Pacwest Bancorp PACW

NAS: PACW | ISIN: US6952631033   30/11/2023
7,540 USD (-2,71%)
(-2,71%)   30/11/2023

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

Fourth Quarter 2020 Highlights

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

Full Year 2020 Highlights

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

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

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

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

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

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

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

FINANCIAL HIGHLIGHTS

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

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

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

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

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

Provision for Credit Losses

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

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

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

Noninterest Income

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

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

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

Noninterest Expense

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

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

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

Income Taxes

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

BALANCE SHEET HIGHLIGHTS

Loans and Leases

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

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

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

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

         
 December 31, 2020 September 30, 2020 December 31, 2019
  % of   % of   % of
Loan and Lease Portfolio BalanceTotal BalanceTotal BalanceTotal
  
 (In thousands)
Real estate mortgage:        
Commercial$4,096,67121% $4,192,46622% $4,202,68722%
Income producing and other        
residential 3,803,26520%  3,684,57919%  3,770,06020%
Total real estate mortgage 7,899,93641%  7,877,04541%  7,972,74742%
Real estate construction and land:        
Commercial 1,117,1216%  1,241,6477%  1,082,3686%
Residential 2,243,16012%  2,182,10011%  1,655,4349%
Total real estate construction        
and land 3,360,28118%  3,423,74718%  2,737,80215%
Total real estate 11,260,21759%  11,300,79259%  10,710,54957%
Commercial:        
Asset-based 3,429,28318%  3,153,04817%  3,748,40720%
Venture capital 1,698,5089%  1,637,1329%  2,179,42212%
Other commercial 2,375,11412%  2,572,99413%  1,767,6679%
Total commercial 7,502,90539%  7,363,17439%  7,695,49641%
Consumer 320,2552%  362,2342%  440,8272%
Total loans and leases held for        
investment, net of deferred fees$19,083,377100% $19,026,200100% $18,846,872100%
         
Total unfunded loan commitments$7,601,390  $7,178,506  $8,183,158 
            

Allowance for Credit Losses

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

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

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

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

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

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

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

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

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

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

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

Deposits and Client Investment Funds

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

          (Keep as 12/31)
 December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2019
  % of   % of   % of   % of
Deposit CompositionBalanceTotal BalanceTotal BalanceTotal BalanceTotal
                   
 (Dollars in thousands)   
Noninterest-bearing demand$9,193,82737% $9,346,744 39% $7,243,29838% $7,243,29838%
Interest checking 5,974,91024%  4,657,511 20%  3,753,97819%  3,753,97819%
Money market 6,532,91726%  6,539,313 27%  4,690,42024%  4,690,42024%
Savings 562,8262%  574,061 2%  499,5913%  499,5913%
Total core deposits 22,264,48089%  21,117,629 88%  16,187,28784%  16,187,28784%
Non-core non-maturity deposits 1,149,4675%  1,123,909 5%  496,4073%  496,4073%
Total non-maturity deposits 23,413,94794%  22,241,538 93%  16,683,69487%  16,683,69487%
Time deposits $250,000 and under 994,1974%  1,047,621 4%  2,065,73311%  2,065,73311%
Time deposits over $250,000 532,5732%  676,536 3%  483,6092%  483,6092%
Total time deposits 1,526,7706%  1,724,157 7%  2,549,34213%  2,549,34213%
Total deposits$24,940,717100% $23,965,695 100% $19,233,036100% $19,233,036100%
                     

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

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

CREDIT QUALITY

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

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

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

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

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

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

CAPITAL

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

 December 31, 2020  
   Excluding September 30,
   PPP 2020
 Actual (1)  Loans (1) Actual
PacWest Bancorp Consolidated:     
Tier 1 leverage capital ratio8.55% 8.93%(3)8.66%
Common equity tier 1 capital ratio10.53% 10.53% 10.45%
Total capital ratio13.76% 13.76% 13.74%
Tangible common equity ratio (2)8.78% 9.12%(3)8.71%
      
(1) Capital information for December 31, 2020 is preliminary.  
(2) Non-GAAP measure.
(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.
 

ABOUT PACWEST BANCORP

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

FORWARD LOOKING STATEMENTS

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

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

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


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


PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS (LOSS) PER SHARE CALCULATIONS      
          
 Three Months Ended Year Ended
 December 31, September 30, December 31, December 31,
  2020   2020   2019   2020   2019 
                    
 (In thousands, except per share data)
Basic Earnings (Loss) Per Share:         
Net earnings (loss)$116,830  $45,503  $117,881  $(1,237,574) $468,636 
Less: earnings allocated to unvested         
restricted stock (1) (1,398)  (578)  (1,458)  (1,782)  (5,182)
Net earnings (loss) allocated to         
common shares$115,432  $44,925  $116,423  $(1,239,356) $463,454 
          
Weighted-average basic shares and         
unvested restricted stock outstanding 118,446   118,438   119,804   118,463   120,468 
Less: weighted-average unvested         
restricted stock outstanding (1,652)  (1,684)  (1,566)  (1,610)  (1,502)
Weighted-average basic shares         
outstanding 116,794   116,754   118,238   116,853   118,966 
          
Basic earnings (loss) per share$0.99  $0.38  $0.98  $(10.61) $3.90 
          
Diluted Earnings (Loss) Per Share:         
Net earnings (loss) allocated to         
common shares$115,432  $44,925  $116,423  $(1,239,356) $463,454 
          
Weighted-average diluted shares         
outstanding 116,794   116,754   118,238   116,853   118,966 
          
Diluted earnings (loss) per share$0.99  $0.38  $0.98  $(10.61) $3.90 
          
(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus     
   undistributed earnings amounts available to holders of unvested restricted stock, if any.     
          


PACWEST BANCORP AND SUBSIDIARIES         
AVERAGE BALANCE SHEET AND YIELD ANALYSIS      
            
 Three Months Ended
 December 31, 2020 September 30, 2020 December 31, 2019
  InterestAverage  InterestAverage  InterestAverage
 Average Income/Yield/ Average Income/Yield/ Average Income/Yield/
 BalanceExpenseCost BalanceExpenseCost BalanceExpenseCost
            
 (Dollars in thousands)
Assets:           
Loans and leases (1)(2)$18,769,214$243,1885.15% $19,195,737$241,5475.01% $18,470,583$263,7835.67%
Investment securities (3)4,888,99330,7572.50% 4,107,91526,0152.52% 3,811,21629,5093.07%
Deposits in financial           
institutions3,576,3351,1350.13% 2,554,3496540.10% 498,0682,0561.64%
Total interest-earning           
assets (1)27,234,542275,0804.02% 25,858,001268,2164.13% 22,779,867295,3485.14%
Other assets2,100,247   2,077,192   3,600,872  
Total assets$29,334,789   $27,935,193   $26,380,739  
            
Liabilities and            
Stockholders' Equity:           
Interest checking$5,191,4352,0640.16% $4,904,6142,0190.16% $3,731,69610,0311.07%
Money market7,636,2203,2250.17% 7,170,8423,0810.17% 5,117,55312,0630.94%
Savings567,646350.02% 565,395350.02% 509,4972040.16%
Time1,650,1503,1300.75% 1,876,0724,7521.01% 2,744,15612,5041.81%
Total interest-bearing           
deposits15,045,4518,4540.22% 14,516,9239,8870.27% 12,102,90234,8021.14%
Borrowings237,098370.06% 181,315270.06% 1,179,2205,1891.75%
Subordinated debentures463,9514,4773.84% 462,3754,6704.02% 456,9976,9836.06%
Total interest-bearing           
liabilities15,746,50012,9680.33% 15,160,61314,5840.38% 13,739,11946,9741.36%
Noninterest-bearing           
demand deposits9,589,789   8,812,391   7,338,888  
Other liabilities462,075   464,320   372,550   
Total liabilities25,798,364   24,437,324   21,450,557  
Stockholders' equity3,536,425   3,497,869   4,930,182  
Total liabilities and           
stockholders' equity$29,334,789   $27,935,193   $26,380,739  
Net interest income (1) $262,112   $253,632   $248,374 
Net interest spread (1)  3.69%   3.75%   3.78%
Net interest margin (1)  3.83%   3.90%   4.33%
            
Total deposits (4)$24,635,240$8,4540.14% $23,329,314$9,8870.17% $19,441,790$34,8020.71%
            
(1) Tax equivalent.           
(2) Includes discount accretion on acquired loans of $3.8 million, $2.0 million, and $3.0 million for the three months ended December 31, 2020,
   September 30, 2020, and December 31, 2019, respectively.        
(3) Includes tax-equivalent adjustments of $1.9 million, $1.6 million, and $1.4 million for the three months ended December 31, 2020, 
   September 30, 2020, and December 31, 2019 related to tax-exempt income on investment securities.    
   The federal statutory tax rate utilized was 21%.         
(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated
   as annualized interest expense on total deposits divided by average total deposits.      
            


PACWEST BANCORP AND SUBSIDIARIES        
FIVE QUARTER BALANCE SHEET        
          
 December 31, September 30, June 30, March 31, December 31,
  2020   2020   2020   2020   2019 
                    
 (Dollars in thousands, except per share data)
ASSETS:         
Cash and due from banks$150,464  $187,176  $174,059  $172,570  $172,585 
Interest-earning deposits in financial         
institutions 3,010,197   2,766,020   1,747,077   439,690   465,039 
Total cash and cash equivalents  3,160,661   2,953,196   1,921,136   612,260   637,624 
          
Securities available-for-sale 5,235,591   4,532,614   3,851,141   3,757,663   3,797,187 
Federal Home Loan Bank stock 17,250   17,250   17,250   54,244   40,924 
   Total investment securities 5,252,841   4,549,864   3,868,391   3,811,907   3,838,111 
          
Gross loans and leases held for investment 19,153,357   19,101,680   19,780,476   19,806,394   18,910,740 
Deferred fees, net (69,980)  (75,480)  (85,845)  (61,089)  (63,868)
Total loans and leases held for         
investment, net of deferred fees 19,083,377   19,026,200   19,694,631   19,745,305   18,846,872 
Allowance for loan and lease losses (348,181)  (345,966)  (301,050)  (221,292)  (138,785)
Total loans and leases held for         
investment, net 18,735,196   18,680,234   19,393,581   19,524,013   18,708,087 
          
Equipment leased to others under         
operating leases 333,846   286,425   295,191   306,530 - 324,084 
Premises and equipment, net 39,234   40,544   42,299   39,799   38,585 
Foreclosed assets, net 14,027   13,747   1,449   1,701   440 
Goodwill 1,078,670   1,078,670   1,078,670   1,078,670   2,548,670 
Core deposit and customer relationship         
intangibles, net 23,641   26,813   30,564   34,446   38,394 
Other assets 860,326   797,223   734,457   733,941   636,811 
Total assets$29,498,442  $28,426,716  $27,365,738  $26,143,267  $26,770,806 
          
LIABILITIES:         
Noninterest-bearing deposits$9,193,827  $9,346,744  $8,629,543  $7,510,218  $7,243,298 
Interest-bearing deposits 15,746,890   14,618,951   14,299,036   12,065,619   11,989,738 
Total deposits 24,940,717   23,965,695   22,928,579   19,575,837   19,233,036 
Borrowings 5,000   60,000   60,000   2,295,000   1,759,008 
Subordinated debentures 465,812   463,282   460,772   458,994   458,209 
Accrued interest payable and other         
liabilities 491,962   451,508   463,489   423,047   365,856 
Total liabilities 25,903,491   24,940,485   23,912,840   22,752,878   21,816,109 
STOCKHOLDERS' EQUITY (1) 3,594,951   3,486,231   3,452,898   3,390,389   4,954,697 
Total liabilities and stockholders’          
equity$29,498,442  $28,426,716  $27,365,738  $26,143,267  $26,770,806 
          
Book value per share$30.36  $29.42  $29.17  $28.75  $41.36 
Tangible book value per share (2)$21.05  $20.09  $19.80  $19.31  $19.77 
Shares outstanding 118,414,853   118,489,927   118,374,603   117,916,789   119,781,605 
          
(1) Includes net unrealized gain on         
securities available-for-sale, net$172,523  $155,474  $145,038  $90,916  $78,658 
(2) Non-GAAP measure.         
          


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


PACWEST BANCORP AND SUBSIDIARIES        
FIVE QUARTER SELECTED FINANCIAL DATA        
          
 At or For the Three Months Ended
 December 31, September 30, June 30, March 31, December 31,
  2020   2020   2020   2020   2019 
                    
 (Dollars in thousands)
Performance Ratios:         
Return on average assets (1) 1.58%  0.65%  0.50%  (21.27)%  1.77%
Pre-provision, pre-goodwill impairment,        
pre-tax net revenue ("PPNR")         
return on average assets (1)(2) 2.22%  2.22%  2.51%  2.39%  2.26%
Return on average equity (1) 13.14%  5.18%  3.87%  (116.28)%  9.49%
Return on average tangible equity (1)(2) 19.63%  8.20%  6.39%  6.88%  20.68%
Efficiency ratio 43.6%  45.1%  42.9%  40.6%  44.8%
Noninterest expense as a percentage         
of average assets (1) 1.84%  1.90%  1.92%  23.57%  1.86%
          
Average Yields/Costs (1):         
Yield on:         
Average loans and leases (3) 5.15%  5.01%  5.01%  5.54%  5.67%
Average interest-earning assets (3) 4.02%  4.13%  4.53%  5.02%  5.14%
Cost of:         
Average interest-bearing deposits 0.22%  0.27%  0.40%  0.95%  1.14%
Average total deposits 0.14%  0.17%  0.25%  0.59%  0.71%
Average interest-bearing liabilities 0.33%  0.38%  0.55%  1.16%  1.36%
Net interest spread (3) 3.69%  3.75%  3.98%  3.86%  3.78%
Net interest margin (3) 3.83%  3.90%  4.20%  4.31%  4.33%
          
Average Balances:         
Assets:         
Loans and leases, net of deferred fees$18,769,214  $19,195,737  $19,951,603  $19,065,035  $18,470,583 
Interest-earning assets 27,234,542   25,858,001   24,531,204   23,455,636   22,779,867 
Total assets 29,334,789   27,935,193   26,621,227   27,099,040   26,380,739 
Liabilities:         
Noninterest-bearing deposits 9,589,789   8,812,391   8,292,151   7,357,717   7,338,888 
Interest-bearing deposits 15,045,451   14,516,923   13,116,297   11,896,780   12,102,902 
Total deposits 24,635,240   23,329,314   21,408,448   19,254,497   19,441,790 
Borrowings 237,098   181,315   871,110   2,026,749   1,179,220 
Subordinated debentures 463,951   462,375   459,466   458,399   456,997 
Interest-bearing liabilities 15,746,500   15,160,613   14,446,873   14,381,928   13,739,119 
Stockholders' equity 3,536,425   3,497,869   3,446,850   4,956,778   4,930,182 
          
(1) Annualized.         
(2) Non-GAAP measure.         
(3) Tax equivalent.         
          


PACWEST BANCORP AND SUBSIDIARIES        
FIVE QUARTER SELECTED FINANCIAL DATA        
          
 At or For the Three Months Ended
 December 31, September 30, June 30, March 31, December 31,
  2020   2020   2020   2020   2019 
                    
 (Dollars in thousands)
Credit Quality Ratios:         
Nonaccrual loans and leases held for         
investment to loans and leases         
held for investment 0.48%  0.45%  0.84%  0.48%  0.49%
Nonperforming assets to loans and         
leases held for investment and         
foreclosed assets 0.55%  0.52%  0.85%  0.49%  0.49%
Classified loans and leases held for         
investment to loans and leases         
held for investment 1.39%  1.44%  1.49%  0.75%  0.93%
Provision for credit losses (for the         
quarter) to average loans and leases         
held for investment (annualized) 0.21%  2.01%  2.42%  2.36%  0.06%
Net charge-offs (for the quarter) to         
average loans and leases held         
for investment (annualized) 0.40%  0.75%  0.27%  0.40%  0.02%
Trailing 12 months net charge-offs         
to average loans and leases         
held for investment 0.45%  0.36%  0.20%  0.19%  0.09%
Allowance for loan and lease losses to         
loans and leases held for investment 1.82%  1.82%  1.53%  1.12%  0.74%
Allowance for credit losses to loans         
and leases held for investment 2.27%  2.33%  1.94%  1.39%  0.93%
Allowance for credit losses to         
nonaccrual loans and leases         
held for investment 475.8%  516.9%  229.7%  287.5%  189.1%
          
PacWest Bancorp Consolidated:         
Tier 1 leverage capital ratio (1) 8.55%  8.66%  8.93%  8.63%  9.74%
Common equity tier 1 capital ratio (1) 10.53%  10.45%  9.97%  9.22%  9.78%
Tier 1 capital ratio (1) 10.53%  10.45%  9.97%  9.22%  9.78%
Total capital ratio (1) 13.76%  13.74%  13.18%  12.07%  12.41%
Risk-weighted assets (1)$22,837,693  $22,114,040  $22,781,836  $24,214,209  $23,582,495 
          
Equity to assets ratio 12.19%  12.26%  12.62%  12.97%  18.51%
Tangible common equity ratio (2) 8.78%  8.71%  8.93%  9.10%  9.79%
Book value per share$30.36  $29.42  $29.17  $28.75  $41.36 
Tangible book value per share (2)$21.05  $20.09  $19.80  $19.31  $19.77 
          
Pacific Western Bank:         
Tier 1 leverage capital ratio (1) 9.53%  9.70%  10.03%  9.71%  10.95%
Common equity tier 1 capital ratio (1) 11.73%  11.70%  11.18%  10.38%  11.00%
Tier 1 capital ratio (1) 11.73%  11.70%  11.18%  10.38%  11.00%
Total capital ratio (1) 12.99%  12.95%  12.44%  11.39%  11.74%
          
(1) Capital information for December 31, 2020 is preliminary.      
(2) Non-GAAP measure.         
          

GAAP TO NON-GAAP RECONCILIATIONS

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

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

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


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


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


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

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