PacWest Bancorp Announces Results for the Third Quarter 2023

Rhea-AI Summary

PacWest Bancorp reports net loss of $33.3 million in Q3 2023. Pending merger with Banc of California on track to close by November 30, 2023. Bank expects return to normalized funding levels and improved profitability. Noninterest expense down 14% in Q3. Allowance for loan and lease losses ratio increased. Community Banking deposits grew by 2%. Repurchase agreement facility to be repaid in December 2023.

Positive

• Pending merger with Banc of California expected to drive significant value for PacWest's stockholders. Bank expects improved profitability with lower interest and FDIC insurance expenses. Community Banking deposits grew by 2%.

Negative

• Net loss of $33.3 million in Q3 2023. Noninterest expense down 14% in Q3. Repurchase agreement facility interest expense of $35 million in Q3.

THIRD QUARTER 2023 HIGHLIGHTS

• Net loss available to common stockholders of $33.3 million, or a loss of $0.28 per diluted share
• Pending merger with Banc of California, Inc. is on track with all regulatory approvals received and is expected to close on or about November 30, 2023
• The Bank put in place a large liquidity base to cautiously navigate the end of the first quarter of 2023 through the third quarter of 2023. The excess borrowings, including $1.4 billion of brokered deposits (at a rate of 5.19%) and the $1.3 billion repurchase agreement facility (at a rate of 8.50%), are expected to roll off in the fourth quarter of 2023. We believe this will accelerate the Bank’s return to more normalized funding levels and improved profitability, with significantly lower interest and FDIC insurance expenses
• We continue to execute on our profitability initiatives by optimizing resources, contracts, facilities, and processes, the benefits of which we anticipate realizing in the quarters ahead. Third quarter noninterest expense had notable movement, with compensation expense down 14% over the prior quarter to $71.6 million, with a higher than usual FDIC insurance expense that we expect will normalize over time, and with $9.9 million of non-recurring merger-related costs
• Adjusted loss available to common stockholders of $37.3 million and adjusted diluted loss per common share of $0.31, which exclude the effect of $9.9 million of merger-related costs related to the pending merger with Banc of California, Inc. and a $14.5 million credit related to a legal settlement gain (see GAAP to non-GAAP reconciliation financial tables at the end of this press release)
• Allowance for loan and lease losses ratio increased from 0.98% to 1.01%
• Third quarter results were marked by enhanced capital and liquidity
  • All capital ratios increased from June 30, 2023, with CET1 increasing from 11.16% to 11.23%
  • Immediately available liquidity (on-balance sheet liquidity and unused borrowing capacity) of $16.7 billion, with $5.9 billion of available cash on hand at September 30, 2023
  • Community Banking deposits grew by 2% in the quarter as a result of strategic efforts to attract and retain customers
  • Brokered deposits continue to mature, with balances decreasing by $1.9 billion in the quarter. $1.4 billion more are scheduled to mature in the fourth quarter of 2023
  • The repurchase agreement facility interest expense was $35 million in the quarter and the facility will be repaid in December 2023

LOS ANGELES, Oct. 24, 2023 (GLOBE NEWSWIRE) --

CEO COMMENTARY

Paul Taylor, President and CEO, commented, “The integration planning for our merger with Banc of California, Inc. continues to progress very well. We expect the closing of the merger to occur on or about November 30, 2023, subject to receipt of stockholder approvals. We all look forward to completing the merger so we can begin to execute on a successful business plan for the combined company that we expect will drive significant value for PacWest’s stockholders, customers, communities, and employees.”

Mr. Taylor concluded, “As we work toward the completion of the merger, our primary strategic focus is adding new deposit customers and continuing to provide outstanding customer service to our existing customers. Our credit quality continues to be stable. Our funding profile improved in the third quarter as we strategically reduced higher-cost brokered deposits and we are pleased to see growth in the Community Bank return. We strategically put in place a high-cost liquidity buffer over the past few quarters to safely navigate the turmoil in the regional banking market. We created this buffer by selling loans and adding customer deposits and wholesale funding. We expect our profitability to improve as we continue to wind down wholesale funding, benefit from lower FDIC insurance expense, and execute on our profitability initiatives.”

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		2023				2023			(Decrease)					2023				2022			(Decrease)
	(Dollars in thousands, except per share amounts)
Net (loss) earnings available
to common stockholders	$	(33,291	)		$	(207,361	)		$	174,070			$	(1,446,023	)		$	364,712			$	(1,810,735	)
Diluted (loss) earnings per
common share	$	(0.28	)		$	(1.75	)		$	1.47			$	(12.23	)		$	3.04			$	(15.27	)
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (1)	$	(26,566	)		$	(262,443	)		$	235,877			$	(169,613	)		$	514,917			$	(684,530	)
Return on average assets		(0.24	)%			(1.84	)%			1.60				(4.60	)%			1.24	%			(5.84	)
PPNR return on average
assets (1)		(0.28	)%			(2.45	)%			2.17				(0.55	)%			1.71	%			(2.26	)
Return on average
tangible common equity (1)		(6.33	)%			(37.62	)%			31.29				(8.49	)%			22.90	%			(31.39	)
Yield on average loans and
leases (tax equivalent)		5.54	%			6.08	%			(0.54	)			5.95	%			4.82	%			1.13
Cost of average total
deposits		2.98	%			2.62	%			0.36				2.50	%			0.32	%			2.18
Net interest margin ("NIM")
(tax equivalent)		1.45	%			1.82	%			(0.37	)			2.07	%			3.52	%			(1.45	)
Efficiency ratio		108.5	%			527.0	%			(418.5	)			123.5	%			50.2	%			73.3
Total assets	$	36,877,833			$	38,337,250			$	(1,459,417	)		$	36,877,833			$	41,404,592			$	(4,526,759	)
Loans and leases held
for investment,
net of deferred fees	$	21,920,946			$	22,258,210			$	(337,264	)		$	21,920,946			$	27,660,041			$	(5,739,095	)
Noninterest-bearing
demand deposits	$	5,579,033			$	6,055,358			$	(476,325	)		$	5,579,033			$	12,775,756			$	(7,196,723	)
Interest-bearing deposits	$	21,019,648			$	21,841,725			$	(822,077	)		$	21,019,648			$	21,420,116			$	(400,468	)
Total deposits	$	26,598,681			$	27,897,083			$	(1,298,402	)		$	26,598,681			$	34,195,872			$	(7,597,191	)
As percentage of total
deposits:
Noninterest-bearing
demand deposits		21	%			22	%			(1	)			21	%			37	%			(16	)
Interest-bearing deposits		79	%			78	%			1				79	%			63	%			16
Equity to assets ratio		6.51	%			6.61	%			(0.10	)			6.51	%			9.36	%			(2.85	)
Common equity tier 1
capital ratio		11.23	%			11.16	%			0.07				11.23	%			8.56	%			2.67
Tier 1 capital ratio		13.84	%			13.70	%			0.14				13.84	%			10.46	%			3.38
Total capital ratio		17.83	%			17.61	%			0.22				17.83	%			13.43	%			4.40
Tangible common equity
ratio (1)		5.09	%			5.24	%			(0.15	)			5.09	%			4.85	%			0.24
Tangible book value per
common share (1)	$	15.64			$	16.71			$	(1.07	)		$	15.64			$	16.11			$	(0.47	)
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income decreased by $55.3 million to $130.7 million for the third quarter of 2023 compared to $186.1 million for the second quarter of 2023 due mainly to lower interest income on loans and leases and higher interest expense on deposits, offset partially by lower interest expense on borrowings. Interest income on loans and leases decreased by $98.6 million in the third quarter of 2023 due to a $4.8 billion decrease in the average balance of loans and leases and a 54 basis points decrease in the tax equivalent yield on loans and leases compared to the second quarter of 2023. The tax equivalent yield on loans and leases was 5.54% in the third quarter of 2023 compared to 6.08% in the second quarter of 2023. The decrease in the tax equivalent yield on loans and leases was due primarily to lower levels of higher-yielding Civic and construction loans. Interest expense on deposits increased by $27.2 million in the third quarter of 2023 due mainly to increased market rates that contributed to a 36 basis points increase in the cost of total deposits. Interest expense on borrowings decreased by $66.7 million due mainly to a $5.1 billion decrease in the average balance. Interest expense on the repurchase agreement facility is at 8.50% and totaled $35 million in the third quarter. This interest expense will decrease in the fourth quarter, as we intend to pay off this borrowing in mid-December with existing balance sheet liquidity, and be eliminated by the first quarter of 2024.

The tax equivalent NIM was 1.45% for the third quarter of 2023 compared to 1.82% for the second quarter of 2023. The decrease in the NIM was due mainly to the lower yield on loans and leases and a higher cost of total deposits.

The cost of total deposits was 2.98% for the third quarter of 2023 compared to 2.62% for the second quarter of 2023 due mainly to higher market interest rates.

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		2023				2023			(Decrease)
	(In thousands)
Addition to allowance for
loan and lease losses	$	8,000			$	40,000			$	(32,000	)
Reduction in reserve for
unfunded loan commitments		(8,000	)			(38,000	)			30,000
Total loan-related provision		-				2,000				(2,000	)
Addition to allowance for
held-to-maturity securities		-				-				-
Total provision for credit losses	$	-			$	2,000			$	(2,000	)

There was no provision for credit losses for the third quarter of 2023 compared to $2.0 million for the second quarter of 2023. The provision for the third quarter of 2023 reflected an addition to the allowance for loan and lease losses, primarily due to an increase in qualitative reserves for loans secured by office properties, which was offset by a reduction in the reserve for unfunded commitments due to lower unfunded commitments. The provision for the second quarter of 2023 reflected the impact of an updated economic forecast, higher net charge-offs and higher reserves for downgraded loans largely offset by lower reserves needed for lower loan and unfunded commitment balances.

NONINTEREST INCOME

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

	Three Months Ended
	September 30,				June 30,				Increase
Noninterest Income		2023				2023			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	4,018			$	4,315			$	(297	)
Other commissions and fees		7,641				11,241				(3,600	)
Leased equipment income		14,554				22,387				(7,833	)
Loss on sale of loans and leases		(1,901	)			(158,881	)			156,980
Dividends and gains on equity investments		3,837				2,658				1,179
Warrant loss		(88	)			(124	)			36
LOCOM HFS adjustment		307				(11,943	)			12,250
Other income		15,440				2,265				13,175
Total noninterest income (loss)	$	43,808			$	(128,082	)		$	171,890

Noninterest income increased by $171.9 million to an income of $43.8 million for the third quarter of 2023 compared to a loss of $128.1 million for the second quarter of 2023 due primarily to a $157.0 million decrease in the loss on sale of loans and leases, the $12.3 million increase in the lower of cost or market held for sale (“LOCOM HFS”) adjustment and a $13.2 million increase in other income, partially offset by a $7.8 million decrease in leased equipment income and a $3.6 million decrease in other commissions and fees. The decrease in the loss on sale of loans and leases was due to the $158.9 million of losses recorded in the second quarter of 2023 related to the sale of three significant non-core loan portfolios. The increase in the LOCOM HFS adjustment was due to the negative $11.9 million LOCOM adjustment made in the second quarter of 2023 related to the $478.1 million of loans held for sale at June 30, 2023. The increase in other income is primarily due to a $14.5 million recovery of a prior year legal settlement. The decrease in leased equipment income was due primarily to lower early lease termination gains and rental income compared to the second quarter of 2023. The decrease in other commissions and fees was due primarily to lower loan-related fee income and lower customer success fees.

NONINTEREST EXPENSE

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

	Three Months Ended
	September 30,				June 30,			Increase
Noninterest Expense		2023				2023		(Decrease)
	(In thousands)
Compensation	$	71,642			$	82,881		$	(11,239	)
Occupancy		15,293				15,383			(90	)
Data processing		11,104				10,963			141
Other professional services		5,597				9,973			(4,376	)
Insurance and assessments		38,298				25,635			12,663
Intangible asset amortization		2,389				2,389			-
Leased equipment depreciation		8,333				9,088			(755	)
Foreclosed assets (income) expense, net		(609	)			2			(611	)
Customer related expense		26,971				27,302			(331	)
Loan expense		4,243				5,245			(1,002	)
Other		7,917				119,182			(111,265	)
Acquisition, integration and reorganization costs		9,925				12,394			(2,469	)
Total noninterest expense	$	201,103			$	320,437		$	(119,334	)

Noninterest expense decreased by $119.3 million to $201.1 million in the third quarter of 2023 compared to $320.4 million in the second quarter of 2023 due primarily to a decrease of $111.3 million in other expense and a decrease of $11.2 million in compensation expense, offset partially by a $12.7 million increase in insurance and assessments expense. The decrease in other expense was due mainly to $106.8 million of unfunded commitments fair value loss adjustments in the second quarter of 2023. The decrease in compensation expense was due mostly to lower salary expense, stock compensation, and commissions expense. The increase in insurance and assessments was due primarily to higher FDIC assessment expense attributable to an increased assessment rate due to lower core earnings and lower core deposits.

INCOME TAXES

The effective income tax rate was 12.1% for the third quarter of 2023 compared to 25.3% for the second quarter of 2023. The decrease from the second quarter of 2023 was due primarily to higher disallowed FDIC assessment expense in the third quarter of 2023.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

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

	September 30, 2023					June 30, 2023					September 30, 2022
			% of					% of					% of
Deposits By Account Type	Balance		Total			Balance		Total			Balance		Total
	(Dollars in thousands)
Noninterest-bearing	$	5,579,033	21	%		$	6,055,358	22	%		$	12,775,756	37	%
Interest-bearing:
Transaction (NOW)		7,038,808	27	%			7,112,807	26	%			7,070,021	21	%
Money market		5,424,347	20	%			5,678,323	20	%			10,440,202	30	%
Savings		1,441,700	5	%			897,277	3	%			640,875	2	%
Time deposits (1)		7,114,793	27	%			8,153,318	29	%			3,269,018	10	%
Total interest-bearing		21,019,648	79	%			21,841,725	78	%			21,420,116	63	%
Total deposits	$	26,598,681	100	%		$	27,897,083	100	%		$	34,195,872	100	%
(1) Includes time deposits over $250,000 of $979.1 million, $853.4 million, and $1.0 billion at September 30, 2023, June 30, 2023, and September 30, 2022, respectively.
	September 30, 2023					June 30, 2023					September 30, 2022
			% of					% of					% of
Deposits By Customer Type	Balance		Total			Balance		Total			Balance		Total
	(Dollars in thousands)
Noninterest-bearing	$	5,579,033	21	%		$	6,055,358	22	%		$	12,775,756	37	%
Interest-bearing:
Consumer and commercial:
Reciprocal		7,839,052	30	%			7,935,479	29	%			3,916,768	11	%
Non-reciprocal		7,442,635	27	%			6,257,971	22	%			13,645,111	41	%
Brokered		5,737,961	22	%			7,648,275	27	%			3,858,237	11	%
Total interest-bearing		21,019,648	79	%			21,841,725	78	%			21,420,116	63	%
Total deposits	$	26,598,681	100	%		$	27,897,083	100	%		$	34,195,872	100	%

Total deposits decreased by $1.3 billion or 4.7% in the third quarter of 2023 due primarily to the $1.9 billion strategic reduction of higher-cost brokered deposits, partially offset by growth in customer deposits. At September 30, 2023, noninterest-bearing deposits totaled $5.6 billion or 21% of total deposits and interest-bearing deposits totaled $21.0 billion or 79% of total deposits.

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

	September 30, 2023					June 30, 2023
			% of					% of			Increase
Deposits By Division	Balance		Total			Balance		Total			(Decrease)
	(Dollars in thousands)
Community Banking	$	14,631,092	55	%		$	14,353,851	51	%		$	277,241
Venture Banking		5,662,435	21	%			5,764,220	21	%			(101,785	)
Brokered/Other		6,305,154	24	%			7,779,012	28	%			(1,473,858	)
Total deposits	$	26,598,681	100	%		$	27,897,083	100	%		$	(1,298,402	)

As of September 30, 2023, FDIC-insured deposits represented approximately 81% of total deposits and FDIC-insured venture-specific deposits accounted for approximately 90% of total venture-specific deposits. The Bank’s spot deposit rate increased from 2.71% at June 30, 2023 to 2.97% at September 30, 2023.

In addition to deposit products, we also offer alternative, non-depository cash investment options for select clients. These alternative options include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds decreased from $0.8 billion as of June 30, 2023 to $0.7 billion at September 30, 2023, of which $0.3 billion was managed by PWAM.

BORROWINGS

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

	September 30, 2023					June 30, 2023
			Weighted					Weighted
			Average					Average			Increase
Borrowing Type	Balance		Rate			Balance		Rate			(Decrease)
	(Dollars in thousands)
FHLB secured advances	$	-	-			$	-	-			$	-
Bank Term Funding Program		4,910,000	4.38	%			4,910,000	4.38	%			-
Repurchase agreement (1)		1,260,743	8.50	%			1,324,273	8.50	%			(63,530	)
Credit-linked notes		123,782	16.00	%			123,065	15.77	%			717
Total borrowings	$	6,294,525	5.43	%		$	6,357,338	5.46	%		$	(62,813	)
(1) Balance is net of unamortized issuance costs of $10.9 million and $4.8 million of accrued exit fees.
Rate calculation does not include the effects of issuance costs and exit fees.

The $62.8 million decrease in borrowings in the third quarter of 2023 was due mainly to paydowns of the repurchase agreement facility. Available borrowing capacity was approximately $10.8 billion at September 30, 2023.

LOANS AND LEASES

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

	Three Months Ended								Nine Months Ended
Roll Forward of Loans and Leases Held	September 30,				June 30,				September 30,
for Investment, Net of Deferred Fees		2023				2023				2023
	(Dollars in thousands)
Balance, beginning of period	$	22,258,210			$	25,672,381			$	28,609,129
Additions:
Production		81,402				189,201				739,274
Disbursements		1,495,471				1,143,347				4,261,716
Total production and disbursements		1,576,873				1,332,548				5,000,990
Reductions:
Payoffs		(1,245,502	)			(942,962	)			(3,210,116	)
Paydowns		(663,939	)			(817,033	)			(2,446,509	)
Total payoffs and paydowns		(1,909,441	)			(1,759,995	)			(5,656,625	)
Sales		(15,617	)			(3,038,672	)			(3,286,087	)
Transfers to foreclosed assets		(6,725	)			(6,657	)			(15,950	)
Charge-offs		(6,695	)			(31,708	)			(48,800	)
Transfers to loans held for sale		-				(280,062	)			(3,076,427	)
Total reductions		(1,938,478	)			(5,117,094	)			(12,083,889	)
Transfers from loans held for sale		24,341				370,375				394,716
Net (decrease) increase		(337,264	)			(3,414,171	)			(6,688,183	)
Balance, end of period	$	21,920,946			$	22,258,210			$	21,920,946
Weighted average rate on production (1)		7.48	%			7.64	%			8.13	%
(1) The weighted average rate on production presents contractual rates on a tax equivalent basis
and excludes amortized fees. Amortized fees added approximately 15 basis points to loan
yields in 2023.

Loans and leases held for investment, net of deferred fees, decreased by $337.3 million, or 1.5% in the third quarter of 2023 to $21.9 billion at September 30, 2023. The overall decrease in the loans and leases balance for the third quarter of 2023 was due primarily to a decrease in commercial loans led by decreases in venture capital loans and asset-based loans.

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, 2023					June 30, 2023					September 30, 2022
			% of					% of					% of
Loan and Lease Portfolio	Balance		Total			Balance		Total			Balance		Total
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	3,526,308	16	%		$	3,610,320	16	%		$	3,770,706	14	%
Multi-family		5,279,659	24	%			5,304,544	24	%			5,510,876	20	%
Other residential		5,228,524	24	%			5,373,178	24	%			5,883,182	21	%
Total real estate mortgage		14,034,491	64	%			14,288,042	64	%			15,164,764	55	%
Real estate construction and land:
Commercial		465,266	2	%			415,997	2	%			843,086	3	%
Residential		2,272,271	10	%			2,049,526	9	%			2,916,415	10	%
Total real estate construction
and land		2,737,537	12	%			2,465,523	11	%			3,759,501	13	%
Total real estate		16,772,028	76	%			16,753,565	75	%			18,924,265	68	%
Commercial:
Asset-based		2,287,893	10	%			2,357,098	11	%			5,154,654	19	%
Venture capital		1,464,160	7	%			1,723,476	8	%			2,001,086	7	%
Other commercial		1,002,377	5	%			1,014,212	4	%			1,115,442	4	%
Total commercial		4,754,430	22	%			5,094,786	23	%			8,271,182	30	%
Consumer		394,488	2	%			409,859	2	%			464,594	2	%
Total loans and leases held for
investment, net of deferred fees	$	21,920,946	100	%		$	22,258,210	100	%		$	27,660,041	100	%
Total unfunded loan commitments	$	5,289,221				$	5,845,375				$	11,227,234

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

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

	Three Months Ended September 30, 2023
Allowance for Credit	Allowance for				Reserve for				Total
Losses on Loans and	Loan and				Unfunded Loan				Allowance for
Leases Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	219,234			$	37,571			$	256,805
Charge-offs		(6,695	)			-				(6,695	)
Recoveries		1,758				-				1,758
Net charge-offs		(4,937	)			-				(4,937	)
Provision		8,000				(8,000	)			-
Ending balance	$	222,297			$	29,571			$	251,868
	Three Months Ended June 30, 2023
Allowance for Credit	Allowance for				Reserve for				Total
Losses on Loans and	Loan and				Unfunded Loan				Allowance for
Leases Rollforward	Lease Losses				Commitments				Credit Losses
	(In thousands)
Beginning balance	$	210,055			$	75,571			$	285,626
Civic loan sale charge-offs		(22,446	)			-				(22,446	)
Other charge-offs		(9,262	)			-				(9,262	)
Total charge-offs		(31,708	)			-				(31,708	)
Recoveries		887				-				887
Net charge-offs		(30,821	)			-				(30,821	)
Provision		40,000				(38,000	)			2,000
Ending balance	$	219,234			$	37,571			$	256,805

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

Allowance for Credit Losses	September 30,				June 30,				Increase
on Loans and Leases		2023				2023			(Decrease)
	(Dollars in thousands)
Allowance for loan and lease losses	$	222,297			$	219,234			$	3,063
Reserve for unfunded loan commitments		29,571				37,571				(8,000	)
Allowance for credit losses	$	251,868			$	256,805			$	(4,937	)
Provision for credit losses (for the quarter)	$	-			$	2,000			$	(2,000	)
Net charge-offs (for the quarter)	$	4,937			$	30,821			$	(25,884	)
Net charge-offs to average loans
and leases (for the quarter)		0.09	%			0.46	%
Allowance for loan and lease losses to loans
and leases held for investment		1.01	%			0.98	%
Allowance for credit losses to loans and leases
held for investment		1.15	%			1.15	%

The allowance for credit losses decreased by $4.9 million in the third quarter of 2023 to $251.9 million at September 30, 2023. This decrease was attributable mainly to lower reserves needed due to the decrease in loans and leases held for investment and unfunded loan commitments.

Net charge-offs over the trailing twelve months were $47.5 million, which resulted in net charge-offs to average loans and leases over the trailing twelve months of 0.19%.

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		2023				2023			(Decrease)
	(Dollars in thousands)
Nonperforming Assets:
Nonaccrual loans and leases held for investment (1)	$	125,396			$	104,886			$	20,510
Accruing loans contractually past due 90 days or more		-				-				-
Foreclosed assets, net		6,829				8,426				(1,597	)
Total nonperforming assets ("NPAs")	$	132,225			$	113,312			$	18,913
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.57	%			0.47	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.60	%			0.51	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		200.9	%			244.8	%
Loan and Lease Credit Risk Ratings:
Pass	$	21,349,720			$	21,679,908			$	(330,188	)
Special mention		360,131				366,368				(6,237	)
Classified		211,095				211,934				(839	)
Total loans and leases held for investment,
net of deferred fees	$	21,920,946			$	22,258,210			$	(337,264	)
Special mention loans and leases held for investment
to loans and leases held for investment		1.64	%			1.65	%
Classified loans and leases held for investment
to loans and leases held for investment		0.96	%			0.95	%
(1) Nonaccrual loans include SBA guaranteed amounts of $13.7 million at September 30, 2023 and $14.8 million
at June 30, 2023.

Nonaccrual loans and leases increased by $20.5 million in the third quarter of 2023 to $125.4 million at September 30, 2023, due primarily to an increase in nonaccrual Civic loans. The increase is primarily due to a sale of non-performing Civic loans in the second quarter which made the balance at June 30, 2023, lower than normal.

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, 2023						June 30, 2023						Increase (Decrease)
				Accruing						Accruing							Accruing
				and 30-89						and 30-89							and 30-89
				Days Past						Days Past							Days Past
	Nonaccrual			Due			Nonaccrual			Due			Nonaccrual				Due
	(In thousands)
Real estate mortgage:
Commercial	$	31,465		$	13		$	37,191		$	-		$	(5,726	)		$	13
Multi-family		-			-			-			-			-				-
Other residential		88,329			35,349			63,626			45,805			24,703				(10,456	)
Total real estate mortgage		119,794			35,362			100,817			45,805			18,977				(10,443	)
Real estate construction and land:
Commercial		-			-			-			-			-				-
Residential		-			-			-			-			-				-
Total real estate
construction and land		-			-			-			-			-				-
Commercial:
Asset-based		363			-			385			-			(22	)			-
Venture capital		2,001			-			-			1,845			2,001				(1,845	)
Other commercial		3,031			411			3,479			147			(448	)			264
Total commercial		5,395			411			3,864			1,992			1,531				(1,581	)
Consumer		207			2,254			205			2,024			2				230
Total held for investment	$	125,396		$	38,027		$	104,886		$	49,821		$	20,510			$	(11,794	)

Loans and leases accruing and 30-89 days past due generally fluctuate from period to period. The $11.8 million decrease to $38.0 million in the third quarter of 2023 was due mainly to a decrease in Civic delinquent loans.

CAPITAL

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

	September 30,				June 30,				September 30,
		2023				2023				2022
PacWest Bancorp Consolidated:
Common equity tier 1 capital ratio (1)		11.23	%			11.16	%			8.56	%
Tier 1 capital ratio (1)		13.84	%			13.70	%			10.46	%
Total capital ratio (1)		17.83	%			17.61	%			13.43	%
Tier 1 leverage capital ratio (1)		8.65	%			7.76	%			8.63	%
Risk-weighted assets (1) (in thousands)	$	24,127,271			$	24,771,837			$	33,042,173
Tangible common equity ratio (2)		5.09	%			5.24	%			4.85	%
(1) Capital information for September 30, 2023 is preliminary.
(2) Non-GAAP measure.

PACWEST BANCORP

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

FORWARD-LOOKING STATEMENTS

This communication contains certain forward-looking information about PacWest (the “Company”) that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” These forward-looking statements include, but are not limited to, statements regarding the proposed transaction between PacWest and Banc of California, Inc. (“Banc of California”) including statements as to the expected timing, completion and effects of the proposed transaction. Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of PacWest’s and Banc of California’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond the control of PacWest and Banc of California, which may cause actual results, performance, or achievements to differ materially from those expressed in them. Continued deterioration in general business, economic, and political conditions, geopolitical tensions, uncertainty in U.S. fiscal monetary policy, including the interest rate policies of the Federal Reserve Board, and volatility and disruptions in credit and capital markets could lead to a tightening of credit and an increase in credit losses, adversely affect PacWest’s revenues and the values of our assets and liabilities, increase stock price volatility, and adversely impact our ability to raise capital. In addition, PacWest and its results could be adversely affected by changes in interest rates, continued high inflation, and unemployment rates, our ability to attract and retain deposits and other sources of funding and liquidity particularly in a rising or high interest rate environment, the impact of bank failures or other adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks, the safety of deposits, and depositor behavior, the quality and composition of our deposits, deterioration in the credit quality of our loan portfolio or in the value of the collateral securing those loans, especially the risks associated with concentrations in real estate related loans, deterioration in the value of our investment securities as a result of rising interest rates or otherwise, our ability to successfully execute on our strategic plan and digital and innovation initiatives, the effectiveness of our risk management framework and quantitative models, legal and regulatory developments, the ability to complete, or any delays in completing, the proposed transaction between us and Banc of California, any failure to realize the anticipated benefits of the transaction when expected or at all, certain restrictions during the pendency of the proposed transaction that may impact our ability to pursue certain business opportunities or strategic transactions, the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management’s attention from ongoing business operations and opportunities, and potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the transaction and integration of the companies. We also caution that the amount and timing of any future common stock dividends will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions. 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 (the “SEC”).

All forward-looking statements in this communication are based on information available at the time the statement is made. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

NO OFFER OR SOLICITATION

This communication is not a proxy statement or solicitation or a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of PacWest, Banc of California, or the combined company, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be deemed to be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, and otherwise in accordance with applicable law.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication includes information relating to the proposed transaction between PacWest and Banc of California and the proposed investment in Banc of California by Warburg Pincus LLC and Centerbridge Partners, L.P. Banc of California filed a registration statement on Form S-4 with the SEC on August 28, 2023 (as amended on September 29, 2023, and further amended on October 16, 2023, and October 19, 2023) that the SEC declared effective on October 20, 2023, and in connection with PacWest’s and Banc of California’s solicitation of proxies for the vote by PacWest’s stockholders and Banc of California’s stockholders with respect to the proposed transaction, on October 23, 2023, PacWest and Banc of California commenced mailing of a definitive joint proxy statement/prospectus to holders of PacWest’s common stock and Banc of California’s common stock who, as of the applicable record date, are entitled to vote on the matters being considered at the PacWest stockholder meeting and at the Banc of California stockholder meeting, as applicable. PacWest or Banc of California may also file other documents with the SEC regarding the proposed transaction.

BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO), AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO SUCH DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders are able to obtain free copies of the registration statement, the definitive joint proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by PacWest or Banc of California through the website maintained by the SEC at www.sec.gov.

The documents filed by PacWest or Banc of California with the SEC also may be obtained free of charge at PacWest’s or Banc of California’s website at www.pacwestbancorp.com, under the heading “SEC Filings,” or https://investors.bancofcal.com, under the heading “Financials and Filings,” respectively, or upon written request to PacWest, Attention: Investor Relations, 9701 Wilshire Boulevard, Suite 700, Beverly Hills, CA 90212 or Banc of California, Attention: Investor Relations, 3 MacArthur Place, Santa Ana, CA 92707, respectively.

PARTICIPANTS IN SOLICITATION

PacWest and Banc of California and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from PacWest’s stockholders or Banc of California’s stockholders in connection with the proposed transaction under the rules of the SEC. PacWest’s stockholders, Banc of California’s stockholders, and other interested persons are able to obtain, without charge, more detailed information regarding the names, affiliations and interests of directors and executive officers of PacWest and Banc of California in Banc of California’s registration statement on Form S-4, as well other documents filed by PacWest or Banc of California from time to time with the SEC. Other information regarding persons who may, under the rules of the SEC, be deemed the participants in the proxy solicitation of PacWest’s or Banc of California’s stockholders in connection with the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, is included in the definitive joint proxy statement/prospectus filed with the SEC and may be contained in other relevant materials to be filed with the SEC regarding the proposed transaction. You may obtain free copies of these documents at the SEC’s website at www.sec.gov. Copies of documents filed with the SEC by PacWest or Banc of California will also be available free of charge from PacWest or Banc of California using the contact information above.

 

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
	September 30,				June 30,				September 30,
		2023				2023				2022
	(Dollars in thousands, except per share amounts)
ASSETS:
Cash and due from banks	$	182,261			$	208,300			$	216,436
Interest-earning deposits in financial institutions		5,887,406				6,489,847				2,244,272
Total cash and cash equivalents		6,069,667				6,698,147				2,460,708
Securities available-for-sale, at estimated fair value		4,487,172				4,708,519				5,891,328
Securities held-to-maturity, at amortized cost,
net of allowance for credit losses		2,282,586				2,278,202				2,264,601
Federal Home Loan Bank stock, at cost		17,250				17,250				36,990
Total investment securities		6,787,008				7,003,971				8,192,919
Loans held for sale		188,866				478,146				15,534
Gross loans and leases held for investment		21,969,789				22,311,292				27,775,962
Deferred fees, net		(48,843	)			(53,082	)			(115,921	)
Total loans and leases held for investment,
net of deferred fees		21,920,946				22,258,210				27,660,041
Allowance for loan and lease losses		(222,297	)			(219,234	)			(189,327	)
Total loans and leases held for investment, net		21,698,649				22,038,976				27,470,714
Equipment leased to others under operating leases		352,330				380,022				338,691
Premises and equipment, net		50,236				57,078				50,781
Foreclosed assets, net		6,829				8,426				2,967
Goodwill		-				-				1,405,736
Core deposit and customer relationship intangibles, net		24,192				26,581				34,010
Deferred tax asset, net		506,248				426,304				321,650
Other assets		1,193,808				1,219,599				1,110,882
Total assets	$	36,877,833			$	38,337,250			$	41,404,592
LIABILITIES:
Noninterest-bearing deposits	$	5,579,033			$	6,055,358			$	12,775,756
Interest-bearing deposits		21,019,648				21,841,725				21,420,116
Total deposits		26,598,681				27,897,083				34,195,872
Borrowings		6,294,525				6,357,338				1,864,815
Subordinated debt		870,896				870,378				863,379
Accrued interest payable and other liabilities		714,454				679,256				604,581
Total liabilities		34,478,556				35,804,055				37,528,647
STOCKHOLDERS' EQUITY (1)		2,399,277				2,533,195				3,875,945
Total liabilities and stockholders’ equity	$	36,877,833			$	38,337,250			$	41,404,592
Book value per common share	$	15.84			$	16.93			$	28.07
Tangible book value per common share (2)	$	15.64			$	16.71			$	16.11
Common shares outstanding		119,967,984				120,169,012				120,314,023
(1) Includes net unrealized loss on:
Securities available-for-sale, net	$	(691,557	)		$	(583,684	)		$	(637,346	)
Securities held to maturity	$	(187,275	)		$	(193,058	)		$	(210,868	)
(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,
		2023				2023				2022				2023				2022
	(In thousands, except per share amounts)
Interest income:
Loans and leases	$	310,392			$	408,972			$	346,550			$	1,150,049			$	907,595
Investment securities		45,326				44,153				53,135				133,716				159,459
Deposits in financial institutions		90,366				86,763				10,359				219,995				16,412
Total interest income		446,084				539,888				410,044				1,503,760				1,083,466
Interest expense:
Deposits		205,982				178,789				61,288				540,663				82,858
Borrowings		94,234				160,914				3,081				324,270				5,683
Subordinated debt		15,139				14,109				10,494				42,750				27,102
Total interest expense		315,355				353,812				74,863				907,683				115,643
Net interest income		130,729				186,076				335,181				596,077				967,823
Provision for credit losses		-				2,000				3,000				5,000				14,500
Net interest income after provision
for credit losses		130,729				184,076				332,181				591,077				953,323
Noninterest income:
Service charges on deposit accounts		4,018				4,315				3,608				11,906				10,813
Other commissions and fees		7,641				11,241				10,034				29,226				32,427
Leased equipment income		14,554				22,387				12,835				50,798				38,264
(Loss) gain on sale of loans and leases		(1,901	)			(158,881	)			58				(157,820	)			130
Gain (loss) on sale of securities		-				-				86				-				(1,019	)
Dividends and gains (losses) on equity investments		3,837				2,658				3,228				7,593				(4,050	)
Warrant (loss) income		(88	)			(124	)			292				(545	)			2,536
LOCOM HFS adjustment		307				(11,943	)			-				(11,636	)			-
Other income		15,440				2,265				8,478				22,595				14,682
Total noninterest income (loss)		43,808				(128,082	)			38,619				(47,883	)			93,783
Noninterest expense:
Compensation		71,642				82,881				105,933				242,999				300,715
Occupancy		15,293				15,383				15,574				45,743				46,042
Data processing		11,104				10,963				9,568				33,005				28,455
Other professional services		5,597				9,973				10,674				21,643				23,354
Insurance and assessments		38,298				25,635				7,159				75,650				18,281
Intangible asset amortization		2,389				2,389				3,649				7,189				10,947
Leased equipment depreciation		8,333				9,088				8,908				26,796				27,031
Foreclosed assets (income) expense, net		(609	)			2				(248	)			(244	)			(3,629	)
Acquisition, integration and reorganization costs		9,925				12,394				-				30,833				-
Customer related expense		26,971				27,302				12,673				78,278				37,076
Loan expense		4,243				5,245				6,228				16,012				18,422
Goodwill impairment		-				-				-				1,376,736				-
Other expense		7,917				119,182				15,500				139,903				39,995
Total noninterest expense		201,103				320,437				195,618				2,094,543				546,689
(Loss) earnings before income taxes		(26,566	)			(264,443	)			175,182				(1,551,349	)			500,417
Income tax (benefit) expense		(3,222	)			(67,029	)			43,566				(135,167	)			126,313
Net (loss) earnings		(23,344	)			(197,414	)			131,616				(1,416,182	)			374,104
Preferred stock dividends		9,947				9,947				9,392				29,841				9,392
Net (loss) earnings available to
common stockholders	$	(33,291	)		$	(207,361	)		$	122,224			$	(1,446,023	)		$	364,712
Basic and diluted (loss) earnings per
common share	$	(0.28	)		$	(1.75	)		$	1.02			$	(12.23	)		$	3.04
Dividends declared and paid per common share	$	0.01			$	0.01			$	0.25			$	0.27			$	0.75

 

PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
	Three Months Ended
	September 30, 2023							June 30, 2023							September 30, 2022
			Interest		Average					Interest		Average					Interest		Average
	Average		Income/		Yield/			Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost			Balance		Expense		Cost
	(Dollars in thousands)
Assets:
Loans and
leases (1)(2)(3)	$	22,226,390	$	310,392	5.54	%		$	26,992,283	$	408,972	6.08	%		$	27,038,873	$	348,639	5.12	%
Investment securities (3)		6,919,948		45,326	2.60	%			7,183,986		44,153	2.47	%			8,803,349		54,423	2.45	%
Deposits in financial
institutions		6,645,335		90,366	5.40	%			6,835,075		86,763	5.09	%			1,809,809		10,359	2.27	%
Total interest-earning
assets (1)		35,791,673		446,084	4.94	%			41,011,344		539,888	5.28	%			37,652,031		413,421	4.36	%
Other assets		2,016,085							2,028,985							3,189,241
Total assets	$	37,807,758						$	43,040,329						$	40,841,272
Liabilities and
Stockholders' Equity:
Interest checking	$	6,983,013		57,237	3.25	%		$	6,601,034		46,798	2.84	%		$	6,650,477		19,475	1.16	%
Money market		5,662,980		42,516	2.98	%			6,590,615		47,008	2.86	%			10,914,027		31,780	1.16	%
Savings		1,163,827		10,255	3.50	%			733,818		3,678	2.01	%			649,574		42	0.03	%
Time		7,801,880		95,974	4.88	%			7,492,094		81,305	4.35	%			3,000,187		9,991	1.32	%
Total interest-bearing
deposits		21,611,700		205,982	3.78	%			21,417,561		178,789	3.35	%			21,214,265		61,288	1.15	%
Borrowings		6,325,537		94,234	5.91	%			11,439,742		160,914	5.64	%			505,482		3,081	2.42	%
Subordinated debt		870,968		15,139	6.90	%			869,419		14,109	6.51	%			863,719		10,494	4.82	%
Total interest-bearing
liabilities		28,808,205		315,355	4.34	%			33,726,722		353,812	4.21	%			22,583,466		74,863	1.32	%
Noninterest-bearing
demand deposits		5,817,488							5,968,625							13,653,177
Other liabilities		701,355							625,610							593,450
Total liabilities		35,327,048							40,320,957							36,830,093
Stockholders' equity		2,480,710							2,719,372							4,011,179
Total liabilities and
stockholders' equity	$	37,807,758						$	43,040,329						$	40,841,272
Net interest income (1)			$	130,729						$	186,076						$	338,558
Net interest spread (1)					0.60	%						1.07	%						3.04	%
Net interest margin (1)					1.45	%						1.82	%						3.57	%
Total deposits (4)	$	27,429,188	$	205,982	2.98	%		$	27,386,186	$	178,789	2.62	%		$	34,867,442	$	61,288	0.70	%
(1) Tax equivalent.
(2) Includes net loan premium amortization of $1.7 million, $1.6 million, and $3.8 million for the three months ended September 30, 2023,
June 30, 2023, and September 30, 2022, respectively.
(3) Includes tax-equivalent adjustments of $0.0 million, $0.0 million, and $2.1 million for the three months ended September 30, 2023,
June 30, 2023, and September 30, 2022 related to tax-exempt income on loans.
Includes tax-equivalent adjustments of $0.0 million, $0.0 million, and $1.3 million for the three months ended September 30, 2023,
June 30, 2023, and September 30, 2022 related to tax-exempt income on investment securities.
The federal statutory tax rate utilized was 21%.
(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is
calculated as annualized interest expense on total deposits divided by average total deposits.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
	September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
	(Dollars in thousands, except per share amounts)
ASSETS:
Cash and due from banks	$	182,261			$	208,300			$	218,830			$	212,273			$	216,436
Interest-earning deposits in financial
institutions		5,887,406				6,489,847				6,461,306				2,027,949				2,244,272
Total cash and cash equivalents		6,069,667				6,698,147				6,680,136				2,240,222				2,460,708
Securities available-for-sale		4,487,172				4,708,519				4,848,607				4,843,487				5,891,328
Securities held-to-maturity		2,282,586				2,278,202				2,273,650				2,269,135				2,264,601
Federal Home Loan Bank stock		17,250				17,250				147,150				34,290				36,990
Total investment securities		6,787,008				7,003,971				7,269,407				7,146,912				8,192,919
Loans held for sale		188,866				478,146				2,796,208				65,076				15,534
Gross loans and leases held for investment		21,969,789				22,311,292				25,770,912				28,726,016				27,775,962
Deferred fees, net		(48,843	)			(53,082	)			(98,531	)			(116,887	)			(115,921	)
Total loans and leases held for
investment, net of deferred fees		21,920,946				22,258,210				25,672,381				28,609,129				27,660,041
Allowance for loan and lease losses		(222,297	)			(219,234	)			(210,055	)			(200,732	)			(189,327	)
Total loans and leases held for
investment, net		21,698,649				22,038,976				25,462,326				28,408,397				27,470,714
Equipment leased to others under
operating leases		352,330				380,022				399,972				404,245		-		338,691
Premises and equipment, net		50,236				57,078				60,358				54,315				50,781
Foreclosed assets, net		6,829				8,426				2,135				5,022				2,967
Goodwill		-				-				-				1,376,736				1,405,736
Core deposit and customer relationship
intangibles, net		24,192				26,581				28,970				31,381				34,010
Deferred tax asset, net		506,248				426,304				342,557				281,848				321,650
Other assets		1,193,808				1,219,599				1,260,912				1,214,782				1,110,882
Total assets	$	36,877,833			$	38,337,250			$	44,302,981			$	41,228,936			$	41,404,592
LIABILITIES:
Noninterest-bearing deposits	$	5,579,033			$	6,055,358			$	7,030,759			$	11,212,357			$	12,775,756
Interest-bearing deposits		21,019,648				21,841,725				21,156,802				22,723,977				21,420,116
Total deposits		26,598,681				27,897,083				28,187,561				33,936,334				34,195,872
Borrowings		6,294,525				6,357,338				11,881,712				1,764,030				1,864,815
Subordinated debt		870,896				870,378				868,815				867,087				863,379
Accrued interest payable and other
liabilities		714,454				679,256				593,416				710,954				604,581
Total liabilities		34,478,556				35,804,055				41,531,504				37,278,405				37,528,647
STOCKHOLDERS' EQUITY (1)		2,399,277				2,533,195				2,771,477				3,950,531				3,875,945
Total liabilities and stockholders’
equity	$	36,877,833			$	38,337,250			$	44,302,981			$	41,228,936			$	41,404,592
Book value per common share	$	15.84			$	16.93			$	18.90			$	28.71			$	28.07
Tangible book value per common share (2)	$	15.64			$	16.71			$	18.66			$	17.00			$	16.11
Common shares outstanding		119,967,984				120,169,012				120,244,214				120,222,057				120,314,023
(1) Includes net unrealized loss on:
Securities available-for-sale, net	$	(691,557	)		$	(583,684	)		$	(537,307	)		$	(586,450	)		$	(637,346	)
Securities held to maturity	$	(187,275	)		$	(193,058	)		$	(198,753	)		$	(204,453	)		$	(210,868	)
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)
	Three Months Ended
	September 30,				June 30,				March 31,				December 31,				September 30,
		2023				2023				2023				2022				2022
	(In thousands, except per share amounts)
Interest income:
Loans and leases	$	310,392			$	408,972			$	430,685			$	404,985			$	346,550
Investment securities		45,326				44,153				44,237				50,292				53,135
Deposits in financial institutions		90,366				86,763				42,866				17,746				10,359
Total interest income		446,084				539,888				517,788				473,023				410,044
Interest expense:
Deposits		205,982				178,789				155,892				117,591				61,288
Borrowings		94,234				160,914				69,122				19,962				3,081
Subordinated debt		15,139				14,109				13,502				12,531				10,494
Total interest expense		315,355				353,812				238,516				150,084				74,863
Net interest income		130,729				186,076				279,272				322,939				335,181
Provision for credit losses		-				2,000				3,000				10,000				3,000
Net interest income after provision
for credit losses		130,729				184,076				276,272				312,939				332,181
Noninterest income:
Service charges on deposit accounts		4,018				4,315				3,573				3,178				3,608
Other commissions and fees		7,641				11,241				10,344				11,208				10,034
Leased equipment income		14,554				22,387				13,857				12,322				12,835
(Loss) gain on sale of loans and leases		(1,901	)			(158,881	)			2,962				388				58
(Loss) gain on sale of securities		-				-				-				(49,302	)			86
Dividends and gains on equity investments		3,837				2,658				1,098				661				3,228
Warrant (loss) income		(88	)			(124	)			(333	)			(46	)			292
LOCOM HFS adjustment		307				(11,943	)			-				-				-
Other income		15,440				2,265				4,890				2,635				8,478
Total noninterest income (loss)		43,808				(128,082	)			36,391				(18,956	)			38,619
Noninterest expense:
Compensation		71,642				82,881				88,476				106,124				105,933
Occupancy		15,293				15,383				15,067				14,922				15,574
Data processing		11,104				10,963				10,938				9,722				9,568
Other professional services		5,597				9,973				6,073				6,924				10,674
Insurance and assessments		38,298				25,635				11,717				7,205				7,159
Intangible asset amortization		2,389				2,389				2,411				2,629				3,649
Leased equipment depreciation		8,333				9,088				9,375				8,627				8,908
Foreclosed assets (income) expense, net		(609	)			2				363				(108	)			(248	)
Acquisition, integration and reorganization costs		9,925				12,394				8,514				5,703				-
Customer related expense		26,971				27,302				24,005				18,197				12,673
Loan expense		4,243				5,245				6,524				6,150				6,228
Goodwill impairment		-				-				1,376,736				29,000				-
Other expense		7,917				119,182				12,804				11,737				15,500
Total noninterest expense		201,103				320,437				1,573,003				226,832				195,618
(Loss) earnings before income taxes		(26,566	)			(264,443	)			(1,260,340	)			67,151				175,182
Income tax (benefit) expense		(3,222	)			(67,029	)			(64,916	)			17,642				43,566
Net (loss) earnings		(23,344	)			(197,414	)			(1,195,424	)			49,509				131,616
Preferred stock dividends		9,947				9,947				9,947				9,947				9,392
Net (loss) earnings available to
common stockholders	$	(33,291	)		$	(207,361	)		$	(1,205,371	)		$	39,562			$	122,224
Basic and diluted (loss) earnings per
common share	$	(0.28	)		$	(1.75	)		$	(10.22	)		$	0.33			$	1.02
Dividends declared and paid per common share	$	0.01			$	0.01			$	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,
		2023				2023				2023				2022				2022
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		(0.24	)%			(1.84	)%			(11.34	)%			0.48	%			1.28	%
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR") return
on average assets (1)(2)		(0.28	)%			(2.45	)%			1.13	%			1.02	%			1.73	%
Return on average equity (1)		(3.73	)%			(29.12	)%			(121.24	)%			5.04	%			13.02	%
Return on average tangible common
equity (1)(2)		(6.33	)%			(37.62	)%			14.45	%			12.71	%			23.93	%
Efficiency ratio		108.5	%			527.0	%			58.2	%			53.3	%			51.0	%
Noninterest expense as a percentage
of average assets (1)		2.11	%			2.99	%			14.92	%			2.19	%			1.90	%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)		5.54	%			6.08	%			6.14	%			5.73	%			5.12	%
Average investment securities (3)		2.60	%			2.47	%			2.49	%			2.57	%			2.45	%
Average interest-earning assets (3)		4.94	%			5.28	%			5.35	%			4.98	%			4.36	%
Cost of:
Average interest-bearing deposits		3.78	%			3.35	%			2.91	%			2.14	%			1.15	%
Average total deposits		2.98	%			2.62	%			1.98	%			1.37	%			0.70	%
Average interest-bearing liabilities		4.34	%			4.21	%			3.47	%			2.45	%			1.32	%
Net interest spread (3)		0.60	%			1.07	%			1.88	%			2.53	%			3.04	%
Net interest margin (3)		1.45	%			1.82	%			2.89	%			3.41	%			3.57	%
Average Balances:
Assets:
Loans and leases, net of deferred fees	$	22,226,390			$	26,992,283			$	28,583,265			$	28,192,953			$	27,038,873
Investment securities		6,919,948				7,183,986				7,191,362				7,824,915				8,803,349
Deposits in financial institutions		6,645,335				6,835,075				3,682,228				1,881,950				1,809,809
Interest-earning assets		35,791,673				41,011,344				39,456,855				37,899,818				37,652,031
Total assets		37,807,758				43,040,329				42,768,714				41,151,963				40,841,272
Liabilities:
Noninterest-bearing deposits		5,817,488				5,968,625				10,233,434				12,325,902				13,653,177
Interest-bearing deposits		21,611,700				21,417,561				21,742,403				21,760,402				21,214,265
Total deposits		27,429,188				27,386,186				31,975,837				34,086,304				34,867,442
Borrowings		6,325,537				11,439,742				5,289,429				1,675,738				505,482
Subordinated debt		870,968				869,419				867,637				864,581				863,719
Interest-bearing liabilities		28,808,205				33,726,722				27,899,469				24,300,721				22,583,466
Stockholders' equity		2,480,710				2,719,372				3,998,687				3,898,800				4,011,179
(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,
		2023				2023				2023				2022				2022
	(Dollars in thousands, except per share amounts)
Credit Quality Metrics for Loans
and Leases Held for Investment:
Nonaccrual loans and leases	$	125,396			$	104,886			$	87,124			$	103,778			$	89,742
Nonperforming assets		132,225				113,312				89,259				108,800				92,709
Special mention loans and leases		360,131				366,368				580,153				566,259				463,994
Classified loans and leases		211,095				211,934				132,423				118,271				96,685
Allowance for loan and lease losses		222,297				219,234				210,055				200,732				189,327
Allowance for credit losses		251,868				256,805				285,626				291,803				284,398
For the quarter:
Provision for credit losses		-				2,000				3,000				10,000				3,000
Net charge-offs		4,937				30,821				9,177				2,595				2,378
Nonaccrual loans and leases to loans
and leases		0.57	%			0.47	%			0.34	%			0.36	%			0.32	%
Nonperforming assets to loans and
leases and foreclosed assets		0.60	%			0.51	%			0.35	%			0.38	%			0.34	%
Special mention loans and leases to
loans and leases		1.64	%			1.65	%			2.26	%			1.98	%			1.68	%
Classified loans and leases to loans
and leases		0.96	%			0.95	%			0.52	%			0.41	%			0.35	%
Allowance for loan and lease losses
to loans and leases		1.01	%			0.98	%			0.82	%			0.70	%			0.68	%
Allowance for credit losses to loans
and leases		1.15	%			1.15	%			1.11	%			1.02	%			1.03	%
Allowance for credit losses to
nonaccrual loans and leases		200.86	%			244.84	%			327.84	%			281.18	%			316.91	%
Net charge-offs to average
loans and leases		0.09	%			0.46	%			0.13	%			0.04	%			0.03	%
Trailing 12 months net charge-offs
to average loans and leases		0.19	%			0.17	%			0.05	%			0.02	%			0.01	%
PacWest Bancorp Consolidated:
Common equity tier 1 capital ratio (1)		11.23	%			11.16	%			9.21	%			8.70	%			8.56	%
Tier 1 capital ratio (1)		13.84	%			13.70	%			11.15	%			10.61	%			10.46	%
Total capital ratio (1)		17.83	%			17.61	%			14.21	%			13.61	%			13.43	%
Tier 1 leverage capital ratio (1)		8.65	%			7.76	%			8.33	%			8.61	%			8.63	%
Risk-weighted assets (1)	$	24,127,271			$	24,771,837			$	32,507,454			$	33,030,960			$	33,042,173
Equity to assets ratio		6.51	%			6.61	%			6.26	%			9.58	%			9.36	%
Tangible common equity ratio (2)		5.09	%			5.24	%			5.07	%			5.13	%			4.85	%
Book value per common share	$	15.84			$	16.93			$	18.90			$	28.71			$	28.07
Tangible book value per common share (2)	$	15.64			$	16.71			$	18.66			$	17.00			$	16.11
Pacific Western Bank:
Common equity tier 1 capital ratio (1)		13.73	%			13.48	%			10.89	%			10.32	%			10.17	%
Tier 1 capital ratio (1)		13.73	%			13.48	%			10.89	%			10.32	%			10.17	%
Total capital ratio (1)		16.37	%			16.07	%			12.94	%			12.34	%			12.16	%
Tier 1 leverage capital ratio (1)		8.57	%			7.62	%			8.14	%			8.39	%			8.39	%
(1) Capital information for September 30, 2023 is preliminary.
(2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) Pre-provision, pre-goodwill impairment, pre-tax net revenue (“PPNR”), (2) PPNR return on average assets (3) return on average tangible common equity, (4) tangible common equity ratio, and (5) tangible book value per common share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. In particular, the use of PPNR, return on average tangible common equity, tangible common equity ratio, and tangible book value per common share is prevalent among banking regulators, investors, and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures (or those calculated from GAAP measures) of: (1) net earnings, (2) return on average assets, (3) return on average equity, (4) equity to assets ratio, (5) book value per common share, and (6) efficiency ratio.

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

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

	Three Months Ended												Nine Months Ended
PPNR and PPNR Return	September 30,				June 30,				September 30,				September 30,
on Average Assets		2023				2023				2022				2023				2022
	(Dollars in thousands)
Net (loss) earnings	$	(23,344	)		$	(197,414	)		$	131,616			$	(1,416,182	)		$	374,104
Net interest income	$	130,729			$	186,076			$	335,181			$	596,077			$	967,823
Add: Noninterest income (loss)		43,808				(128,082	)			38,619				(47,883	)			93,783
Less: Noninterest expense		(201,103	)			(320,437	)			(195,618	)			(2,094,543	)			(546,689	)
Add: Goodwill impairment		-				-				-				1,376,736				-
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")	$	(26,566	)		$	(262,443	)		$	178,182			$	(169,613	)		$	514,917
Average assets	$	37,807,758			$	43,040,329			$	40,841,272			$	41,187,428			$	40,255,665
Return on average assets (1)		(0.24	)%			(1.84	)%			1.28	%			(4.60	)%			1.24	%
PPNR return on average assets (2)		(0.28	)%			(2.45	)%			1.73	%			(0.55	)%			1.71	%
(1) Annualized net (loss) earnings divided by average assets.
(2) Annualized PPNR divided by average assets.

	Three Months Ended												Nine Months Ended
Return on Average	September 30,				June 30,				September 30,				September 30,
Tangible Common Equity		2023				2023				2022				2023				2022
	(Dollars in thousands)
Net (loss) earnings	$	(23,344	)		$	(197,414	)		$	131,616			$	(1,416,182	)		$	374,104
(Loss) earnings before income taxes	$	(26,566	)		$	(264,443	)		$	175,182			$	(1,551,349	)		$	500,417
Add: Goodwill impairment		-				-				-				1,376,736				-
Add: Intangible asset amortization		2,389				2,389				3,649				7,189				10,947
Adjusted (loss) earnings before
income taxes		(24,177	)			(262,054	)			178,831				(167,424	)			511,364
Adjusted income tax expense (1)		(2,925	)			(66,300	)			44,529				(64,793	)			128,864
Adjusted net (loss) earnings		(21,252	)			(195,754	)			134,302				(102,631	)			382,500
Less: Preferred stock dividends		9,947				9,947				9,392				29,841				9,392
Adjusted net (loss) earnings available
to common stockholders	$	(31,199	)		$	(205,701	)		$	124,910			$	(132,472	)		$	373,108
Average stockholders' equity	$	2,480,710			$	2,719,372			$	4,011,179			$	3,060,696			$	3,837,609
Less: Average intangible assets		25,499				27,824				1,441,689				476,721				1,445,332
Less: Average preferred stock		498,516				498,516				498,516				498,516				213,698
Average tangible common equity	$	1,956,695			$	2,193,032			$	2,070,974			$	2,085,459			$	2,178,579
Return on average equity (2)		(3.73	)%			(29.12	)%			13.02	%			(61.86	)%			13.03	%
Return on average tangible
common equity (3)		(6.33	)%			(37.62	)%			23.93	%			(8.49	)%			22.90	%
(1) Effective tax rates of 12.1%, 25.3%, and 24.9% used for three months ended September 30, 2023, June 30, 2023, and
September 30, 2022.
Adjusted effective tax rate of 38.7% used to normalize the effect of goodwill impairment for nine months ended
September 30, 2023; effective tax rate of 25.2% used for nine months ended September 30, 2022.
(2) Annualized net (loss) earnings divided by average stockholders' equity.
(3) Annualized adjusted net (loss) earnings available to common stockholders divided by average
tangible common equity.

	Three Months Ended												Nine Months Ended
Adjusted Return on Average	September 30,				June 30,				September 30,				September 30,
Tangible Common Equity		2023				2023				2022				2023				2022
	(Dollars in thousands)
(Loss) earnings before income taxes	$	(26,566	)		$	(264,443	)		$	175,182			$	(1,551,349	)		$	500,417
Add: Goodwill impairment		-				-				-				1,376,736				-
Add: Intangible asset amortization		2,389				2,389				3,649				7,189				10,947
Add: Acquisition, integration, and
reorganization costs		9,925				12,394				-				30,833				-
Less: Legal recovery		(14,500	)			-				-				(14,500	)			-
Add: Loan fair value loss adjustments		-				170,971				-				170,971				-
Add: Unfunded commitments fair value
loss adjustments		-				106,767				-				106,767				-
Add: Civic loan sale charge-offs		-				22,446				-				22,446				-
Adjusted (loss) earnings before
income taxes		(28,752	)			50,524				178,831				149,093				511,364
Adjusted income tax expense (1)		(3,479	)			12,783				44,529				57,699				128,864
Adjusted (loss) net earnings		(25,273	)			37,741				134,302				91,394				382,500
Less: Preferred stock dividends		9,947				9,947				9,392				29,841				9,392
Adjusted net (loss) earnings available
to common stockholders	$	(35,220	)		$	27,794			$	124,910			$	61,553			$	373,108
Average stockholders' equity	$	2,480,710			$	2,719,372			$	4,011,179			$	3,060,696			$	3,837,609
Less: Average intangible assets		25,499				27,824				1,441,689				476,721				1,445,332
Less: Average preferred stock		498,516				498,516				498,516				498,516				213,698
Average tangible common equity	$	1,956,695			$	2,193,032			$	2,070,974			$	2,085,459			$	2,178,579
Adjusted return on average tangible
common equity (2)		(7.14	)%			5.08	%			23.93	%			3.95	%			22.90	%
(1) Effective tax rates of 12.1%, 25.3%, and 24.9% used for three months ended September 30, 2023, June 30, 2023, and
September 30, 2022.
Adjusted effective tax rate of 38.7% used to normalize the effect of goodwill impairment for nine months ended
September 30, 2023; effective tax rate of 25.2% used for nine months ended September 30, 2022.
(2) Annualized adjusted net (loss) earnings available to common stockholders divided by average
tangible common equity.

Tangible Common Equity Ratio/
Tangible Book Value Per	September 30,				June 30,				March 31,				December 31,				September 30,
Common Share		2023				2023				2023				2022				2022
	(Dollars in thousands, except per share amounts)
Stockholders' equity	$	2,399,277			$	2,533,195			$	2,771,477			$	3,950,531			$	3,875,945
Less: Preferred stock		498,516				498,516				498,516				498,516				498,516
Total common equity		1,900,761				2,034,679				2,272,961				3,452,015				3,377,429
Less: Intangible assets		24,192				26,581				28,970				1,408,117				1,439,746
Tangible common equity	$	1,876,569			$	2,008,098			$	2,243,991			$	2,043,898			$	1,937,683
Total assets	$	36,877,833			$	38,337,250			$	44,302,981			$	41,228,936			$	41,404,592
Less: Intangible assets		24,192				26,581				28,970				1,408,117				1,439,746
Tangible assets	$	36,853,641			$	38,310,669			$	44,274,011			$	39,820,819			$	39,964,846
Equity to assets ratio		6.51	%			6.61	%			6.26	%			9.58	%			9.36	%
Tangible common equity ratio (1)		5.09	%			5.24	%			5.07	%			5.13	%			4.85	%
Book value per common share (2)	$	15.84			$	16.93			$	18.90			$	28.71			$	28.07
Tangible book value per common share (3)	$	15.64			$	16.71			$	18.66			$	17.00			$	16.11
Common shares outstanding		119,967,984				120,169,012				120,244,214				120,222,057				120,314,023
(1) Tangible common equity divided by tangible assets.
(2) Total common equity divided by common shares outstanding.
(3) Tangible common equity divided by common shares outstanding.

	Three Months Ended												Nine Months Ended
Adjusted Earnings, Earnings Per	September 30,				June 30,				September 30,				September 30,
Share, and Return on Average Assets		2023				2023				2022				2023				2022
	(In thousands, except per share amounts)
(Loss) earnings before income taxes	$	(26,566	)		$	(264,443	)		$	175,182			$	(1,551,349	)		$	500,417
Add: Goodwill impairment		-				-				-				1,376,736				-
Add: Acquisition, integration, and
reorganization costs		9,925				12,394				-				30,833				-
Add: Loan fair value loss adjustments		-				170,971				-				170,971				-
Add: Unfunded commitments fair value
loss adjustments		-				106,767				-				106,767				-
Add: Civic loan sale charge-offs		-				22,446				-				22,446				-
Less: Legal recovery		(14,500	)			-				-				(14,500	)			-
Adjusted (loss) earnings before
income taxes		(31,141	)			48,135				175,182				141,904				500,417
Adjusted income tax expense (1)		(3,768	)			12,178				43,566				54,917				126,313
Adjusted (loss) earnings		(27,373	)			35,957				131,616				86,987				374,104
Less: Preferred stock dividends		(9,947	)			(9,947	)			(9,392	)			(29,841	)			(9,392	)
Adjusted (loss) earnings available to
common stockholders		(37,320	)			26,010				122,224				57,146				364,712
Less: Earnings allocated to unvested
restricted stock		374				(313	)			(2,331	)			(249	)			(6,721	)
Adjusted (loss) earnings allocated
to common shares	$	(36,946	)		$	25,697			$	119,893			$	56,897			$	357,991
Weighted average shares outstanding		118,558				118,255				117,786				118,250				117,567
Adjusted diluted (loss) earnings per
common share (2)	$	(0.31	)		$	0.22			$	1.02			$	0.48			$	3.04
Average assets	$	37,807,758			$	43,040,329			$	40,841,272			$	41,187,428			$	40,255,665
Adjusted return on average assets (3)		(0.29	)%			0.34	%			1.28	%			0.28	%			1.24	%
(1) Effective tax rates of 12.1%, 25.3%, and 24.9% used for three months ended September 30, 2023, June 30, 2023, and
September 30, 2022.
Adjusted effective tax rate of 38.7% used to normalize the effect of goodwill impairment for nine months ended
September 30, 2023; effective tax rate of 25.2% used for nine months ended September 30, 2022.
(2) Adjusted (loss) earnings allocated to common shares divided by weighted average shares outstanding.
(3) Annualized adjusted (loss) earnings divided by average assets.

	Three Months Ended												Nine Months Ended
	September 30,				June 30,				September 30,				September 30,
Adjusted Efficiency Ratio		2023				2023				2022				2023				2022
	(Dollars in thousands)
Noninterest expense	$	201,103			$	320,437			$	195,618			$	2,094,543			$	546,689
Less: Intangible asset amortization		2,389				2,389				3,649				7,189				10,947
Less: Foreclosed assets expense
(income), net		(609	)			2				(248	)			(244	)			(3,629	)
Less: Goodwill impairment		-				-				-				1,376,736				-
Less: Acquisition, integration, and
reorganization costs		9,925				12,394				-				30,833				-
Noninterest expense used for
efficiency ratio		189,398				305,652				192,217				680,029				539,371
Less: Unfunded commitments fair value
loss adjustments		-				106,767				-				106,767				-
Noninterest expense used for
adjusted efficiency ratio	$	189,398			$	198,885			$	192,217			$	573,262			$	539,371
Net interest income (tax equivalent)	$	130,729			$	186,076			$	338,558			$	598,421			$	979,010
Noninterest income (loss)		43,808				(128,082	)			38,619				(47,883	)			93,783
Net revenues		174,537				57,994				377,177				550,538				1,072,793
Less: Gain (loss) on sale of securities		-				-				86				-				(1,019	)
Net revenues used for efficiency ratio		174,537				57,994				377,091				550,538				1,073,812
Less: Legal recovery		(14,500	)			-				-				(14,500	)			-
Add: Loan fair value loss adjustments		-				170,971				-				170,971				-
Net revenues used for adjusted
efficiency ratio	$	160,037			$	228,965			$	377,091			$	707,009			$	1,073,812
Efficiency ratio (1)		108.5	%			527.0	%			51.0	%			123.5	%			50.2	%
Adjusted efficiency ratio (2)		118.3	%			86.9	%			51.0	%			81.1	%			50.2	%
(1) Noninterest expense used for efficiency ratio divided by net revenues used for efficiency ratio.
(2) Noninterest expense used for adjusted efficiency ratio divided by net revenues used for adjusted efficiency ratio.

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

CONTACTS
Kevin L. Thompson Executive Vice President, Chief Financial Officer 303.802.8934	William J. Black Executive Vice President, Strategy and Corporate Development 919.597.7466

FAQ

When is the expected closing date for the merger with Banc of California?

The merger is expected to close on or about November 30, 2023.

What is the impact of the pending merger on PacWest's stockholders?

The merger is expected to drive significant value for PacWest's stockholders.

What is the growth rate of Community Banking deposits in Q3?

Community Banking deposits grew by 2% in the quarter.

What is the expected impact of the pending merger on PacWest's profitability?

The Bank expects improved profitability with lower interest and FDIC insurance expenses.

What is the status of the repurchase agreement facility?

The facility will be repaid in December 2023.