PacWest Bancorp Announces Results for the Second Quarter of 2021

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  • PACW

Figure 1

Well-Positioned Balance Sheet
Well-Positioned Balance Sheet
Well-Positioned Balance Sheet

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

SECOND QUARTER 2021 RESULTS

$180.5M

$1.52

$154.9M

29.25%

Net Earnings

Diluted Earnings per Share

PPNR

ROATE

SECOND QUARTER 2021 HIGHLIGHTS

  • Net Earnings of $180.5 Million or $1.52 Per Diluted Share

  • Core Deposits Up $1.5 Billion or 22.9% annualized in 2Q21; Represents 91% of Total Deposits

  • Loan Growth of $527.0 Million or 11.1% annualized, Excluding PPP Loan Activity, Growth of $997.1 Million or 22.3% annualized

  • Civic Loan Production of $423 Million in 2Q21, Compared to $231 Million for Two Months in 1Q21

  • Provision for Credit Losses Benefit of $88.0 Million in 2Q21 Compared to Benefit of $48.0 Million in 1Q21

  • Net Interest Income (TE) of $270.1 Million, Compared To $264.6 Million in 1Q21

  • Noninterest Income of $40.4 Million With Continued Strength in Warrant Income

  • Noninterest Expense of $151.8 Million, Up 1% From 1Q21, Driven By Three Months of Civic Financial Services (“Civic”) Operations Compared to Two Months in 1Q21 and Higher Variable Compensation From Strong Growth Across the Company

  • Classified and Special Mention Loans Fell $15.9 Million and $96.9 Million, Respectively, From 1Q21

  • ACL Ratio of 1.54% and ALLL Ratio of 1.16%; Excluding PPP Loans, ACL Ratio of 1.59% and ALLL Ratio of 1.19%

  • Net Recoveries of $5.2 Million (11bps of Average Loans and Leases)

  • Cost of Deposits Decreased 1 bp to 10 bps

  • Loan and Lease Production of $1.7 Billion Up From $1.6 Billion in 1Q21; WAC of 4.55% vs. 4.36% in 1Q21

  • Strong Capital Position – CET1 Ratio of 10.41%

  • Total Capital Ratio Increased From 13.60% at 1Q21 to 14.99% at 2Q21

  • Tangible Book Value Per Share Increased From $20.39 at 1Q21 to $21.95 at 2Q21

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

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

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

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

FINANCIAL HIGHLIGHTS

At or For the

At or For the

Three Months Ended

Six Months Ended

June 30,

March 31,

Increase

June 30,

Increase

Financial Highlights (1)

2021

2021

(Decrease)

2021

2020

(Decrease)

(Dollars in thousands, except per share data)

Net earnings (loss)

$

180,512

$

150,406

$

30,106

$

330,918

$

(1,399,907

)

$

1,730,825

Diluted earnings (loss)

per share

$

1.52

$

1.27

$

0.25

$

2.78

$

(11.98

)

$

14.76

Pre-provision, pre-goodwill

impairment, pre-tax net

revenue ("PPNR") (2)

$

154,929

$

155,962

$

(1,033

)

$

310,891

$

327,049

$

(16,158

)

Return on average assets

2.11

%

1.94

%

0.17

2.03

%

(10.48

)%

12.51

PPNR return on average

assets (2)

1.81

%

2.01

%

(0.20

)

1.91

%

2.45

%

(0.54

)

Return on average

tangible equity (2)

29.25

%

25.67

%

3.58

27.51

%

6.64

%

20.87

Yield on average loans and

leases (tax equivalent)

5.18

%

5.20

%

(0.02

)

5.19

%

5.27

%

(0.08

)

Cost of average total

deposits

0.10

%

0.11

%

(0.01

)

0.11

%

0.41

%

(0.30

)

Net interest margin ("NIM")

(tax equivalent)

3.40

%

3.69

%

(0.29

)

3.53

%

4.26

%

(0.73

)

Efficiency ratio

47.9

%

46.4

%

1.5

47.2

%

41.8

%

5.4

Total assets

$

34,867,987

$

32,856,533

$

2,011,454

$

34,867,987

$

27,365,738

$

7,502,249

Loans and leases held

for investment,

net of deferred fees

$

19,506,257

$

18,979,228

$

527,029

$

19,506,257

$

19,694,631

$

(188,374

)

Noninterest-bearing

demand deposits

$

11,252,286

$

11,017,462

$

234,824

$

11,252,286

$

8,629,543

$

2,622,743

Core deposits

$

27,038,161

$

25,576,348

$

1,461,813

$

27,038,161

$

19,535,814

$

7,502,347

Total deposits

$

29,647,034

$

28,223,291

$

1,423,743

$

29,647,034

$

22,928,579

$

6,718,455

As percentage of total

deposits:

Noninterest-bearing

demand deposits

38

%

39

%

(1

)

38

%

38

%

-

Core deposits

91

%

91

%

-

91

%

85

%

6

Equity to assets ratio

11.03

%

11.12

%

(0.09

)

11.03

%

12.62

%

(1.59

)

Common equity tier 1

capital ratio

10.41

%

10.39

%

0.02

10.41

%

9.97

%

0.44

Total capital ratio

14.99

%

13.60

%

1.39

14.99

%

13.18

%

1.81

Tangible common equity

ratio (2)

7.80

%

7.68

%

0.12

7.80

%

8.93

%

(1.13

)

Book value per share

$

32.17

$

30.68

$

1.49

$

32.17

$

29.17

$

3.00

Tangible book value per

share (2)

$

21.95

$

20.39

$

1.56

$

21.95

$

19.80

$

2.15

(1) The operations of Civic are included from its February 1, 2021 acquisition date.

(2) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

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

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

The cost of average total deposits decreased to 0.10% in the second quarter of 2021 from 0.11% for the first quarter of 2021. The lower cost of average total deposits was due primarily to the increased average balance of noninterest-bearing deposits.

PROVISION FOR CREDIT LOSSES

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

Three Months Ended

June 30,

March 31,

Increase

Provision for Credit Losses

2021

2021

(Decrease)

(In thousands)

(Reduction in) addition to allowance for loan

and lease losses

$

(72,000

)

$

(53,000

)

$

(19,000

)

(Reduction in) addition to reserve for

unfunded loan commitments

(16,000

)

5,000

(21,000

)

Total provision for credit losses

$

(88,000

)

$

(48,000

)

$

(40,000

)

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

NONINTEREST INCOME

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

Three Months Ended

June 30,

March 31,

Increase

Noninterest Income

2021

2021

(Decrease)

(In thousands)

Service charges on deposit accounts

$

3,452

$

2,934

$

518

Other commissions and fees

10,704

9,158

1,546

Leased equipment income

10,847

11,354

(507

)

Gain on sale of loans and leases

1,422

139

1,283

Gain on sale of securities

-

101

(101

)

Other income:

Dividends and gains on equity investments

5,394

10,904

(5,510

)

Warrant income

5,650

6,123

(473

)

Other

2,902

4,116

(1,214

)

Total noninterest income

$

40,371

$

44,829

$

(4,458

)

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

NONINTEREST EXPENSE

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

Three Months Ended

June 30,

March 31,

Increase

Noninterest Expense

2021

2021

(Decrease)

(In thousands)

Compensation

$

90,807

$

79,882

$

10,925

Occupancy

14,784

14,054

730

Data processing

7,758

6,957

801

Other professional services

5,256

5,126

130

Insurance and assessments

3,745

4,903

(1,158

)

Intangible asset amortization

2,889

3,079

(190

)

Leased equipment depreciation

8,614

8,969

(355

)

Foreclosed assets (income) expense, net

(119

)

1

(120

)

Acquisition, integration and reorganization costs

200

3,425

(3,225

)

Customer related expense

4,973

4,818

155

Loan expense

4,031

3,193

838

Other

8,812

15,729

(6,917

)

Total noninterest expense

$

151,750

$

150,136

$

1,614

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

INCOME TAXES

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

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

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

June 30, 2021

March 31, 2021

June 30, 2020

% of

% of

% of

Deposit Composition

Balance

Total

Balance

Total

Balance

Total

(Dollars in thousands)

Noninterest-bearing demand

$

11,252,286

38

%

$

11,017,462

39

%

$

8,629,543

38

%

Interest checking

7,394,472

25

%

6,862,398

25

%

4,858,168

21

%

Money market

7,777,199

26

%

7,112,610

25

%

5,498,150

24

%

Savings

614,204

2

%

583,878

2

%

549,953

2

%

Total core deposits

27,038,161

91

%

25,576,348

91

%

19,535,814

85

%

Non-core non-maturity deposits

1,122,971

4

%

1,162,590

4

%

1,217,266

5

%

Total non-maturity deposits

28,161,132

95

%

26,738,938

95

%

20,753,080

90

%

Time deposits $250,000 and under

913,371

3

%

940,340

3

%

1,522,928

7

%

Time deposits over $250,000

572,531

2

%

544,013

2

%

652,571

3

%

Total time deposits

1,485,902

5

%

1,484,353

5

%

2,175,499

10

%

Total deposits

$

29,647,034

100

%

$

28,223,291

100

%

$

22,928,579

100

%

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

In addition to deposit products, we also offer alternative, non-depository cash investment options for select clients. These alternative options include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds at June 30, 2021 were $1.3 billion, of which $1.0 billion was managed by PWAM.

LOANS AND LEASES

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

Three Months Ended

Six Months Ended

Roll Forward of Loans and Leases Held

June 30,

March 31,

June 30,

for Investment, Net of Deferred Fees (1)

2021

2021

2021

(Dollars in thousands)

Balance, beginning of period

$

18,979,228

$

19,083,377

$

19,083,377

Additions:

Production

1,663,151

1,612,777

3,275,928

Disbursements

1,662,644

1,022,986

2,685,630

Total production and disbursements

3,325,795

2,635,763

5,961,558

Reductions:

Payoffs

(1,969,118

)

(1,635,264

)

(3,604,382

)

Paydowns

(802,222

)

(1,067,418

)

(1,869,640

)

Total payoffs and paydowns

(2,771,340

)

(2,702,682

)

(5,474,022

)

Sales

(26,610

)

(72,641

)

(99,251

)

Transfers to foreclosed assets

-

(647

)

(647

)

Charge-offs

(816

)

(3,988

)

(4,804

)

Transfers to loans held for sale

-

(25,554

)

(25,554

)

Total reductions

(2,798,766

)

(2,805,512

)

(5,604,278

)

Loans acquired through Civic acquisition

-

65,600

65,600

Net increase (decrease)

527,029

(104,149

)

422,880

Balance, end of period

$

19,506,257

$

18,979,228

$

19,506,257

Weighted average rate on production (2)

4.55

%

4.36

%

4.46

%

(1) Includes direct financing leases but excludes equipment leased to others under operating leases.

(2) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees. Amortized fees added approximately 41 basis points to loan yields in 2021.

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

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

June 30, 2021

March 31, 2021

June 30, 2020

% of

% of

% of

Loan and Lease Portfolio

Balance

Total

Balance

Total

Balance

Total

(In thousands)

Real estate mortgage:

Commercial

$

3,792,198

19

%

$

3,941,610

21

%

$

4,222,075

22

%

Income producing and other

residential

4,620,822

24

%

4,045,603

21

%

3,733,659

19

%

Total real estate mortgage

8,413,020

43

%

7,987,213

42

%

7,955,734

41

%

Real estate construction and land:

Commercial

930,785

5

%

990,035

5

%

1,167,609

6

%

Residential

2,574,799

13

%

2,575,788

14

%

2,172,919

11

%

Total real estate construction

and land

3,505,584

18

%

3,565,823

19

%

3,340,528

17

%

Total real estate

11,918,604

61

%

11,553,036

61

%

11,296,262

58

%

Commercial:

Asset-based

3,550,903

18

%

3,383,403

18

%

3,412,431

17

%

Venture capital

1,749,432

9

%

1,495,798

8

%

1,814,341

9

%

Other commercial

1,921,909

10

%

2,206,639

11

%

2,760,278

14

%

Total commercial

7,222,244

37

%

7,085,840

37

%

7,987,050

40

%

Consumer

365,409

2

%

340,352

2

%

411,319

2

%

Total loans and leases held for

investment, net of deferred fees

$

19,506,257

100

%

$

18,979,228

100

%

$

19,694,631

100

%

Total unfunded loan commitments

$

7,891,875

$

8,127,999

$

7,745,921

ALLOWANCE FOR CREDIT LOSSES

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

Three Months Ended June 30, 2021

Allowance for

Reserve for

Total

Allowance for Credit

Loan and

Unfunded Loan

Allowance for

Losses Rollforward

Lease Losses

Commitments

Credit Losses

(In thousands)

Beginning balance

$

292,445

$

90,571

$

383,016

Charge-offs

(816

)

-

(816

)

Recoveries

5,971

-

5,971

Net recoveries

5,155

-

5,155

Provision

(72,000

)

(16,000

)

(88,000

)

Ending balance

$

225,600

$

74,571

$

300,171

Three Months Ended March 31, 2021

Allowance for

Reserve for

Total

Allowance for Credit

Loan and

Unfunded Loan

Allowance for

Losses Rollforward

Lease Losses

Commitments

Credit Losses

(In thousands)

Beginning balance

$

348,181

$

85,571

$

433,752

Charge-offs

(3,988

)

-

(3,988

)

Recoveries

1,252

-

1,252

Net charge-offs

(2,736

)

-

(2,736

)

Provision

(53,000

)

5,000

(48,000

)

Ending balance

$

292,445

$

90,571

$

383,016

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

June 30,

March 31,

Increase

Allowance for Credit Losses

2021

2021

(Decrease)

(Dollars in thousands)

Allowance for loan and lease losses

$

225,600

$

292,445

$

(66,845

)

Reserve for unfunded loan commitments

74,571

90,571

(16,000

)

Allowance for credit losses

$

300,171

$

383,016

$

(82,845

)

Provision for credit losses (for the quarter)

$

(88,000

)

$

(48,000

)

$

(40,000

)

Net (recoveries) charge-offs (for the quarter)

$

(5,155

)

$

2,736

$

(7,891

)

Net (recoveries) charge-offs to average loans and leases

(for the quarter)

(0.11

)%

0.06

%

Allowance for loan and lease losses to loans

and leases held for investment

1.16

%

1.54

%

Allowance for loan and lease losses to loans

and leases held for investment, excluding PPP loans

1.19

%

1.63

%

Allowance for credit losses to loans and leases

held for investment

1.54

%

2.02

%

Allowance for credit losses to loans and leases

held for investment, excluding PPP loans

1.59

%

2.14

%

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

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

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

CREDIT QUALITY

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

June 30,

March 31,

Increase

Credit Quality Metrics

2021

2021

(Decrease)

(Dollars in thousands)

NPAs and Performing TDRs:

Nonaccrual loans and leases held for investment (1)

$

56,803

$

67,652

$

(10,849

)

Accruing loans contractually past due 90 days or more

-

-

-

Foreclosed assets, net

13,227

14,298

(1,071

)

Total nonperforming assets ("NPAs")

$

70,030

$

81,950

$

(11,920

)

Performing TDRs held for investment

$

40,129

$

27,999

$

12,130

Nonaccrual loans and leases held for investment

to loans and leases held for investment

0.29

%

0.36

%

Nonperforming assets to loans and leases

held for investment and foreclosed assets

0.36

%

0.43

%

Allowance for credit losses to nonaccrual loans

and leases held for investment

528.4

%

566.2

%

Loan and Lease Credit Risk Ratings:

Pass

$

18,822,938

$

18,183,114

$

639,824

Special mention

536,052

632,997

(96,945

)

Classified

147,267

163,117

(15,850

)

Total loans and leases held for investment,

net of deferred fees

$

19,506,257

$

18,979,228

$

527,029

Classified loans and leases held for investment

to loans and leases held for investment

0.75

%

0.86

%

(1) Nonaccrual loans include SBA guaranteed amounts of $24.2 million at June 30, 2021 and $18.4 million at March 31, 2021.

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

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

June 30, 2021

March 31, 2021

Increase (Decrease)

Accruing

Accruing

Accruing

and 30-89

and 30-89

and 30-89

Days Past

Days Past

Days Past

Nonaccrual

Due

Nonaccrual

Due

Nonaccrual

Due

(Dollars in thousands)

Real estate mortgage:

Commercial

$

32,065

$

-

$

46,436

$

5

$

(14,371

)

$

(5

)

Income producing and other

residential

6,133

2,179

2,471

6,339

3,662

(4,160

)

Total real estate mortgage

38,198

2,179

48,907

6,344

(10,709

)

(4,165

)

Real estate construction and land:

Commercial

284

-

302

-

(18

)

-

Residential

1,934

22,714

416

1,241

1,518

21,473

Total real estate

construction and land

2,218

22,714

718

1,241

1,500

21,473

Commercial:

Asset-based

1,973

-

2,379

-

(406

)

-

Venture capital

2,717

-

2,432

6,750

285

(6,750

)

Other commercial

11,337

270

12,660

1,251

(1,323

)

(981

)

Total commercial

16,027

270

17,471

8,001

(1,444

)

(7,731

)

Consumer

360

1,454

556

954

(196

)

500

Total held for investment

$

56,803

$

26,617

$

67,652

$

16,540

$

(10,849

)

$

10,077

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

CAPITAL

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

June 30, 2021

Excluding

March 31,

PPP

2021

Actual (1)

Loans (1)

Actual

PacWest Bancorp Consolidated:

Tier 1 leverage capital ratio

7.67

%

7.89

%

(3

)

7.95

%

Common equity tier 1 capital ratio

10.41

%

10.41

%

10.39

%

Total capital ratio

14.99

%

14.99

%

13.60

%

Tangible common equity ratio (2)

7.80

%

7.94

%

(3

)

7.68

%

(1) Capital information for June 30, 2021 is preliminary.

(2) Non-GAAP measure.

(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $34 billion in assets headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 70 full-service branches located in California, one branch located in Durham, North Carolina, and one branch located in Denver, Colorado. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

FORWARD LOOKING STATEMENTS

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

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

PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

June 30,

March 31,

June 30,

2021

2021

2020

(Dollars in thousands, except per share data)

ASSETS:

Cash and due from banks

$

179,505

$

177,199

$

174,059

Interest-earning deposits in financial institutions

5,678,587

5,517,667

1,747,077

Total cash and cash equivalents

5,858,092

5,694,866

1,921,136

Securities available-for-sale, at estimated fair value

7,198,608

5,941,690

3,851,141

Federal Home Loan Bank stock, at cost

17,250

17,250

17,250

Total investment securities

7,215,858

5,958,940

3,868,391

Loans held for sale

-

25,554

-

Gross loans and leases held for investment

19,580,731

19,055,165

19,780,476

Deferred fees, net

(74,474

)

(75,937

)

(85,845

)

Total loans and leases held for investment,

net of deferred fees

19,506,257

18,979,228

19,694,631

Allowance for loan and lease losses

(225,600

)

(292,445

)

(301,050

)

Total loans and leases held for investment, net

19,280,657

18,686,783

19,393,581

Equipment leased to others under operating leases

313,574

327,413

295,191

Premises and equipment, net

39,541

39,622

42,299

Foreclosed assets, net

13,227

14,298

1,449

Goodwill

1,204,118

1,204,092

1,078,670

Core deposit and customer relationship intangibles, net

18,423

21,312

30,564

Other assets

924,497

883,653

734,457

Total assets

$

34,867,987

$

32,856,533

$

27,365,738

LIABILITIES:

Noninterest-bearing deposits

$

11,252,286

$

11,017,462

$

8,629,543

Interest-bearing deposits

18,394,748

17,205,829

14,299,036

Total deposits

29,647,034

28,223,291

22,928,579

Borrowings

6,625

19,750

60,000

Subordinated debentures

861,788

465,814

460,772

Accrued interest payable and other liabilities

505,859

493,541

463,489

Total liabilities

31,021,306

29,202,396

23,912,840

STOCKHOLDERS' EQUITY (1)

3,846,681

3,654,137

3,452,898

Total liabilities and stockholders’ equity

$

34,867,987

$

32,856,533

$

27,365,738

Book value per share

$

32.17

$

30.68

$

29.17

Tangible book value per share (2)

$

21.95

$

20.39

$

19.80

Shares outstanding

119,555,102

119,105,642

118,374,603

(1) Includes net unrealized gain on securities

available-for-sale, net

$

145,516

$

106,381

$

145,038

(2) Non-GAAP measure.


PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

2021

2021

2020

2021

2020

(Dollars in thousands, except per share data)

Interest income:

Loans and leases

$

244,529

$

241,544

$

247,851

$

486,073

$

510,129

Investment securities

33,954

30,265

26,038

64,219

53,484

Deposits in financial institutions

2,022

1,528

186

3,550

1,794

Total interest income

280,505

273,337

274,075

553,842

565,407

Interest expense:

Deposits

7,269

7,500

13,075

14,769

41,322

Borrowings

265

193

1,319

458

8,097

Subordinated debentures

6,663

4,375

5,402

11,038

11,962

Total interest expense

14,197

12,068

19,796

26,265

61,381

Net interest income

266,308

261,269

254,279

527,577

504,026

Provision for credit losses

(88,000

)

(48,000

)

120,000

(136,000

)

232,000

Net interest income after provision

for credit losses

354,308

309,269

134,279

663,577

272,026

Noninterest income:

Service charges on deposit accounts

3,452

2,934

2,004

6,386

4,662

Other commissions and fees

10,704

9,158

10,111

19,862

19,832

Leased equipment income

10,847

11,354

12,037

22,201

24,288

Gain on sale of loans and leases

1,422

139

346

1,561

433

Gain on sale of securities

-

101

7,715

101

7,897

Other income

13,946

21,143

6,645

35,089

10,846

Total noninterest income

40,371

44,829

38,858

85,200

67,958

Noninterest expense:

Compensation

90,807

79,882

61,910

170,689

123,192

Occupancy

14,784

14,054

14,494

28,838

28,701

Data processing

7,758

6,957

7,102

14,715

13,556

Other professional services

5,256

5,126

4,146

10,382

8,404

Insurance and assessments

3,745

4,903

9,373

8,648

13,622

Intangible asset amortization

2,889

3,079

3,882

5,968

7,830

Leased equipment depreciation

8,614

8,969

7,102

17,583

14,307

Foreclosed assets (income) expense, net

(119

)

1

(146

)

(118

)

(80

)

Acquisition, integration and

reorganization costs

200

3,425

-

3,625

-

Customer related expense

4,973

4,818

4,408

9,791

8,340

Loan expense

4,031

3,193

3,379

7,224

6,029

Goodwill impairment

-

-

-

-

1,470,000

Other expense

8,812

15,729

11,315

24,541

21,034

Total noninterest expense

151,750

150,136

126,965

301,886

1,714,935

Earnings (loss) before income taxes

242,929

203,962

46,172

446,891

(1,374,951

)

Income tax expense

62,417

53,556

12,968

115,973

24,956

Net earnings (loss)

$

180,512

$

150,406

$

33,204

$

330,918

$

(1,399,907

)

Basic and diluted earnings (loss) per share

$

1.52

$

1.27

$

0.28

$

2.78

$

(11.98

)

Dividends declared and paid per share

$

0.25

$

0.25

$

0.25

$

0.50

$

0.85



PACWEST BANCORP AND SUBSIDIARIES

NET EARNINGS (LOSS) PER SHARE CALCULATIONS

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

2021

2021

2020

2021

2020

(In thousands, except per share data)

Basic Earnings (Loss) Per Share:

Net earnings (loss)

$

180,512

$

150,406

$

33,204

$

330,918

$

(1,399,907

)

Less: earnings allocated to

unvested restricted stock (1)

(3,172

)

(2,355

)

(362

)

(5,495

)

(1,251

)

Net earnings (loss) allocated to

common shares

$

177,340

$

148,051

$

32,842

$

325,423

$

(1,401,158

)

Weighted-average basic shares

and unvested restricted stock

outstanding

119,386

118,852

118,192

119,121

118,484

Less: weighted-average unvested

restricted stock outstanding

(2,356

)

(2,003

)

(1,606

)

(2,181

)

(1,551

)

Weighted-average basic shares

outstanding

117,030

116,849

116,586

116,940

116,933

Basic earnings (loss) per share

$

1.52

$

1.27

$

0.28

$

2.78

$

(11.98

)

Diluted Earnings (Loss) Per Share:

Net earnings (loss) allocated to

common shares

$

177,340

$

148,051

$

32,842

$

325,423

$

(1,401,158

)

Weighted-average diluted shares

outstanding

117,030

116,849

116,586

116,940

116,933

Diluted earnings (loss) per share

$

1.52

$

1.27

$

0.28

$

2.78

$

(11.98

)

(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.


PACWEST BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEET AND YIELD ANALYSIS

Three Months Ended

June 30, 2021

March 31, 2021

June 30, 2020

Interest

Average

Interest

Average

Interest

Average

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Cost

Balance

Expense

Cost

Balance

Expense

Cost

(Dollars in thousands)

Assets:

Loans and leases (1)(2)

$

19,057,420

$

246,147

5.18

%

$

18,927,314

$

242,846

5.20

%

$

19,951,603

$

248,474

5.01

%

Investment securities (3)

6,492,721

36,111

2.23

%

5,383,140

32,329

2.44

%

3,846,459

27,430

2.87

%

Deposits in financial

institutions

6,347,764

2,022

0.13

%

4,790,231

1,528

0.13

%

733,142

186

0.10

%

Total interest-earning

assets (1)

31,897,905

284,280

3.57

%

29,100,685

276,703

3.86

%

24,531,204

276,090

4.53

%

Other assets

2,428,207

2,315,197

2,090,023

Total assets

$

34,326,112

$

31,415,882

$

26,621,227

Liabilities and

Stockholders' Equity:

Interest checking

$

7,235,726

2,394

0.13

%

$

6,401,869

2,232

0.14

%

$

4,001,750

1,573

0.16

%

Money market

8,484,933

3,318

0.16

%

7,975,996

3,278

0.17

%

6,114,354

2,856

0.19

%

Savings

598,225

36

0.02

%

572,959

35

0.02

%

524,335

33

0.03

%

Time

1,498,169

1,521

0.41

%

1,493,267

1,955

0.53

%

2,475,858

8,613

1.40

%

Total interest-bearing

deposits

17,817,053

7,269

0.16

%

16,444,091

7,500

0.18

%

13,116,297

13,075

0.40

%

Borrowings

225,446

265

0.47

%

226,053

193

0.35

%

871,110

1,319

0.61

%

Subordinated debentures

735,725

6,663

3.63

%

466,101

4,375

3.81

%

459,466

5,402

4.73

%

Total interest-bearing

liabilities

18,778,224

14,197

0.30

%

17,136,245

12,068

0.29

%

14,446,873

19,796

0.55

%

Noninterest-bearing

demand deposits

11,304,757

10,173,459

8,292,151

Other liabilities

504,089

488,930

435,353

Total liabilities

30,587,070

27,798,634

23,174,377

Stockholders' equity

3,739,042

3,617,248

3,446,850

Total liabilities and

stockholders' equity

$

34,326,112

$

31,415,882

$

26,621,227

Net interest income (1)

$

270,083

$

264,635

$

256,294

Net interest spread (1)

3.27

%

3.57

%

3.98

%

Net interest margin (1)

3.40

%

3.69

%

4.20

%

Total deposits (4)

$

29,121,810

$

7,269

0.10

%

$

26,617,550

$

7,500

0.11

%

$

21,408,448

$

13,075

0.25

%

(1) Tax equivalent.

(2) Includes net loan premium amortization of $1.5 million and $1.2 million and net loan discount accretion of $1.2 million for the three months ended

June 30, 2021, March 31, 2021, and June 30, 2020, respectively.

(3) Includes tax-equivalent adjustments of $2.2 million, $2.1 million, and $1.4 million for the three months ended June 30, 2021,

March 31, 2021, and June 30, 2020 related to tax-exempt income on investment securities.

The federal statutory tax rate utilized was 21%.

(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is

calculated as annualized interest expense on total deposits divided by average total deposits.


PACWEST BANCORP AND SUBSIDIARIES

FIVE QUARTER BALANCE SHEET

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

(Dollars in thousands, except per share data)

ASSETS:

Cash and due from banks

$

179,505

$

177,199

$

150,464

$

187,176

$

174,059

Interest-earning deposits in financial

institutions

5,678,587

5,517,667

3,010,197

2,766,020

1,747,077

Total cash and cash equivalents

5,858,092

5,694,866

3,160,661

2,953,196

1,921,136

Securities available-for-sale

7,198,608

5,941,690

5,235,591

4,532,614

3,851,141

Federal Home Loan Bank stock

17,250

17,250

17,250

17,250

17,250

Total investment securities

7,215,858

5,958,940

5,252,841

4,549,864

3,868,391

Loans held for sale

-

25,554

-

-

-

Gross loans and leases held for investment

19,580,731

19,055,165

19,153,357

19,101,680

19,780,476

Deferred fees, net

(74,474

)

(75,937

)

(69,980

)

(75,480

)

(85,845

)

Total loans and leases held for

investment, net of deferred fees

19,506,257

18,979,228

19,083,377

19,026,200

19,694,631

Allowance for loan and lease losses

(225,600

)

(292,445

)

(348,181

)

(345,966

)

(301,050

)

Total loans and leases held for

investment, net

19,280,657

18,686,783

18,735,196

18,680,234

19,393,581

Equipment leased to others under

operating leases

313,574

327,413

333,846

286,425

295,191

Premises and equipment, net

39,541

39,622

39,234

40,544

42,299

Foreclosed assets, net

13,227

14,298

14,027

13,747

1,449

Goodwill

1,204,118

1,204,092

1,078,670

1,078,670

1,078,670

Core deposit and customer relationship

intangibles, net

18,423

21,312

23,641

26,813

30,564

Other assets

924,497

883,653

860,326

797,223

734,457

Total assets

$

34,867,987

$

32,856,533

$

29,498,442

$

28,426,716

$

27,365,738

LIABILITIES:

Noninterest-bearing deposits

$

11,252,286

$

11,017,462

$

9,193,827

$

9,346,744

$

8,629,543

Interest-bearing deposits

18,394,748

17,205,829

15,746,890

14,618,951

14,299,036

Total deposits

29,647,034

28,223,291

24,940,717

23,965,695

22,928,579

Borrowings

6,625

19,750

5,000

60,000

60,000

Subordinated debentures

861,788

465,814

465,812

463,282

460,772

Accrued interest payable and other

liabilities

505,859

493,541

491,962

451,508

463,489

Total liabilities

31,021,306

29,202,396

25,903,491

24,940,485

23,912,840

STOCKHOLDERS' EQUITY (1)

3,846,681

3,654,137

3,594,951

3,486,231

3,452,898

Total liabilities and stockholders’

equity

$

34,867,987

$

32,856,533

$

29,498,442

$

28,426,716

$

27,365,738

Book value per share

$

32.17

$

30.68

$

30.36

$

29.42

$

29.17

Tangible book value per share (2)

$

21.95

$

20.39

$

21.05

$

20.09

$

19.80

Shares outstanding

119,555,102

119,105,642

118,414,853

118,489,927

118,374,603

(1) Includes net unrealized gain on

securities available-for-sale, net

$

145,516

$

106,381

$

172,523

$

155,474

$

145,038

(2) Non-GAAP measure.


PACWEST BANCORP AND SUBSIDIARIES

FIVE QUARTER STATEMENT OF EARNINGS

Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

(Dollars in thousands, except per share data)

Interest income:

Loans and leases

$

244,529

$

241,544

$

242,198

$

240,811

$

247,851

Investment securities

33,954

30,265

28,843

24,443

26,038

Deposits in financial institutions

2,022

1,528

1,135

654

186

Total interest income

280,505

273,337

272,176

265,908

274,075

Interest expense:

Deposits

7,269

7,500

8,454

9,887

13,075

Borrowings

265

193

37

27

1,319

Subordinated debentures

6,663

4,375

4,477

4,670

5,402

Total interest expense

14,197

12,068

12,968

14,584

19,796

Net interest income

266,308

261,269

259,208

251,324

254,279

Provision for credit losses

(88,000

)

(48,000

)

10,000

97,000

120,000

Net interest income after provision

for credit losses

354,308

309,269

249,208

154,324

134,279

Noninterest income:

Service charges on deposit accounts

3,452

2,934

3,119

2,570

2,004

Other commissions and fees

10,704

9,158

9,974

10,541

10,111

Leased equipment income

10,847

11,354

9,440

9,900

12,037

Gain on sale of loans and leases

1,422

139

1,671

35

346

Gain on sale of securities

-

101

4

5,270

7,715

Other income

13,946

21,143

15,642

9,936

6,645

Total noninterest income

40,371

44,829

39,850

38,252

38,858

Noninterest expense:

Compensation

90,807

79,882

73,171

75,131

61,910

Occupancy

14,784

14,054

14,083

14,771

14,494

Data processing

7,758

6,957

6,718

6,505

7,102

Other professional services

5,256

5,126

6,800

4,713

4,146

Insurance and assessments

3,745

4,903

5,064

3,939

9,373

Intangible asset amortization

2,889

3,079

3,172

3,751

3,882

Leased equipment depreciation

8,614

8,969

7,501

7,057

7,102

Foreclosed assets (income) expense, net

(119

)

1

(272

)

335

(146

)

Acquisition, integration and

reorganization costs

200

3,425

1,060

-

-

Customer related expense

4,973

4,818

4,430

4,762

4,408

Loan expense

4,031

3,193

3,926

3,499

3,379

Other expense

8,812

15,729

10,029

8,939

11,315

Total noninterest expense

151,750

150,136

135,682

133,402

126,965

Earnings before income taxes

242,929

203,962

153,376

59,174

46,172

Income tax expense

62,417

53,556

36,546

13,671

12,968

Net earnings

$

180,512

$

150,406

$

116,830

$

45,503

$

33,204

Basic and diluted earnings per share

$

1.52

$

1.27

$

0.99

$

0.38

$

0.28

Dividends declared and paid per share

$

0.25

$

0.25

$

0.25

$

0.25

$

0.25


PACWEST BANCORP AND SUBSIDIARIES

FIVE QUARTER SELECTED FINANCIAL DATA

At or For the Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

(Dollars in thousands)

Performance Ratios:

Return on average assets (1)

2.11

%

1.94

%

1.58

%

0.65

%

0.50

%

Pre-provision, pre-goodwill impairment,

pre-tax net revenue ("PPNR")

return on average assets (1)(2)

1.81

%

2.01

%

2.22

%

2.22

%

2.51

%

Return on average equity (1)

19.36

%

16.86

%

13.14

%

5.18

%

3.87

%

Return on average tangible equity (1)(2)

29.25

%

25.67

%

19.63

%

8.20

%

6.39

%

Efficiency ratio

47.9

%

46.4

%

43.6

%

45.1

%

42.9

%

Noninterest expense as a percentage

of average assets (1)

1.77

%

1.94

%

1.84

%

1.90

%

1.92

%

Average Yields/Costs (1):

Yield on:

Average loans and leases (3)

5.18

%

5.20

%

5.15

%

5.01

%

5.01

%

Average investment securities (3)

2.23

%

2.44

%

2.50

%

2.52

%

2.87

%

Average interest-earning assets (3)

3.57

%

3.86

%

4.02

%

4.13

%

4.53

%

Cost of:

Average interest-bearing deposits

0.16

%

0.18

%

0.22

%

0.27

%

0.40

%

Average total deposits

0.10

%

0.11

%

0.14

%

0.17

%

0.25

%

Average interest-bearing liabilities

0.30

%

0.29

%

0.33

%

0.38

%

0.55

%

Net interest spread (3)

3.27

%

3.57

%

3.69

%

3.75

%

3.98

%

Net interest margin (3)

3.40

%

3.69

%

3.83

%

3.90

%

4.20

%

Average Balances:

Assets:

Loans and leases, net of deferred fees

$

19,057,420

$

18,927,314

$

18,769,214

$

19,195,737

$

19,951,603

Investment securities

6,492,721

5,383,140

4,888,993

4,107,915

3,846,459

Deposits in financial institutions

6,347,764

4,790,231

3,576,335

2,554,349

733,142

Interest-earning assets

31,897,905

29,100,685

27,234,542

25,858,001

24,531,204

Total assets

34,326,112

31,415,882

29,334,789

27,935,193

26,621,227

Liabilities:

Noninterest-bearing deposits

11,304,757

10,173,459

9,589,789

8,812,391

8,292,151

Interest-bearing deposits

17,817,053

16,444,091

15,045,451

14,516,923

13,116,297

Total deposits

29,121,810

26,617,550

24,635,240

23,329,314

21,408,448

Borrowings

225,446

226,053

237,098

181,315

871,110

Subordinated debentures

735,725

466,101

463,951

462,375

459,466

Interest-bearing liabilities

18,778,224

17,136,245

15,746,500

15,160,613

14,446,873

Stockholders' equity

3,739,042

3,617,248

3,536,425

3,497,869

3,446,850

(1) Annualized.

(2) Non-GAAP measure.

(3) Tax equivalent.


PACWEST BANCORP AND SUBSIDIARIES

FIVE QUARTER SELECTED FINANCIAL DATA

At or For the Three Months Ended

June 30,

March 31,

December 31,

September 30,

June 30,

2021

2021

2020

2020

2020

(Dollars in thousands)

Credit Quality Ratios:

Nonaccrual loans and leases held for

investment to loans and leases

held for investment

0.29

%

0.36

%

0.48

%

0.45

%

0.84

%

Nonperforming assets to loans and

leases held for investment and

foreclosed assets

0.36

%

0.43

%

0.55

%

0.52

%

0.85

%

Classified loans and leases held for

investment to loans and leases

held for investment

0.75

%

0.86

%

1.39

%

1.44

%

1.49

%

Provision for credit losses (for the

quarter) to average loans and leases

held for investment (annualized)

(1.85

)%

(1.03

)%

0.21

%

2.01

%

2.42

%

Net charge-offs (for the quarter) to

average loans and leases held

for investment (annualized)

(0.11

)%

0.06

%

0.40

%

0.75

%

0.27

%

Trailing 12 months net charge-offs

to average loans and leases

held for investment

0.27

%

0.37

%

0.45

%

0.36

%

0.20

%

Allowance for loan and lease losses to

loans and leases held for investment

1.16

%

1.54

%

1.82

%

1.82

%

1.53

%

Allowance for credit losses to loans

and leases held for investment

1.54

%

2.02

%

2.27

%

2.33

%

1.94

%

Allowance for credit losses to

nonaccrual loans and leases

held for investment

528.4

%

566.2

%

475.8

%

516.9

%

229.7

%

PacWest Bancorp Consolidated:

Tier 1 leverage capital ratio (1)

7.67

%

7.95

%

8.55

%

8.66

%

8.93

%

Common equity tier 1 capital ratio (1)

10.41

%

10.39

%

10.53

%

10.45

%

9.97

%

Tier 1 capital ratio (1)

10.41

%

10.39

%

10.53

%

10.45

%

9.97

%

Total capital ratio (1)

14.99

%

13.60

%