BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2013

BUSINESS SEGMENTS

BUSINESS SEGMENTS

NOTE 15—BUSINESS SEGMENTS

        The Company's reportable segments consist of "Banking," "Asset Financing," and "Other." At September 30, 2013, the Other segment consisted of the PacWest Bancorp holding company and other elimination and reconciliation entries.

        The Bank's Asset Financing segment includes the operations of the divisions and subsidiaries that provide asset-based commercial loans and equipment leases. The asset-based lending products are offered primarily through three business units: (1) First Community Financial ("FCF"), a division of the Bank, based in Phoenix, Arizona; (2) BFI Business Finance ("BFI"), a wholly-owned subsidiary of the Bank, based in San Jose, California; and (3) Celtic Capital Corporation ("Celtic"), a wholly-owned subsidiary of the Bank based in Santa Monica, California. The equipment leasing products are offered through Pacific Western Equipment Finance ("EQF"), a division of the Bank based in Midvale, Utah.

        The following tables present information regarding our business segments as of and for the periods indicated (the only segment income statements for which discontinued operations are applicable and reported are those for the three months ended September 30, 2013 and June 30, 2013 and the nine months ended September 30, 2013):

	September 30, 2013
	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Loans and leases, net of unearned income	$	3,912,885		$	470,508		$	—		$	4,383,393
Allowance for loan and lease losses		(76,496	)		(7,290	)		—			(83,786	)
Total loans and leases, net	$	3,836,389		$	463,218		$	—		$	4,299,607
Goodwill	$	190,184		$	25,678		$	—		$	215,862
Core deposit and customer relationship intangibles, net		16,604			2,074			—			18,678
Total assets		6,100,587			507,339			8,929			6,616,855
Total deposits(1)		5,467,568			—			(34,424	)		5,433,144

(1)

The negative balance in the "Other" segment represents the elimination of holding company cash held in deposit accounts at the Bank.

	September 30, 2012
	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Loans and leases, net of unearned income	$	3,259,571		$	389,420		$	—		$	3,648,991
Allowance for loan and lease losses		(95,878	)		(3,968	)		—			(99,846	)
Total loans and leases, net	$	3,163,693		$	385,452		$	—		$	3,549,145
Goodwill	$	54,704		$	24,888		$	—		$	79,592
Core deposit and customer relationship intangibles, net		13,194			2,705			—			15,899
Total assets		5,080,308			440,690			17,504			5,538,502
Total deposits(1)		4,800,852			—			(13,504	)		4,787,348

(1)

The negative balance in the "Other" segment represents the elimination of holding company cash held in deposit accounts at the Bank.

	Three Months Ended September 30, 2013
	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	72,873		$	12,285		$	—		$	85,158
Intersegment interest income (expense)		353			(353	)		—			—
Other interest expense		(1,692	)		(108	)		(1,069	)		(2,869	)
Net interest income		71,534			11,824			(1,069	)		82,289
Negative provision (provision) for credit losses		5,782			(1,615	)		—			4,167
Noninterest income		(1,566	)		1,443			5,250			5,127
Intangible asset amortization		(1,354	)		(158	)		—			(1,512	)
Acqusition and integration costs		(5,190	)		—			(260	)		(5,450	)
Other noninterest expense		(42,015	)		(5,822	)		(1,401	)		(49,238	)
Total noninterest expense		(48,559	)		(5,980	)		(1,661	)		(56,200	)
Earnings (loss) from continuing operations before income taxes		27,191			5,672			2,520			35,383
Income tax (expense) benefit		(9,996	)		(2,378	)		1,131			(11,243	)
Net earnings (loss) from continuing operations		17,195			3,294			3,651			24,140
Earnings from discontinued operations before income taxes		39			—			—			39
Income tax expense		(16	)		—			—			(16	)
Net earnings from discontinued operations		23			—			—			23
Net earnings	$	17,218		$	3,294		$	3,651		$	24,163

	Three Months Ended June 30, 2013
	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	59,321		$	12,310		$	—		$	71,631
Intersegment interest income (expense)		460			(460	)		—			—
Other interest expense		(2,080	)		(196	)		(882	)		(3,158	)
Net interest income		57,701			11,654			(882	)		68,473
Negative provision (provision) for credit losses		2,607			(765	)		—			1,842
Noninterest income		(415	)		592			26			203
Intangible asset amortization		(1,127	)		(157	)		—			(1,284	)
Acquisition and integration costs		(17,997	)		—			—			(17,997	)
Other noninterest expense		(37,557	)		(5,980	)		(1,398	)		(44,935	)
Total noninterest expense		(56,681	)		(6,137	)		(1,398	)		(64,216	)
Earnings (loss) from continuing operations before income taxes		3,212			5,344			(2,254	)		6,302
Income tax (expense) benefit		(612	)		(2,237	)		943			(1,906	)
Net earnings (loss) from continuing operations		2,600			3,107			(1,311	)		4,396
Loss from discontinued operations before income taxes		(81	)		—			—			(81	)
Income tax benefit		34			—			—			34
Net loss from discontinued operations		(47	)		—			—			(47	)
Net earnings (loss)	$	2,553		$	3,107		$	(1,311	)	$	4,349

	Three Months Ended September 30, 2012
	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	62,358		$	12,765		$	—		$	75,123
Intersegment interest income (expense)		454			(454	)		—			—
Other interest expense		(3,287	)		(215	)		(850	)		(4,352	)
Net interest income		59,525			12,096			(850	)		70,771
Negative provision (provision) for credit losses		3,325			(1,184	)		—			2,141
Noninterest income		5,191			466			25			5,682
Intangible asset amortization		(1,544	)		(134	)		—			(1,678	)
Acquisition and integration costs		(2,101	)		—			—			(2,101	)
Other noninterest expense		(40,776	)		(5,706	)		(1,396	)		(47,878	)
Total noninterest expense		(44,421	)		(5,840	)		(1,396	)		(51,657	)
Earnings (loss) before income taxes		23,620			5,538			(2,221	)		26,937
Income tax (expense) benefit		(9,491	)		(2,291	)		933			(10,849	)
Net earnings (loss)	$	14,129		$	3,247		$	(1,288	)	$	16,088

	Nine Months Ended September 30, 2013
	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	189,101		$	36,957		$	—		$	226,058
Intersegment interest income (expense)		1,284			(1,284	)		—			—
Other interest expense		(6,422	)		(447	)		(2,734	)		(9,603	)
Net interest income		183,963			35,226			(2,734	)		216,455
Negative provision (provision) for credit losses		6,053			(3,181	)		—			2,872
Noninterest income		292			2,579			5,299			8,170
Intangible asset amortization		(3,474	)		(498	)		—			(3,972	)
Acquisition and integration costs		(23,879	)		—			(260	)		(24,139	)
Other noninterest expense		(114,418	)		(17,855	)		(4,215	)		(136,488	)
Total noninterest expense		(141,771	)		(18,353	)		(4,475	)		(164,599	)
Earnings (loss) from continuing operations before income taxes		48,537			16,271			(1,910	)		62,898
Income tax (expense) benefit		(17,038	)		(6,814	)		2,984			(20,868	)
Net earnings (loss) from continuing operations		31,499			9,457			1,074			42,030
Loss from discontinued operations before income taxes		(42	)		—			—			(42	)
Income tax benefit		18			—			—			18
Net loss from discontinued operations		(24	)		—			—			(24	)
Net earnings	$	31,475		$	9,457		$	1,074		$	42,006

	Nine Months Ended September 30, 2012
	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	189,886		$	32,527		$	—		$	222,413
Intersegment interest income (expense)		1,607			(1,607	)		—			—
Other interest expense		(12,002	)		(658	)		(2,889	)		(15,549	)
Net interest income		179,491			30,262			(2,889	)		206,864
Negative provision (provision) for credit losses		9,770			(1,284	)		—			8,486
Noninterest income		11,382			2,345			88			13,815
Intangible asset amortization		(4,855	)		(295	)		—			(5,150	)
Acquisition and integration costs		(2,951	)		(46	)		—			(2,997	)
Debt termination expense		(24,195	)		—			1,597			(22,598	)
Other noninterest expense		(116,366	)		(16,916	)		(4,110	)		(137,392	)
Total noninterest expense		(148,367	)		(17,257	)		(2,513	)		(168,137	)
Earnings (loss) before income taxes		52,276			14,066			(5,314	)		61,028
Income tax (expense) benefit		(20,412	)		(5,941	)		2,234			(24,119	)
Net earnings (loss)	$	31,864		$	8,125		$	(3,080	)	$	36,909