764		2,022		0.13%		2,554,349		654		0.10%
Total interest-earning
assets (1)	33,375,537		294,017		3.50%		31,897,905		284,280		3.57%		25,858,001		268,216		4.13%
Other assets	2,496,127						2,428,207						2,077,192
Total assets	$	35,871,664					$	34,326,112					$	27,935,193
Liabilities and
Stockholders' Equity:
Interest checking	$	7,372,859	2,042		0.11%		$	7,235,726	2,394		0.13%		$	4,904,614	2,019		0.16%
Money market	8,662,449		2,997		0.14%		8,484,933		3,318		0.16%		7,170,842		3,081		0.17%
Savings	620,079		38		0.02%		598,225		36		0.02%		565,395		35		0.02%
Time	1,475,307		1,340		0.36%		1,498,169		1,521		0.41%		1,876,072		4,752		1.01%
Total interest-bearing
deposits	18,130,694		6,417		0.14%		17,817,053		7,269		0.16%		14,516,923		9,887		0.27%
Borrowings	238,335		101		0.17%		225,446		265		0.47%		181,315		27		0.06%
Subordinated debt	862,272		7,722		3.55%		735,725		6,663		3.63%		462,375		4,670		4.02%
Total interest-bearing
liabilities	19,231,301		14,240		0.29%		18,778,224		14,197		0.30%		15,160,613		14,584		0.38%
Noninterest-bearing
demand deposits	12,198,313						11,304,757						8,812,391
Other liabilities	525,429						504,089						464,320
Total liabilities	31,955,043						30,587,070						24,437,324
Stockholders' equity	3,916,621						3,739,042						3,497,869
Total liabilities and
stockholders' equity	$	35,871,664					$	34,326,112					$	27,935,193
Net interest income (1)			$	279,777					$	270,083					$	253,632
Net interest spread (1)					3.21%						3.27%						3.75%
Net interest margin (1)					3.33%						3.40%						3.90%
Total deposits (4)	$	30,329,007	$	6,417	0.08%		$	29,121,810	$	7,269	0.10%		$	23,329,314	$	9,887	0.17%
(1) Tax equivalent.
(2) Includes net loan premium amortization of $2.4 million and $1.5 million and net loan discount accretion of $35,000 for the three months ended September 30, 2021, June 30, 2021, and September 30, 2020, respectively.
(3) Includes tax-equivalent adjustments of $2.2 million, $2.2 million, and $1.6 million for the three months ended September 30, 2021,   June 30, 2021, and September 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
	September 30,			June 30,			March 31,			December 31,			September 30,
	2021			2021			2021			2020			2020
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	174,585		$	179,505		$	177,199		$	150,464		$	187,176
Interest-earning deposits in financial
institutions	3,524,613			5,678,587			5,517,667			3,010,197			2,766,020
Total cash and cash equivalents	3,699,198			5,858,092			5,694,866			3,160,661			2,953,196
Securities available-for-sale	9,276,926			7,198,608			5,941,690			5,235,591			4,532,614
Federal Home Loan Bank stock	17,250			17,250			17,250			17,250			17,250
Total investment securities	9,294,176			7,215,858			5,958,940			5,252,841			4,549,864
Loans held for sale	-			-			25,554			-			-
Gross loans and leases held for investment	20,588,255			19,580,731			19,055,165			19,153,357			19,101,680
Deferred fees, net	(77,235)			(74,474)			(75,937)			(69,980)			(75,480)
Total loans and leases held for
investment, net of deferred fees	20,511,020			19,506,257			18,979,228			19,083,377			19,026,200
Allowance for loan and lease losses	(203,733)			(225,600)			(292,445)			(348,181)			(345,966)
Total loans and leases held for
investment, net	20,307,287			19,280,657			18,686,783			18,735,196			18,680,234
Equipment leased to others under
operating leases	334,275			313,574			327,413			333,846			286,425
Premises and equipment, net	47,246			39,541			39,622			39,234			40,544
Foreclosed assets, net	13,364			13,227			14,298			14,027			13,747
Goodwill	1,204,118			1,204,118			1,204,092			1,078,670			1,078,670
Core deposit and customer relationship
intangibles, net	15,533			18,423			21,312			23,641			26,813
Other assets	970,479			924,497			883,653			860,326			797,223
Total assets	$	35,885,676		$	34,867,987		$	32,856,533		$	29,498,442		$	28,426,716
LIABILITIES:
Noninterest-bearing deposits	$	12,881,806		$	11,252,286		$	11,017,462		$	9,193,827		$	9,346,744
Interest-bearing deposits	17,677,939			18,394,748			17,205,829			15,746,890			14,618,951
Total deposits	30,559,745			29,647,034			28,223,291			24,940,717			23,965,695
Borrowings	-			6,625			19,750			5,000			60,000
Subordinated debt	862,447			861,788			465,814			465,812			463,282
Accrued interest payable and other
liabilities	545,050			505,859			493,541			491,962			451,508
Total liabilities	31,967,242			31,021,306			29,202,396			25,903,491			24,940,485
STOCKHOLDERS' EQUITY (1)	3,918,434			3,846,681			3,654,137			3,594,951			3,486,231
Total liabilities and stockholders’
equity	$	35,885,676		$	34,867,987		$	32,856,533		$	29,498,442		$	28,426,716
Book value per share	$	32.77		$	32.17		$	30.68		$	30.36		$	29.42
Tangible book value per share (2)	$	22.57		$	21.95		$	20.39		$	21.05		$	20.09
Shares outstanding	119,579,566			119,555,102			119,105,642			118,414,853			118,489,927
(1) Includes net unrealized gain on
securities available-for-sale, net	$	98,859		$	145,516		$	106,381		$	172,523		$	155,474
(2) Non-GAAP measure.

	Three Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
	2021			2021			2021			2020			2020
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	246,722		$	244,529		$	241,544		$	242,198		$	240,811
Investment securities	40,780			33,954			30,265			28,843			24,443
Deposits in financial institutions	2,580			2,022			1,528			1,135			654
Total interest income	290,082			280,505			273,337			272,176			265,908
Interest expense:
Deposits	6,417			7,269			7,500			8,454			9,887
Borrowings	101			265			193			37			27
Subordinated debt	7,722			6,663			4,375			4,477			4,670
Total interest expense	14,240			14,197			12,068			12,968			14,584
Net interest income	275,842			266,308			261,269			259,208			251,324
Provision for credit losses	(20,000)			(88,000)			(48,000)			10,000			97,000
Net interest income after provision
for credit losses	295,842			354,308			309,269			249,208			154,324
Noninterest income:
Service charges on deposit accounts	3,407			3,452			2,934			3,119			2,570
Other commissions and fees	11,792			10,704			9,158			9,974			10,541
Leased equipment income	10,943			10,847			11,354			9,440			9,900
Gain on sale of loans and leases	-			1,422			139			1,671			35
Gain on sale of securities	515			-			101			4			5,270
Other income	24,688			13,946			21,143			15,642			9,936
Total noninterest income	51,345			40,371			44,829			39,850			38,252
Noninterest expense:
Compensation	98,061			90,807			79,882			73,171			75,131
Occupancy	14,928			14,784			14,054			14,083			14,771
Data processing	7,391			7,758			6,957			6,718			6,505
Other professional services	5,164			5,256			5,126			6,800			4,713
Insurance and assessments	3,685			3,745			4,903			5,064			3,939
Intangible asset amortization	2,890			2,889			3,079			3,172			3,751
Leased equipment depreciation	8,603			8,614			8,969			7,501			7,057
Foreclosed assets expense (income), net	165			(119)			1			(272)			335
Acquisition, integration and
reorganization costs	200			200			3,425			1,060			-
Customer related expense	4,538			4,973			4,818			4,430			4,762
Loan expense	4,180			4,031			3,193			3,926			3,499
Other expense	9,616			8,812			15,729			10,029			8,939
Total noninterest expense	159,421			151,750			150,136			135,682			133,402
Earnings before income taxes	187,766			242,929			203,962			153,376			59,174
Income tax expense	47,770			62,417			53,556			36,546			13,671
Net earnings	$	139,996		$	180,512		$	150,406		$	116,830		$	45,503
Basic and diluted earnings per share	$	1.17		$	1.52		$	1.27		$	0.99		$	0.38
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
	September 30,			June 30,			March 31,			December 31,			September 30,
	2021			2021			2021			2020			2020
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)	1.55%			2.11%			1.94%			1.58%			0.65%
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")
return on average assets (1)(2)	1.86%			1.81%			2.01%			2.22%			2.22%
Return on average equity (1)	14.18%			19.36%			16.86%			13.14%			5.18%
Return on average tangible equity (1)(2)	21.03%			29.25%			25.67%			19.63%			8.20%
Efficiency ratio	47.2%			47.9%			46.4%			43.6%			45.1%
Noninterest expense as a percentage
of average assets (1)	1.76%			1.77%			1.94%			1.84%			1.90%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)	5.01%			5.18%			5.20%			5.15%			5.01%
Average investment securities (3)	2.12%			2.23%			2.44%			2.50%			2.52%
Average interest-earning assets (3)	3.50%			3.57%			3.86%			4.02%			4.13%
Cost of:
Average interest-bearing deposits	0.14%			0.16%			0.18%			0.22%			0.27%
Average total deposits	0.08%			0.10%			0.11%			0.14%			0.17%
Average interest-bearing liabilities	0.29%			0.30%			0.29%			0.33%			0.38%
Net interest spread (3)	3.21%			3.27%			3.57%			3.69%			3.75%
Net interest margin (3)	3.33%			3.40%			3.69%			3.83%			3.90%
Average Balances:
Assets:
Loans and leases, net of deferred fees	$	19,670,671		$	19,057,420		$	18,927,314		$	18,769,214		$	19,195,737
Investment securities	8,047,098			6,492,721			5,383,140			4,888,993			4,107,915
Deposits in financial institutions	5,657,768			6,347,764			4,790,231			3,576,335			2,554,349
Interest-earning assets	33,375,537			31,897,905			29,100,685			27,234,542			25,858,001
Total assets	35,871,664			34,326,112			31,415,882			29,334,789			27,935,193
Liabilities:
Noninterest-bearing deposits	12,198,313			11,304,757			10,173,459			9,589,789			8,812,391
Interest-bearing deposits	18,130,694			17,817,053			16,044,091			15,045,451			14,516,923
Total deposits	30,329,007			29,121,810			26,217,550			24,635,240			23,329,314
Borrowings	238,335			225,446			226,053			237,098			181,315
Subordinated debt	862,272			735,725			466,101			463,951			462,375
Interest-bearing liabilities	19,231,301			18,778,224			17,136,245			15,746,500			15,160,613
Stockholders' equity	3,916,621			3,739,042			3,617,248			3,536,425			3,497,869
(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
	September 30,			June 30,			March 31,			December 31,			September 30,
	2021			2021			2021			2020			2020
	(Dollars in thousands)
Credit Quality Ratios:
Nonaccrual loans and leases held for
investment to loans and leases
held for investment	0.31%			0.29%			0.36%			0.48%			0.45%
Nonperforming assets to loans and
leases held for investment and
foreclosed assets	0.38%			0.36%			0.43%			0.55%			0.52%
Classified loans and leases held for
investment to loans and leases
held for investment	0.69%			0.75%			0.86%			1.39%			1.44%
Provision for credit losses (for the
quarter) to average loans and leases
held for investment (annualized)	(0.40)%			(1.85)%			(1.03)%			0.21%			2.01%
Net charge-offs (for the quarter) to
average loans and leases held
for investment (annualized)	0.01%			(0.11)%			0.06%			0.40%			0.75%
Trailing 12 months net charge-offs
to average loans and leases
held for investment	0.09%			0.27%			0.37%			0.45%			0.36%
Allowance for loan and lease losses to
loans and leases held for investment	0.99%			1.16%			1.54%			1.82%			1.82%
Allowance for credit losses to loans
and leases held for investment	1.36%			1.54%			2.02%			2.27%			2.33%
Allowance for credit losses to
nonaccrual loans and leases
held for investment	433.8%			528.4%			566.2%			475.8%			516.9%
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio (1)	8.05%			7.67%			7.95%			8.55%			8.66%
Common equity tier 1 capital ratio (1)	10.15%			10.41%			10.39%			10.53%			10.45%
Tier 1 capital ratio (1)	10.65%			10.41%			10.39%			10.53%			10.45%
Total capital ratio (1)	14.36%			14.99%			13.60%			13.76%			13.74%
Risk-weighted assets (1)	$	26,057,583		$	24,274,256		$	23,012,350		$	22,837,693		$	22,114,040
Equity to assets ratio	10.92%			11.03%			11.12%			12.19%			12.26%
Tangible common equity ratio (2)	7.79%			7.80%			7.68%			8.78%			8.71%
Book value per share	$	32.77		$	32.17		$	30.68		$	30.36		$	29.42
Tangible book value per share (2)	$	22.57		$	21.95		$	20.39		$	21.05		$	20.09
Pacific Western Bank:
Tier 1 leverage capital ratio (1)	8.40%			8.47%			8.83%			9.53%			9.70%
Common equity tier 1 capital ratio (1)	11.12%			11.51%			11.54%			11.73%			11.70%
Tier 1 capital ratio (1)	11.12%			11.51%			11.54%			11.73%			11.70%
Total capital ratio (1)	13.59%			14.22%			12.80%			12.99%			12.95%
(1) Capital information for September 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									Nine Months Ended
PPNR and PPNR Return	September 30,			June 30,			September 30,			September 30,
on Average Assets	2021			2021			2020			2021			2020
	(Dollars in thousands)
Net earnings (loss)	$	139,996		$	180,512		$	45,503		$	470,914		$	(1,354,404)
Add: Provision for credit losses	(20,000)			(88,000)			97,000			(156,000)			329,000
Add: Goodwill impairment	-			-			-			-			1,470,000
Add: Income tax expense	47,770			62,417			13,671			163,743			38,627
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")	$	167,766		$	154,929		$	156,174		$	478,657		$	483,223
Average assets	$	35,871,664		$	34,326,112		$	27,935,193		$	33,887,541		$	27,221,102
Return on average assets (1)	1.55%			2.11%			0.65%			1.86%			(6.65)%
PPNR return on average assets (2)	1.86%			1.81%			2.22%			1.89%			2.37%
(1) Annualized net earnings (loss) divided by average assets.
(2) Annualized PPNR divided by average assets.

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
Return on Average Tangible Equity	2021			2021			2020			2021			2020
	(Dollars in thousands)
Net earnings (loss)	$	139,996		$	180,512		$	45,503		$	470,914		$	(1,354,404)
Add: Intangible asset amortization	2,890			2,889			3,751			8,858			11,581
Add: Goodwill impairment	-			-			-			-			1,470,000
Adjusted net earnings	$	142,886		$	183,401		$	49,254		$	479,772		$	127,177
Average stockholders' equity	$	3,916,621		$	3,739,042		$	3,497,869		$	3,758,733		$	3,965,453
Less: Average intangible assets	1,221,253			1,224,208			1,107,548			1,212,851			1,594,231
Average tangible common equity	$	2,695,368		$	2,514,834		$	2,390,321		$	2,545,882		$	2,371,222
Return on average equity (1)	14.18%			19.36%			5.18%			16.75%			(45.62)%
Return on average tangible equity (2)	21.03%			29.25%			8.20%			25.20%			7.16%
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.

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 the Q3 2021 earnings for PacWest Bancorp (PACW)?

PacWest Bancorp reported net earnings of $140 million or $1.17 per diluted share for Q3 2021.

How much did core deposits increase in Q3 2021 for PACW?

Core deposits rose by $1.1 billion, or 4.1%, in Q3 2021.

What was the loan growth for PACW in Q3 2021?

Loan growth reached $1 billion, representing a 5.2% increase in Q3 2021.

How did the pre-provision net revenue change for PACW in Q3 2021?

The pre-provision net revenue increased to $167.8 million, up 8.3% from Q2 2021.

What was the provision for credit losses for PACW in Q3 2021?

PACW recorded a provision for credit losses benefit of $20 million in Q3 2021.