UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported) July 16, 2019
PacWest Bancorp
(Exact name of registrant as specified in its charter)
Delaware |
|
001-36408 |
|
33-0885320 |
(State of |
|
(Commission File Number) |
|
(IRS Employer |
Incorporation) |
|
|
|
Identification No.) |
9701 Wilshire Blvd., Suite 700, Beverly Hills, California 90212
(Address of principal executive offices and zip code)
(310) 887-8500
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value |
|
PACW |
|
The Nasdaq Stock |
(Title of Each Class) |
|
(Trading Symbol) |
|
(Name of Exchange on Which |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230-425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.*
On July 16, 2019, PacWest Bancorp announced its results of operations and financial condition for the three and six months ended June 30, 2019. The press release announcing the financial results for the three and six months ended June 30, 2019 is furnished as Exhibit 99.1 and incorporated herein by reference. A presentation regarding the Companys financial results for the three and six months ended June 30, 2019 is furnished as Exhibit 99.2 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.*
(d) Exhibits.
Exhibit |
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Description |
|
|
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99.1 |
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99.2 |
|
*The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of PacWest Bancorp under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PacWest Bancorp | |
|
|
|
|
By: |
/s/ Bart R. Olson |
|
Name: |
Bart R. Olson |
|
Title: |
Executive Vice President |
|
|
Chief Accounting Officer |
Date: July 16, 2019
PRESS RELEASE
PacWest Bancorp
(Nasdaq: PACW)
Contact: |
|
Matthew P. Wagner |
|
Patrick J. Rusnak |
|
|
President and CEO |
|
Executive Vice President and CFO |
Phone: |
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310-887-8520 |
|
714-989-4705 |
FOR IMMEDIATE RELEASE |
|
July 16, 2019 |
PACWEST BANCORP ANNOUNCES RESULTS
FOR THE SECOND QUARTER 2019
Highlights
· Net Earnings of $128.1 Million, or $1.07 Per Diluted Share; Up 16% from Prior Quarter
· Tax Equivalent Net Interest Margin of 4.72%; Up 3 Basis Points from Prior Quarter
· Loan and Lease Production of $1.4 Billion; $165 Million of Net Loan Growth
· Core Deposits Represent 83% of Total Deposits
Los Angeles, California . . . PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the second quarter of 2019 of $128.1 million, or $1.07 per diluted share, compared to net earnings for the first quarter of 2019 of $112.6 million, or $0.92 per diluted share. The increase in net earnings in the second quarter included a $22.2 million pre-tax gain on the sale of securities which contributed $0.13 per diluted share.
Matt Wagner, President and CEO, commented, We continue to see favorable results from our credit de-risking strategy with sustained improvement in our credit quality metrics. Year-to-date net charge-offs are 48% lower than the same period in 2018 and year-to-date credit loss provisions are 44% lower than the same period in 2018. Our second quarter of 2019 results produced a return on assets of 1.99% and a return on tangible equity of 23.15%.
Mr. Wagner continued, We experienced solid loan production in the second quarter bringing our net loan growth to $515 million for the first half of 2019. However, competition for core deposits and customers desiring higher yields on their funds resulted in total deposits being flat in the first half of 2019. Core deposit generation remains a priority in order to help fund loan growth and maintain our net interest margin.
FINANCIAL HIGHLIGHTS
|
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At or For the |
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|
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At or For the |
|
|
| ||||||||||
|
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Three Months Ended |
|
|
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Six Months Ended |
|
|
| ||||||||||
|
|
June 30, |
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March 31, |
|
Increase |
|
June 30, |
|
Increase |
| ||||||||
Financial Highlights |
|
2019 |
|
2019 |
|
(Decrease) |
|
2019 |
|
2018 |
|
(Decrease) |
| ||||||
|
|
(Dollars in thousands, except per share data) |
| ||||||||||||||||
Net earnings |
|
$ |
128,125 |
|
$ |
112,604 |
|
$ |
15,521 |
|
$ |
240,729 |
|
$ |
234,011 |
|
$ |
6,718 |
|
Diluted earnings per share |
|
$ |
1.07 |
|
$ |
0.92 |
|
$ |
0.15 |
|
$ |
1.99 |
|
$ |
1.85 |
|
$ |
0.14 |
|
Return on average assets |
|
1.99 |
% |
1.77 |
% |
0.22 |
|
1.88 |
% |
1.96 |
% |
(0.08 |
) | ||||||
Return on average tangible equity (1) |
|
23.15 |
% |
20.64 |
% |
2.51 |
|
21.91 |
% |
21.03 |
% |
0.88 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net interest margin (NIM) (tax equivalent) |
|
4.72 |
% |
4.69 |
% |
0.03 |
|
4.70 |
% |
5.15 |
% |
(0.45 |
) | ||||||
Yield on average loans and leases (tax equivalent) |
|
6.26 |
% |
6.16 |
% |
0.10 |
|
6.21 |
% |
6.21 |
% |
|
| ||||||
Cost of average total deposits |
|
0.81 |
% |
0.73 |
% |
0.08 |
|
0.77 |
% |
0.34 |
% |
0.43 |
| ||||||
Efficiency ratio |
|
41.6 |
% |
42.4 |
% |
(0.8 |
) |
42.0 |
% |
40.7 |
% |
1.3 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total assets |
|
$ |
26,344,414 |
|
$ |
26,324,138 |
|
$ |
20,276 |
|
$ |
26,344,414 |
|
$ |
24,529,557 |
|
$ |
1,814,857 |
|
Loans and leases held for investment, net of deferred fees |
|
$ |
18,472,852 |
|
$ |
18,307,697 |
|
$ |
165,155 |
|
$ |
18,472,852 |
|
$ |
16,885,192 |
|
$ |
1,587,660 |
|
Noninterest-bearing demand deposits |
|
$ |
7,299,213 |
|
$ |
7,712,409 |
|
$ |
(413,196 |
) |
$ |
7,299,213 |
|
$ |
8,126,153 |
|
$ |
(826,940 |
) |
Core deposits |
|
$ |
15,617,488 |
|
$ |
16,127,638 |
|
$ |
(510,150 |
) |
$ |
15,617,488 |
|
$ |
15,586,238 |
|
$ |
31,250 |
|
Total deposits |
|
$ |
18,805,756 |
|
$ |
19,285,927 |
|
$ |
(480,171 |
) |
$ |
18,805,756 |
|
$ |
17,929,192 |
|
$ |
876,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
As percentage of total deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Noninterest-bearing demand deposits |
|
39 |
% |
40 |
% |
(1 |
) |
39 |
% |
45 |
% |
(6 |
) | ||||||
Core deposits |
|
83 |
% |
84 |
% |
(1 |
) |
83 |
% |
87 |
% |
(4 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Equity to assets ratio |
|
18.42 |
% |
18.20 |
% |
0.22 |
|
18.42 |
% |
19.48 |
% |
(1.06 |
) | ||||||
Tangible common equity ratio (1) |
|
9.50 |
% |
9.23 |
% |
0.27 |
|
9.50 |
% |
9.86 |
% |
(0.36 |
) | ||||||
Book value per share |
|
$ |
40.49 |
|
$ |
39.86 |
|
$ |
0.63 |
|
$ |
40.49 |
|
$ |
38.36 |
|
$ |
2.13 |
|
Tangible book value per share (1) |
|
$ |
18.83 |
|
$ |
18.22 |
|
$ |
0.61 |
|
$ |
18.83 |
|
$ |
17.35 |
|
$ |
1.48 |
|
(1) Non-GAAP measure.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income increased by $6.0 million to $260.9 million for the second quarter of 2019 compared to $254.9 million for the first quarter of 2019 due to a higher yield on average loans and leases, a higher balance of average loans and leases, and one more day in the second quarter of 2019, offset partially by higher deposit costs. The tax equivalent yield on average loans and leases was 6.26% for the second quarter of 2019 compared to 6.16% for the first quarter of 2019. The increase in the yield on average loans and leases was due principally to loan prepayment fees being $6.3 million higher in the second quarter compared to the first quarter. The prepayment fees added 11 basis points to the second quarter loan yield and were primarily from two loans.
The tax equivalent NIM was 4.72% for the second quarter of 2019 compared to 4.69% for the first quarter of 2019. The increase in the NIM was due mainly to higher loan prepayment fees, partially offset by higher deposit costs.
The cost of average total deposits increased to 0.81% for the second quarter of 2019 from 0.73% for the first quarter of 2019 due to a lower average balance of noninterest-bearing deposits and higher rates paid on 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 |
|
2019 |
|
2019 |
|
(Decrease) |
| |||
|
|
(In thousands) |
| |||||||
Addition to allowance for loan and lease losses |
|
$ |
10,000 |
|
$ |
4,000 |
|
$ |
6,000 |
|
Reduction to reserve for unfunded loan commitments |
|
(2,000 |
) |
|
|
(2,000 |
) | |||
Total provision for credit losses |
|
$ |
8,000 |
|
$ |
4,000 |
|
$ |
4,000 |
|
Noninterest Income
The following table presents details of noninterest income for the periods indicated:
|
|
Three Months Ended |
|
|
| |||||
|
|
June 30, |
|
March 31, |
|
Increase |
| |||
Noninterest Income |
|
2019 |
|
2019 |
|
(Decrease) |
| |||
|
|
(In thousands) |
| |||||||
Service charges on deposit accounts |
|
$ |
3,771 |
|
$ |
3,730 |
|
$ |
41 |
|
Other commissions and fees |
|
11,590 |
|
11,008 |
|
582 |
| |||
Leased equipment income |
|
9,182 |
|
9,282 |
|
(100 |
) | |||
Gain on sale of loans and leases |
|
326 |
|
|
|
326 |
| |||
Gain on sale of securities |
|
22,192 |
|
2,161 |
|
20,031 |
| |||
Other income: |
|
|
|
|
|
|
| |||
Dividends and (losses) gains on equity investments |
|
(83 |
) |
296 |
|
(379 |
) | |||
Warrant income |
|
1,214 |
|
2,279 |
|
(1,065 |
) | |||
Other |
|
2,701 |
|
2,308 |
|
393 |
| |||
Total noninterest income |
|
$ |
50,893 |
|
$ |
31,064 |
|
$ |
19,829 |
|
Noninterest income increased by $19.8 million to $50.9 million for the second quarter of 2019 compared to $31.1 million for the first quarter of 2019 due mainly to a $20.0 million increase in the gain on sale of securities attributable to a $22.2 million net gain on sales of $980.4 million in the second quarter of 2019 compared to a net gain of $2.2 million on sales of $405.8 million in the first quarter of 2019. We re-positioned a portion of our securities portfolio in the second quarter to shorten the duration of the portfolio and to enhance liquidity.
Noninterest Expense
The following table presents details of noninterest expense for the periods indicated:
|
|
Three Months Ended |
|
|
| |||||
|
|
June 30, |
|
March 31, |
|
Increase |
| |||
Noninterest Expense |
|
2019 |
|
2019 |
|
(Decrease) |
| |||
|
|
(In thousands) |
| |||||||
Compensation |
|
$ |
68,956 |
|
$ |
70,845 |
|
$ |
(1,889 |
) |
Occupancy |
|
14,457 |
|
14,320 |
|
137 |
| |||
Data processing |
|
6,817 |
|
6,925 |
|
(108 |
) | |||
Other professional services |
|
4,629 |
|
4,513 |
|
116 |
| |||
Insurance and assessments |
|
4,098 |
|
4,038 |
|
60 |
| |||
Intangible asset amortization |
|
4,870 |
|
4,870 |
|
|
| |||
Leased equipment depreciation |
|
5,558 |
|
5,651 |
|
(93 |
) | |||
Foreclosed assets (income) expense, net |
|
(146 |
) |
29 |
|
(175 |
) | |||
Acquisition, integration and reorganization costs |
|
|
|
618 |
|
(618 |
) | |||
Loan expense |
|
3,451 |
|
2,885 |
|
566 |
| |||
Other |
|
12,737 |
|
11,593 |
|
1,144 |
| |||
Total noninterest expense |
|
$ |
125,427 |
|
$ |
126,287 |
|
$ |
(860 |
) |
Noninterest expense decreased by $0.9 million to $125.4 million for the second quarter of 2019 compared to $126.3 million for the first quarter of 2019 attributable primarily to a $1.9 million decrease in compensation expense, offset partially by a $1.1 million increase in other expense. Compensation expense decreased due mainly to lower payroll taxes and bonus expense. Other expense increased primarily due to a loss on the early termination of a lease.
Income Taxes
The overall effective income tax rate was 28.2% for the second quarter of 2019 and 27.7% for the first quarter of 2019. The effective tax rate for the full year 2019 is estimated to be in the range of 27-28%.
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 |
|
Six Months Ended |
| |||||
Roll Forward of Loans and Leases Held |
|
June 30, |
|
March 31, |
|
June 30, |
| |||
for Investment, Net of Deferred Fees (1) |
|
2019 |
|
2019 |
|
2019 |
| |||
|
|
(Dollars in thousands) |
| |||||||
Balance, beginning of period |
|
$ |
18,307,697 |
|
$ |
17,957,713 |
|
$ |
17,957,713 |
|
Additions: |
|
|
|
|
|
|
| |||
Production |
|
1,436,299 |
|
1,174,838 |
|
2,611,137 |
| |||
Disbursements |
|
1,293,747 |
|
1,192,972 |
|
2,486,719 |
| |||
Total production and disbursements |
|
2,730,046 |
|
2,367,810 |
|
5,097,856 |
| |||
Reductions: |
|
|
|
|
|
|
| |||
Payoffs |
|
(1,529,213 |
) |
(933,300 |
) |
(2,462,513 |
) | |||
Paydowns |
|
(979,987 |
) |
(1,038,964 |
) |
(2,018,951 |
) | |||
Total payoffs and paydowns |
|
(2,509,200 |
) |
(1,972,264 |
) |
(4,481,464 |
) | |||
Sales |
|
(38,054 |
) |
(16,936 |
) |
(54,990 |
) | |||
Transfers to foreclosed assets |
|
|
|
(37 |
) |
(37 |
) | |||
Charge-offs |
|
(17,637 |
) |
(3,465 |
) |
(21,102 |
) | |||
Transfers to loans held for sale |
|
|
|
(25,124 |
) |
(25,124 |
) | |||
Total reductions |
|
(2,564,891 |
) |
(2,017,826 |
) |
(4,582,717 |
) | |||
Balance, end of period |
|
$ |
18,472,852 |
|
$ |
18,307,697 |
|
$ |
18,472,852 |
|
|
|
|
|
|
|
|
| |||
Weighted average rate on production (2) |
|
5.15 |
% |
5.11 |
% |
5.13 |
% |
(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 32 basis points to loan yields in 2019 and 31 basis points to loan yields in 2018.
Loans and leases held for investment, net of deferred fees, increased by $165.2 million, or 4% annualized, in the second quarter of 2019 to $18.5 billion at June 30, 2019. The net loan growth in the second quarter was primarily from the income producing and other residential loan class, which included $177 million of multi-family loan pool purchases, and the asset-based loan class.
The following table presents the composition of loans and leases held for investment, net of deferred fees, as of the dates indicated:
|
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
| |||||||||
|
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
| |||
Loan and Lease Portfolio (1) |
|
Amount |
|
Total |
|
Amount |
|
Total |
|
Amount |
|
Total |
| |||
|
|
(In thousands) |
| |||||||||||||
Real estate mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Commercial |
|
$ |
4,435,274 |
|
24 |
% |
$ |
4,640,510 |
|
25 |
% |
$ |
5,010,680 |
|
30 |
% |
Income producing and other residential |
|
3,640,752 |
|
20 |
% |
3,518,948 |
|
19 |
% |
2,555,695 |
|
15 |
% | |||
Total real estate mortgage |
|
8,076,026 |
|
44 |
% |
8,159,458 |
|
44 |
% |
7,566,375 |
|
45 |
% | |||
Real estate construction and land: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Commercial |
|
972,891 |
|
5 |
% |
943,596 |
|
5 |
% |
831,462 |
|
5 |
% | |||
Residential |
|
1,403,239 |
|
8 |
% |
1,408,128 |
|
8 |
% |
1,042,564 |
|
6 |
% | |||
Total real estate construction and land |
|
2,376,130 |
|
13 |
% |
2,351,724 |
|
13 |
% |
1,874,026 |
|
11 |
% | |||
Total real estate |
|
10,452,156 |
|
57 |
% |
10,511,182 |
|
57 |
% |
9,440,401 |
|
56 |
% | |||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Asset-based |
|
3,606,007 |
|
19 |
% |
3,422,202 |
|
19 |
% |
3,184,300 |
|
19 |
% | |||
Venture capital |
|
2,194,743 |
|
12 |
% |
2,027,450 |
|
11 |
% |
2,008,205 |
|
12 |
% | |||
Other commercial |
|
1,773,564 |
|
10 |
% |
1,974,702 |
|
11 |
% |
1,873,607 |
|
11 |
% | |||
Total commercial |
|
7,574,314 |
|
41 |
% |
7,424,354 |
|
41 |
% |
7,066,112 |
|
42 |
% | |||
Consumer |
|
446,382 |
|
2 |
% |
372,161 |
|
2 |
% |
378,679 |
|
2 |
% | |||
Total loans and leases held for investment, net of deferred fees |
|
$ |
18,472,852 |
|
100 |
% |
$ |
18,307,697 |
|
100 |
% |
$ |
16,885,192 |
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total unfunded loan commitments |
|
$ |
7,610,899 |
|
|
|
$ |
7,465,392 |
|
|
|
$ |
6,429,587 |
|
|
|
(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.
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, 2019 |
| |||||||
|
|
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 |
|
$ |
136,281 |
|
$ |
36,861 |
|
$ |
173,142 |
|
Charge-offs |
|
(17,637 |
) |
|
|
(17,637 |
) | |||
Recoveries |
|
6,393 |
|
|
|
6,393 |
| |||
Net charge-offs |
|
(11,244 |
) |
|
|
(11,244 |
) | |||
Provision |
|
10,000 |
|
(2,000 |
) |
8,000 |
| |||
Ending balance |
|
$ |
135,037 |
|
$ |
34,861 |
|
$ |
169,898 |
|
|
|
Three Months Ended March 31, 2019 |
| |||||||
|
|
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 |
|
$ |
132,472 |
|
$ |
36,861 |
|
$ |
169,333 |
|
Charge-offs |
|
(3,465 |
) |
|
|
(3,465 |
) | |||
Recoveries |
|
3,274 |
|
|
|
3,274 |
| |||
Net charge-offs |
|
(191 |
) |
|
|
(191 |
) | |||
Provision |
|
4,000 |
|
|
|
4,000 |
| |||
Ending balance |
|
$ |
136,281 |
|
$ |
36,861 |
|
$ |
173,142 |
|
The allowance for credit losses as a percentage of loans and leases held for investment decreased to 0.92% at June 30, 2019 from 0.95% at March 31, 2019.
Gross charge-offs for the second quarter of 2019 were $17.6 million and included $11.8 million for a single asset-based loan, $3.7 million for other commercial loans, and $1.5 million for venture capital loans compared to gross charge-offs for the first quarter of 2019 of $3.5 million which were primarily for other commercial loans. Recoveries for the second quarter of 2019 were $6.4 million and included $4.8 million for venture capital loans and $1.0 million for other commercial loans compared to recoveries for the first quarter of 2019 of $3.3 million which included $2.3 million for venture capital loans and $0.8 million for other commercial loans.
For the second quarter of 2019 and first quarter of 2019, annualized net charge-offs to average loans and leases were 0.25% and 0.00%.
Deposits and Client Investment Funds
The following table presents the composition of our deposit portfolio as of the dates indicated:
|
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
| |||||||||
|
|
|
|
% of |
|
|
|
% of |
|
|
|
% of |
| |||
Deposit Composition |
|
Amount |
|
Total |
|
Amount |
|
Total |
|
Amount |
|
Total |
| |||
|
|
(Dollars in thousands) |
| |||||||||||||
Noninterest-bearing demand |
|
$ |
7,299,213 |
|
39 |
% |
$ |
7,712,409 |
|
40 |
% |
$ |
8,126,153 |
|
45 |
% |
Interest checking |
|
3,220,353 |
|
17 |
% |
3,163,228 |
|
16 |
% |
2,184,785 |
|
12 |
% | |||
Money market |
|
4,578,083 |
|
24 |
% |
4,714,078 |
|
25 |
% |
4,631,658 |
|
26 |
% | |||
Savings |
|
519,839 |
|
3 |
% |
537,923 |
|
3 |
% |
643,642 |
|
4 |
% | |||
Total core deposits |
|
15,617,488 |
|
83 |
% |
16,127,638 |
|
84 |
% |
15,586,238 |
|
87 |
% | |||
Non-core non-maturity deposits |
|
436,833 |
|
2 |
% |
454,277 |
|
2 |
% |
607,388 |
|
3 |
% | |||
Total non-maturity deposits |
|
16,054,321 |
|
85 |
% |
16,581,915 |
|
86 |
% |
16,193,626 |
|
90 |
% | |||
Time deposits $250,000 and under |
|
2,284,023 |
|
12 |
% |
2,258,989 |
|
12 |
% |
1,394,117 |
|
8 |
% | |||
Time deposits over $250,000 |
|
467,412 |
|
3 |
% |
445,023 |
|
2 |
% |
341,449 |
|
2 |
% | |||
Total time deposits |
|
2,751,435 |
|
15 |
% |
2,704,012 |
|
14 |
% |
1,735,566 |
|
10 |
% | |||
Total deposits |
|
$ |
18,805,756 |
|
100 |
% |
$ |
19,285,927 |
|
100 |
% |
$ |
17,929,192 |
|
100 |
% |
At June 30, 2019, core deposits totaled $15.6 billion, or 83% of total deposits, including $7.3 billion of noninterest-bearing demand deposits, or 39% of total deposits. The decrease in core deposits is primarily due to decreases in noninterest-bearing demand deposits across each of our business groups as customers seek out interest-earning accounts in the competitive market environment.
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 June 30, 2019 were $2.0 billion, of which $1.6 billion was managed by PWAM.
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 |
|
2019 |
|
2019 |
|
(Decrease) |
| |||
|
|
(Dollars in thousands) |
| |||||||
NPAs and Performing TDRs: |
|
|
|
|
|
|
| |||
Nonaccrual loans and leases held for investment (1)(2) |
|
$ |
81,265 |
|
$ |
88,527 |
|
$ |
(7,262 |
) |
Accruing loans contractually past due 90 days or more |
|
|
|
|
|
|
| |||
Foreclosed assets, net |
|
1,472 |
|
3,291 |
|
(1,819 |
) | |||
Total nonperforming assets (NPAs) |
|
$ |
82,737 |
|
$ |
91,818 |
|
$ |
(9,081 |
) |
|
|
|
|
|
|
|
| |||
Nonaccrual loans and leases held for investment to loans and leases held for investment |
|
0.44 |
% |
0.48 |
% |
|
| |||
Nonperforming assets to loans and leases held for investment and foreclosed assets |
|
0.45 |
% |
0.50 |
% |
|
| |||
|
|
|
|
|
|
|
| |||
Nonaccrual loans and leases held for investment (1)(2) |
|
$ |
81,265 |
|
$ |
88,527 |
|
$ |
(7,262 |
) |
Performing TDRs held for investment |
|
16,464 |
|
17,027 |
|
(563 |
) | |||
Total impaired loans and leases |
|
$ |
97,729 |
|
$ |
105,554 |
|
$ |
(7,825 |
) |
|
|
|
|
|
|
|
| |||
Loan and Lease Credit Risk Ratings: |
|
|
|
|
|
|
| |||
Pass |
|
$ |
18,042,569 |
|
$ |
17,824,612 |
|
$ |
217,957 |
|
Special mention |
|
239,304 |
|
292,780 |
|
(53,476 |
) | |||
Classified (1) |
|
190,979 |
|
190,305 |
|
674 |
| |||
Total loans and leases held for investment, net of deferred fees |
|
$ |
18,472,852 |
|
$ |
18,307,697 |
|
$ |
165,155 |
|
|
|
|
|
|
|
|
| |||
Classified loans and leases held for investment to loans and leases held for investment |
|
1.03 |
% |
1.04 |
% |
|
| |||
|
|
|
|
|
|
|
| |||
Allowance for Credit Losses: |
|
|
|
|
|
|
| |||
Allowance for credit losses |
|
$ |
169,898 |
|
$ |
173,142 |
|
$ |
(3,244 |
) |
Provision for credit losses (for the quarter) |
|
$ |
8,000 |
|
$ |
4,000 |
|
$ |
4,000 |
|
Net charge-offs (for the quarter) |
|
$ |
11,244 |
|
$ |
191 |
|
$ |
11,053 |
|
Net charge-offs to average loans and leases (for the quarter) |
|
0.25 |
% |
0.00 |
% |
|
| |||
Allowance for credit losses to loans and leases held for investment |
|
0.92 |
% |
0.95 |
% |
|
| |||
Allowance for credit losses to nonaccrual loans and leases held for investment |
|
209.1 |
% |
195.6 |
% |
|
|
(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.
(2) Nonaccrual loans include guaranteed amounts of $13.0 million at June 30, 2019 and $10.2 million at March 31, 2019.
Nonaccrual, classified, and special mention loans and leases fluctuate from period to period as a result of loan repayments and our ongoing active portfolio monitoring.
During the second quarter of 2019, nonaccrual loans and leases decreased $7.3 million, while classified loans and leases increased by $0.7 million and special mention loans and leases decreased by $53.5 million.
The following table presents nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated:
|
|
Nonaccrual Loans and Leases (1) |
|
Accruing and |
| ||||||||||||
|
|
June 30, 2019 |
|
March 31, 2019 |
|
30-89 Days Past Due |
| ||||||||||
|
|
|
|
% of |
|
|
|
% of |
|
June 30, |
|
March 31, |
| ||||
|
|
|
|
Loan |
|
|
|
Loan |
|
2019 |
|
2019 |
| ||||
|
|
Amount |
|
Category |
|
Amount |
|
Category |
|
Amount |
|
Amount |
| ||||
|
|
(Dollars in thousands) |
| ||||||||||||||
Real estate mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
$ |
17,012 |
|
0.4 |
% |
$ |
12,750 |
|
0.3 |
% |
$ |
3,948 |
|
$ |
6,863 |
|
Income producing and other residential |
|
2,883 |
|
0.1 |
% |
2,444 |
|
0.1 |
% |
3,262 |
|
1,853 |
| ||||
Total real estate mortgage |
|
19,895 |
|
0.2 |
% |
15,194 |
|
0.2 |
% |
7,210 |
|
8,716 |
| ||||
Real estate construction and land: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
|
390 |
|
0.0 |
% |
430 |
|
0.0 |
% |
|
|
|
| ||||
Residential |
|
|
|
0.0 |
% |
|
|
0.0 |
% |
4,672 |
|
8,949 |
| ||||
Total real estate construction and land |
|
390 |
|
0.0 |
% |
430 |
|
0.0 |
% |
4,672 |
|
8,949 |
| ||||
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Asset-based |
|
32,236 |
|
0.9 |
% |
43,406 |
|
1.3 |
% |
12,382 |
|
3,750 |
| ||||
Venture capital |
|
22,501 |
|
1.0 |
% |
20,437 |
|
1.0 |
% |
|
|
4,500 |
| ||||
Other commercial |
|
5,799 |
|
0.3 |
% |
8,633 |
|
0.4 |
% |
439 |
|
1,694 |
| ||||
Total commercial |
|
60,536 |
|
0.8 |
% |
72,476 |
|
1.0 |
% |
12,821 |
|
9,944 |
| ||||
Consumer |
|
444 |
|
0.1 |
% |
427 |
|
0.1 |
% |
964 |
|
614 |
| ||||
Total held for investment |
|
$ |
81,265 |
|
0.4 |
% |
$ |
88,527 |
|
0.5 |
% |
$ |
25,667 |
|
$ |
28,223 |
|
(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.
STOCK REPURCHASE PROGRAM
During the second quarter of 2019, we repurchased 917,269 shares at an average price of $38.08 and a total cost of $34.9 million. At June 30, 2019, the remaining amount that could be used to repurchase shares under the $225 million Stock Repurchase Program was $124.7 million.
ABOUT PACWEST BANCORP
PacWest Bancorp (PacWest) is a bank holding company with over $26 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the Bank). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Our Community Banking group provides lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices. We offer additional products and services through our National Lending and Venture Banking groups. National Lending provides asset-based, equipment, real estate and security cash flow loans and treasury management services to established middle-market businesses on a national basis. Venture Banking offers a comprehensive suite of financial services focused on entrepreneurial 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, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.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. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on information available at the time of this communication and are based on current beliefs and expectations of the Companys management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by the Company with the 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, |
|
December 31, |
| |||
|
|
2019 |
|
2019 |
|
2018 |
| |||
|
|
(Dollars in thousands, except per share data) |
| |||||||
ASSETS: |
|
|
|
|
|
|
| |||
Cash and due from banks |
|
$ |
185,075 |
|
$ |
224,758 |
|
$ |
175,830 |
|
Interest-earning deposits in financial institutions |
|
422,663 |
|
332,124 |
|
209,937 |
| |||
Total cash and cash equivalents |
|
607,738 |
|
556,882 |
|
385,767 |
| |||
|
|
|
|
|
|
|
| |||
Securities available-for-sale, at estimated fair value |
|
3,807,244 |
|
3,994,708 |
|
4,009,431 |
| |||
Federal Home Loan Bank stock, at cost |
|
43,146 |
|
29,430 |
|
32,103 |
| |||
Total investment securities |
|
3,850,390 |
|
4,024,138 |
|
4,041,534 |
| |||
|
|
|
|
|
|
|
| |||
Loans held for sale |
|
|
|
25,124 |
|
|
| |||
|
|
|
|
|
|
|
| |||
Gross loans and leases held for investment |
|
18,532,740 |
|
18,371,295 |
|
18,026,365 |
| |||
Deferred fees, net |
|
(59,888 |
) |
(63,598 |
) |
(68,652 |
) | |||
Total loans and leases held for investment, net of deferred fees |
|
18,472,852 |
|
18,307,697 |
|
17,957,713 |
| |||
Allowance for loan and lease losses |
|
(135,037 |
) |
(136,281 |
) |
(132,472 |
) | |||
Total loans and leases held for investment, net |
|
18,337,815 |
|
18,171,416 |
|
17,825,241 |
| |||
|
|
|
|
|
|
|
| |||
Equipment leased to others under operating leases |
|
300,668 |
|
293,853 |
|
292,677 |
| |||
Premises and equipment, net |
|
38,162 |
|
37,783 |
|
34,661 |
| |||
Foreclosed assets, net |
|
1,472 |
|
3,291 |
|
5,299 |
| |||
Deferred tax asset, net |
|
|
|
|
|
17,489 |
| |||
Goodwill |
|
2,548,670 |
|
2,548,670 |
|
2,548,670 |
| |||
Core deposit and customer relationship intangibles, net |
|
47,380 |
|
52,250 |
|
57,120 |
| |||
Other assets |
|
612,119 |
|
610,731 |
|
522,896 |
| |||
Total assets |
|
$ |
26,344,414 |
|
$ |
26,324,138 |
|
$ |
25,731,354 |
|
|
|
|
|
|
|
|
| |||
LIABILITIES: |
|
|
|
|
|
|
| |||
Noninterest-bearing deposits |
|
$ |
7,299,213 |
|
$ |
7,712,409 |
|
$ |
7,888,915 |
|
Interest-bearing deposits |
|
11,506,543 |
|
11,573,518 |
|
10,981,586 |
| |||
Total deposits |
|
18,805,756 |
|
19,285,927 |
|
18,870,501 |
| |||
Borrowings |
|
1,913,059 |
|
1,481,087 |
|
1,371,114 |
| |||
Subordinated debentures |
|
456,112 |
|
454,458 |
|
453,846 |
| |||
Accrued interest payable and other liabilities |
|
317,477 |
|
311,684 |
|
210,305 |
| |||
Total liabilities |
|
21,492,404 |
|
21,533,156 |
|
20,905,766 |
| |||
STOCKHOLDERS EQUITY (1) |
|
4,852,010 |
|
4,790,982 |
|
4,825,588 |
| |||
Total liabilities and stockholders equity |
|
$ |
26,344,414 |
|
$ |
26,324,138 |
|
$ |
25,731,354 |
|
|
|
|
|
|
|
|
| |||
Book value per share |
|
$ |
40.49 |
|
$ |
39.86 |
|
$ |
39.17 |
|
Tangible book value per share (2) |
|
$ |
18.83 |
|
$ |
18.22 |
|
$ |
18.02 |
|
Shares outstanding |
|
119,829,104 |
|
120,201,149 |
|
123,189,833 |
| |||
|
|
|
|
|
|
|
|
(1) Includes net unrealized gain (loss) on securities available-for-sale, net |
|
$ |
73,066 |
|
$ |
37,258 |
|
$ |
(6,075 |
) |
(2) Non-GAAP measure. |
|
|
|
|
|
|
|
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
| |||||||
|
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| |||||
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
Loans and leases |
|
$ |
284,236 |
|
$ |
274,229 |
|
$ |
260,300 |
|
$ |
558,465 |
|
$ |
511,385 |
|
Investment securities |
|
28,948 |
|
29,680 |
|
27,730 |
|
58,628 |
|
53,868 |
| |||||
Deposits in financial institutions |
|
1,349 |
|
650 |
|
484 |
|
1,999 |
|
1,036 |
| |||||
Total interest income |
|
314,533 |
|
304,559 |
|
288,514 |
|
619,092 |
|
566,289 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
Deposits |
|
38,720 |
|
34,235 |
|
16,367 |
|
72,955 |
|
30,185 |
| |||||
Borrowings |
|
7,210 |
|
7,710 |
|
2,649 |
|
14,920 |
|
3,569 |
| |||||
Subordinated debentures |
|
7,705 |
|
7,738 |
|
7,166 |
|
15,443 |
|
13,703 |
| |||||
Total interest expense |
|
53,635 |
|
49,683 |
|
26,182 |
|
103,318 |
|
47,457 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net interest income |
|
260,898 |
|
254,876 |
|
262,332 |
|
515,774 |
|
518,832 |
| |||||
Provision for credit losses |
|
8,000 |
|
4,000 |
|
17,500 |
|
12,000 |
|
21,500 |
| |||||
Net interest income after provision for credit losses |
|
252,898 |
|
250,876 |
|
244,832 |
|
503,774 |
|
497,332 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
Service charges on deposit accounts |
|
3,771 |
|
3,730 |
|
4,265 |
|
7,501 |
|
8,439 |
| |||||
Other commissions and fees |
|
11,590 |
|
11,008 |
|
11,767 |
|
22,598 |
|
22,032 |
| |||||
Leased equipment income |
|
9,182 |
|
9,282 |
|
9,790 |
|
18,464 |
|
19,377 |
| |||||
Gain on sale of loans and leases |
|
326 |
|
|
|
106 |
|
326 |
|
4,675 |
| |||||
Gain on sale of securities |
|
22,192 |
|
2,161 |
|
253 |
|
24,353 |
|
6,564 |
| |||||
Other income |
|
3,832 |
|
4,883 |
|
13,457 |
|
8,715 |
|
17,110 |
| |||||
Total noninterest income |
|
50,893 |
|
31,064 |
|
39,638 |
|
81,957 |
|
78,197 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
Compensation |
|
68,956 |
|
70,845 |
|
69,913 |
|
139,801 |
|
140,936 |
| |||||
Occupancy |
|
14,457 |
|
14,320 |
|
13,575 |
|
28,777 |
|
26,798 |
| |||||
Data processing |
|
6,817 |
|
6,925 |
|
6,896 |
|
13,742 |
|
13,555 |
| |||||
Other professional services |
|
4,629 |
|
4,513 |
|
5,257 |
|
9,142 |
|
9,696 |
| |||||
Insurance and assessments |
|
4,098 |
|
4,038 |
|
5,330 |
|
8,136 |
|
11,057 |
| |||||
Intangible asset amortization |
|
4,870 |
|
4,870 |
|
5,587 |
|
9,740 |
|
11,933 |
| |||||
Leased equipment depreciation |
|
5,558 |
|
5,651 |
|
5,237 |
|
11,209 |
|
10,612 |
| |||||
Foreclosed assets (income) expense, net |
|
(146 |
) |
29 |
|
(61 |
) |
(117 |
) |
(183 |
) | |||||
Acquisition, integration and reorganization costs |
|
|
|
618 |
|
|
|
618 |
|
|
| |||||
Loan expense |
|
3,451 |
|
2,885 |
|
3,058 |
|
6,336 |
|
5,329 |
| |||||
Other expense |
|
12,737 |
|
11,593 |
|
11,657 |
|
24,330 |
|
24,111 |
| |||||
Total noninterest expense |
|
125,427 |
|
126,287 |
|
126,449 |
|
251,714 |
|
253,844 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings before income taxes |
|
178,364 |
|
155,653 |
|
158,021 |
|
334,017 |
|
321,685 |
| |||||
Income tax expense |
|
50,239 |
|
43,049 |
|
42,286 |
|
93,288 |
|
87,674 |
| |||||
Net earnings |
|
$ |
128,125 |
|
$ |
112,604 |
|
$ |
115,735 |
|
$ |
240,729 |
|
$ |
234,011 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic and diluted earnings per share |
|
$ |
1.07 |
|
$ |
0.92 |
|
$ |
0.92 |
|
$ |
1.99 |
|
$ |
1.85 |
|
Dividends declared and paid per share |
|
$ |
0.60 |
|
$ |
0.60 |
|
$ |
0.60 |
|
$ |
1.20 |
|
$ |
1.10 |
|
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
| |||||||
|
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| |||||
|
|
(In thousands, except per share data) |
| |||||||||||||
Basic Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
Net earnings |
|
$ |
128,125 |
|
$ |
112,604 |
|
$ |
115,735 |
|
$ |
240,729 |
|
$ |
234,011 |
|
Less: earnings allocated to unvested restricted stock (1) |
|
(1,190 |
) |
(1,163 |
) |
(1,348 |
) |
(2,343 |
) |
(2,469 |
) | |||||
Net earnings allocated to common shares |
|
$ |
126,935 |
|
$ |
111,441 |
|
$ |
114,387 |
|
$ |
238,386 |
|
$ |
231,542 |
|
Weighted-average basic shares and unvested restricted stock outstanding |
|
120,042 |
|
122,227 |
|
126,082 |
|
121,128 |
|
126,780 |
| |||||
Less: weighted-average unvested restricted stock outstanding |
|
(1,462 |
) |
(1,352 |
) |
(1,466 |
) |
(1,407 |
) |
(1,439 |
) | |||||
Weighted-average basic shares outstanding |
|
118,580 |
|
120,875 |
|
124,616 |
|
119,721 |
|
125,341 |
| |||||
Basic earnings per share |
|
$ |
1.07 |
|
$ |
0.92 |
|
$ |
0.92 |
|
$ |
1.99 |
|
$ |
1.85 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
Net earnings allocated to common shares |
|
$ |
126,935 |
|
$ |
111,441 |
|
$ |
114,387 |
|
$ |
238,386 |
|
$ |
231,542 |
|
Weighted-average basic shares outstanding |
|
118,580 |
|
120,875 |
|
124,616 |
|
119,721 |
|
125,341 |
| |||||
Diluted earnings per share |
|
$ |
1.07 |
|
$ |
0.92 |
|
$ |
0.92 |
|
$ |
1.99 |
|
$ |
1.85 |
|
(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, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
| ||||||||||||||||||
|
|
|
|
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) |
|
$ |
18,239,690 |
|
$ |
284,513 |
|
6.26 |
% |
$ |
18,064,230 |
|
$ |
274,513 |
|
6.16 |
% |
$ |
16,576,361 |
|
$ |
260,529 |
|
6.30 |
% |
Investment securities (3) |
|
3,790,436 |
|
29,462 |
|
3.12 |
% |
3,968,531 |
|
30,572 |
|
3.12 |
% |
3,803,590 |
|
29,967 |
|
3.16 |
% | ||||||
Deposits in financial institutions |
|
228,702 |
|
1,349 |
|
2.37 |
% |
111,950 |
|
650 |
|
2.35 |
% |
112,170 |
|
484 |
|
1.73 |
% | ||||||
Total interest-earning assets (1) |
|
22,258,828 |
|
315,324 |
|
5.68 |
% |
22,144,711 |
|
305,735 |
|
5.60 |
% |
20,492,121 |
|
290,980 |
|
5.70 |
% | ||||||
Other assets |
|
3,590,361 |
|
|
|
|
|
3,631,238 |
|
|
|
|
|
3,507,516 |
|
|
|
|
| ||||||
Total assets |
|
$ |
25,849,189 |
|
|
|
|
|
$ |
25,775,949 |
|
|
|
|
|
$ |
23,999,637 |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Liabilities and Stockholders Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Interest checking |
|
$ |
3,242,960 |
|
10,644 |
|
1.32 |
% |
$ |
3,041,822 |
|
9,321 |
|
1.24 |
% |
$ |
2,243,767 |
|
3,932 |
|
0.70 |
% | |||
Money market |
|
5,046,021 |
|
14,604 |
|
1.16 |
% |
5,274,987 |
|
14,908 |
|
1.15 |
% |
5,013,119 |
|
8,072 |
|
0.65 |
% | ||||||
Savings |
|
525,648 |
|
227 |
|
0.17 |
% |
553,032 |
|
242 |
|
0.18 |
% |
656,310 |
|
245 |
|
0.15 |
% | ||||||
Time |
|
2,731,156 |
|
13,245 |
|
1.95 |
% |
2,286,932 |
|
9,764 |
|
1.73 |
% |
1,790,415 |
|
4,118 |
|
0.92 |
% | ||||||
Total interest-bearing deposits |
|
11,545,785 |
|
38,720 |
|
1.35 |
% |
11,156,773 |
|
34,235 |
|
1.24 |
% |
9,703,611 |
|
16,367 |
|
0.68 |
% | ||||||
Borrowings |
|
1,142,223 |
|
7,210 |
|
2.53 |
% |
1,218,319 |
|
7,710 |
|
2.57 |
% |
549,665 |
|
2,649 |
|
1.93 |
% | ||||||
Subordinated debentures |
|
454,901 |
|
7,705 |
|
6.79 |
% |
454,203 |
|
7,738 |
|
6.91 |
% |
451,973 |
|
7,166 |
|
6.36 |
% | ||||||
Total interest-bearing liabilities |
|
13,142,909 |
|
53,635 |
|
1.64 |
% |
12,829,295 |
|
49,683 |
|
1.57 |
% |
10,705,249 |
|
26,182 |
|
0.98 |
% | ||||||
Noninterest-bearing demand deposits |
|
7,544,027 |
|
|
|
|
|
7,783,652 |
|
|
|
|
|
8,253,413 |
|
|
|
|
| ||||||
Other liabilities |
|
343,364 |
|
|
|
|
|
347,037 |
|
|
|
|
|
208,495 |
|
|
|
|
| ||||||
Total liabilities |
|
21,030,300 |
|
|
|
|
|
20,959,984 |
|
|
|
|
|
19,167,157 |
|
|
|
|
| ||||||
Stockholders equity |
|
4,818,889 |
|
|
|
|
|
4,815,965 |
|
|
|
|
|
4,832,480 |
|
|
|
|
| ||||||
Total liabilities and stockholders equity |
|
$ |
25,849,189 |
|
|
|
|
|
$ |
25,775,949 |
|
|
|
|
|
$ |
23,999,637 |
|
|
|
|
| |||
Net interest income (1) |
|
|
|
$ |
261,689 |
|
|
|
|
|
$ |
256,052 |
|
|
|
|
|
$ |
264,798 |
|
|
| |||
Net interest spread (1) |
|
|
|
|
|
4.04 |
% |
|
|
|
|
4.03 |
% |
|
|
|
|
4.72 |
% | ||||||
Net interest margin (1) |
|
|
|
|
|
4.72 |
% |
|
|
|
|
4.69 |
% |
|
|
|
|
5.18 |
% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total deposits (4) |
|
$ |
19,089,812 |
|
$ |
38,720 |
|
0.81 |
% |
$ |
18,940,425 |
|
$ |
34,235 |
|
0.73 |
% |
$ |
17,957,024 |
|
$ |
16,367 |
|
0.37 |
% |
(1) Tax equivalent.
(2) Includes discount accretion on acquired loans of $3.1 million, $3.0 million, and $8.7 million for the three months ended June 30, 2019, March 31, 2019, and June 30, 2018, respectively.
(3) Includes tax-equivalent adjustments of $0.5 million, $0.9 million, and $2.2 million for the three months ended June 30, 2019, March 31, 2019, and June 30, 2018 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, |
| |||||
|
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
| |||||
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
ASSETS: |
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and due from banks |
|
$ |
185,075 |
|
$ |
224,758 |
|
$ |
175,830 |
|
$ |
196,502 |
|
$ |
245,998 |
|
Interest-earning deposits in financial institutions |
|
422,663 |
|
332,124 |
|
209,937 |
|
185,284 |
|
205,567 |
| |||||
Total cash and cash equivalents |
|
607,738 |
|
556,882 |
|
385,767 |
|
381,786 |
|
451,565 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Securities available-for-sale |
|
3,807,244 |
|
3,994,708 |
|
4,009,431 |
|
3,820,333 |
|
3,857,788 |
| |||||
Federal Home Loan Bank stock |
|
43,146 |
|
29,430 |
|
32,103 |
|
31,077 |
|
26,271 |
| |||||
Total investment securities |
|
3,850,390 |
|
4,024,138 |
|
4,041,534 |
|
3,851,410 |
|
3,884,059 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Loans held for sale |
|
|
|
25,124 |
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross loans and leases held for investment |
|
18,532,740 |
|
18,371,295 |
|
18,026,365 |
|
17,295,589 |
|
16,947,502 |
| |||||
Deferred fees, net |
|
(59,888 |
) |
(63,598 |
) |
(68,652 |
) |
(65,443 |
) |
(62,310 |
) | |||||
Total loans and leases held for investment, net of deferred fees |
|
18,472,852 |
|
18,307,697 |
|
17,957,713 |
|
17,230,146 |
|
16,885,192 |
| |||||
Allowance for loan and lease losses |
|
(135,037 |
) |
(136,281 |
) |
(132,472 |
) |
(141,920 |
) |
(132,139 |
) | |||||
Total loans and leases held for investment, net |
|
18,337,815 |
|
18,171,416 |
|
17,825,241 |
|
17,088,226 |
|
16,753,053 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Equipment leased to others under operating leases |
|
300,668 |
|
293,853 |
|
292,677 |
|
275,707 |
|
266,576 |
| |||||
Premises and equipment, net |
|
38,162 |
|
37,783 |
|
34,661 |
|
34,012 |
|
34,513 |
| |||||
Foreclosed assets, net |
|
1,472 |
|
3,291 |
|
5,299 |
|
4,407 |
|
2,231 |
| |||||
Deferred tax asset, net |
|
|
|
|
|
17,489 |
|
41,280 |
|
25,551 |
| |||||
Goodwill |
|
2,548,670 |
|
2,548,670 |
|
2,548,670 |
|
2,548,670 |
|
2,548,670 |
| |||||
Core deposit and customer relationship intangibles, net |
|
47,380 |
|
52,250 |
|
57,120 |
|
62,106 |
|
67,693 |
| |||||
Other assets |
|
612,119 |
|
610,731 |
|
522,896 |
|
494,522 |
|
495,646 |
| |||||
Total assets |
|
$ |
26,344,414 |
|
$ |
26,324,138 |
|
$ |
25,731,354 |
|
$ |
24,782,126 |
|
$ |
24,529,557 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest-bearing deposits |
|
$ |
7,299,213 |
|
$ |
7,712,409 |
|
$ |
7,888,915 |
|
$ |
7,834,480 |
|
$ |
8,126,153 |
|
Interest-bearing deposits |
|
11,506,543 |
|
11,573,518 |
|
10,981,586 |
|
10,045,063 |
|
9,803,039 |
| |||||
Total deposits |
|
18,805,756 |
|
19,285,927 |
|
18,870,501 |
|
17,879,543 |
|
17,929,192 |
| |||||
Borrowings |
|
1,913,059 |
|
1,481,087 |
|
1,371,114 |
|
1,513,166 |
|
1,187,226 |
| |||||
Subordinated debentures |
|
456,112 |
|
454,458 |
|
453,846 |
|
452,944 |
|
451,878 |
| |||||
Accrued interest payable and other liabilities |
|
317,477 |
|
311,684 |
|
210,305 |
|
194,788 |
|
183,302 |
| |||||
Total liabilities |
|
21,492,404 |
|
21,533,156 |
|
20,905,766 |
|
20,040,441 |
|
19,751,598 |
| |||||
STOCKHOLDERS EQUITY (1) |
|
4,852,010 |
|
4,790,982 |
|
4,825,588 |
|
4,741,685 |
|
4,777,959 |
| |||||
Total liabilities and stockholders equity |
|
$ |
26,344,414 |
|
$ |
26,324,138 |
|
$ |
25,731,354 |
|
$ |
24,782,126 |
|
$ |
24,529,557 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Book value per share |
|
$ |
40.49 |
|
$ |
39.86 |
|
$ |
39.17 |
|
$ |
38.46 |
|
$ |
38.36 |
|
Tangible book value per share (2) |
|
$ |
18.83 |
|
$ |
18.22 |
|
$ |
18.02 |
|
$ |
17.28 |
|
$ |
17.35 |
|
Shares outstanding |
|
119,829,104 |
|
120,201,149 |
|
123,189,833 |
|
123,283,450 |
|
124,567,950 |
|
(1) Includes net unrealized gain (loss) on securities available-for-sale, net |
|
$ |
73,066 |
|
$ |
37,258 |
|
$ |
(6,075 |
) |
$ |
(43,854 |
) |
$ |
(22,340 |
) |
(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, |
| |||||
|
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
| |||||
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
Loans and leases |
|
$ |
284,236 |
|
$ |
274,229 |
|
$ |
272,522 |
|
$ |
264,062 |
|
$ |
260,300 |
|
Investment securities |
|
28,948 |
|
29,680 |
|
29,690 |
|
28,061 |
|
27,730 |
| |||||
Deposits in financial institutions |
|
1,349 |
|
650 |
|
527 |
|
519 |
|
484 |
| |||||
Total interest income |
|
314,533 |
|
304,559 |
|
302,739 |
|
292,642 |
|
288,514 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
Deposits |
|
38,720 |
|
34,235 |
|
28,834 |
|
21,121 |
|
16,367 |
| |||||
Borrowings |
|
7,210 |
|
7,710 |
|
4,602 |
|
3,814 |
|
2,649 |
| |||||
Subordinated debentures |
|
7,705 |
|
7,738 |
|
7,538 |
|
7,390 |
|
7,166 |
| |||||
Total interest expense |
|
53,635 |
|
49,683 |
|
40,974 |
|
32,325 |
|
26,182 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net interest income |
|
260,898 |
|
254,876 |
|
261,765 |
|
260,317 |
|
262,332 |
| |||||
Provision for credit losses |
|
8,000 |
|
4,000 |
|
12,000 |
|
11,500 |
|
17,500 |
| |||||
Net interest income after provision for credit losses |
|
252,898 |
|
250,876 |
|
249,765 |
|
248,817 |
|
244,832 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
Service charges on deposit accounts |
|
3,771 |
|
3,730 |
|
4,091 |
|
3,979 |
|
4,265 |
| |||||
Other commissions and fees |
|
11,590 |
|
11,008 |
|
11,114 |
|
12,397 |
|
11,767 |
| |||||
Leased equipment income |
|
9,182 |
|
9,282 |
|
9,384 |
|
9,120 |
|
9,790 |
| |||||
Gain on sale of loans and leases |
|
326 |
|
|
|
|
|
|
|
106 |
| |||||
Gain on sale of securities |
|
22,192 |
|
2,161 |
|
786 |
|
826 |
|
253 |
| |||||
Other income |
|
3,832 |
|
4,883 |
|
8,151 |
|
10,590 |
|
13,457 |
| |||||
Total noninterest income |
|
50,893 |
|
31,064 |
|
33,526 |
|
36,912 |
|
39,638 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
Compensation |
|
68,956 |
|
70,845 |
|
69,299 |
|
72,333 |
|
69,913 |
| |||||
Occupancy |
|
14,457 |
|
14,320 |
|
13,356 |
|
13,069 |
|
13,575 |
| |||||
Data processing |
|
6,817 |
|
6,925 |
|
6,930 |
|
6,740 |
|
6,896 |
| |||||
Other professional services |
|
4,629 |
|
4,513 |
|
6,198 |
|
6,058 |
|
5,257 |
| |||||
Insurance and assessments |
|
4,098 |
|
4,038 |
|
4,202 |
|
5,446 |
|
5,330 |
| |||||
Intangible asset amortization |
|
4,870 |
|
4,870 |
|
4,986 |
|
5,587 |
|
5,587 |
| |||||
Leased equipment depreciation |
|
5,558 |
|
5,651 |
|
5,758 |
|
5,001 |
|
5,237 |
| |||||
Foreclosed assets (income) expense, net |
|
(146 |
) |
29 |
|
(311 |
) |
(257 |
) |
(61 |
) | |||||
Acquisition, integration and reorganization costs |
|
|
|
618 |
|
970 |
|
800 |
|
|
| |||||
Loan expense |
|
3,451 |
|
2,885 |
|
2,991 |
|
2,249 |
|
3,058 |
| |||||
Other expense |
|
12,737 |
|
11,593 |
|
14,856 |
|
11,127 |
|
11,657 |
| |||||
Total noninterest expense |
|
125,427 |
|
126,287 |
|
129,235 |
|
128,153 |
|
126,449 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Earnings before income taxes |
|
178,364 |
|
155,653 |
|
154,056 |
|
157,576 |
|
158,021 |
| |||||
Income tax expense |
|
50,239 |
|
43,049 |
|
39,015 |
|
41,289 |
|
42,286 |
| |||||
Net earnings |
|
$ |
128,125 |
|
$ |
112,604 |
|
$ |
115,041 |
|
$ |
116,287 |
|
$ |
115,735 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Basic and diluted earnings per share |
|
$ |
1.07 |
|
$ |
0.92 |
|
$ |
0.93 |
|
$ |
0.94 |
|
$ |
0.92 |
|
Dividends declared and paid per share |
|
$ |
0.60 |
|
$ |
0.60 |
|
$ |
0.60 |
|
$ |
0.60 |
|
$ |
0.60 |
|
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, |
| |||||
|
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
| |||||
|
|
(Dollars in thousands) |
| |||||||||||||
Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
| |||||
Return on average assets (1) |
|
1.99 |
% |
1.77 |
% |
1.84 |
% |
1.89 |
% |
1.93 |
% | |||||
Return on average equity (1) |
|
10.66 |
% |
9.48 |
% |
9.59 |
% |
9.72 |
% |
9.61 |
% | |||||
Return on average tangible equity (1)(2) |
|
23.15 |
% |
20.64 |
% |
21.23 |
% |
21.61 |
% |
20.98 |
% | |||||
Efficiency ratio |
|
41.6 |
% |
42.4 |
% |
41.7 |
% |
40.9 |
% |
39.8 |
% | |||||
Noninterest expense as a percentage of average assets (1) |
|
1.95 |
% |
1.99 |
% |
2.07 |
% |
2.09 |
% |
2.11 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average Yields/Costs (1): |
|
|
|
|
|
|
|
|
|
|
| |||||
Yield on: |
|
|
|
|
|
|
|
|
|
|
| |||||
Average loans and leases (3) |
|
6.26 |
% |
6.16 |
% |
6.27 |
% |
6.20 |
% |
6.30 |
% | |||||
Average interest-earning assets (3) |
|
5.68 |
% |
5.60 |
% |
5.68 |
% |
5.60 |
% |
5.70 |
% | |||||
Cost of: |
|
|
|
|
|
|
|
|
|
|
| |||||
Average interest-bearing deposits |
|
1.35 |
% |
1.24 |
% |
1.10 |
% |
0.83 |
% |
0.68 |
% | |||||
Average total deposits |
|
0.81 |
% |
0.73 |
% |
0.62 |
% |
0.46 |
% |
0.37 |
% | |||||
Average interest-bearing liabilities |
|
1.64 |
% |
1.57 |
% |
1.40 |
% |
1.14 |
% |
0.98 |
% | |||||
Net interest spread (3) |
|
4.04 |
% |
4.03 |
% |
4.28 |
% |
4.46 |
% |
4.72 |
% | |||||
Net interest margin (3) |
|
4.72 |
% |
4.69 |
% |
4.91 |
% |
4.99 |
% |
5.18 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Average Balances: |
|
|
|
|
|
|
|
|
|
|
| |||||
Assets: |
|
|
|
|
|
|
|
|
|
|
| |||||
Loans and leases, net of deferred fees |
|
$ |
18,239,690 |
|
$ |
18,064,230 |
|
$ |
17,275,343 |
|
$ |
16,913,792 |
|
$ |
16,576,361 |
|
Interest-earning assets |
|
22,258,828 |
|
22,144,711 |
|
21,269,363 |
|
20,866,478 |
|
20,492,121 |
| |||||
Total assets |
|
25,849,189 |
|
25,775,949 |
|
24,784,462 |
|
24,357,771 |
|
23,999,637 |
| |||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Noninterest-bearing deposits |
|
7,544,027 |
|
7,783,652 |
|
8,163,699 |
|
8,120,306 |
|
8,253,413 |
| |||||
Interest-bearing deposits |
|
11,545,785 |
|
11,156,773 |
|
10,422,761 |
|
10,111,927 |
|
9,703,611 |
| |||||
Total deposits |
|
19,089,812 |
|
18,940,425 |
|
18,586,460 |
|
18,232,233 |
|
17,957,024 |
| |||||
Borrowings |
|
1,142,223 |
|
1,218,319 |
|
764,039 |
|
720,449 |
|
549,665 |
| |||||
Subordinated debentures |
|
454,901 |
|
454,203 |
|
452,998 |
|
452,312 |
|
451,973 |
| |||||
Interest-bearing liabilities |
|
13,142,909 |
|
12,829,295 |
|
11,639,798 |
|
11,284,688 |
|
10,705,249 |
| |||||
Stockholders equity |
|
4,818,889 |
|
4,815,965 |
|
4,758,401 |
|
4,748,819 |
|
4,832,480 |
| |||||
(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, |
| |||||
|
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
| |||||
|
|
(Dollars in thousands) |
| |||||||||||||
Credit Quality Ratios: |
|
|
|
|
|
|
|
|
|
|
| |||||
Nonaccrual loans and leases held for investment to loans and leases held for investment |
|
0.44 |
% |
0.48 |
% |
0.44 |
% |
0.66 |
% |
0.67 |
% | |||||
Nonperforming assets to loans and leases held for investment and foreclosed assets |
|
0.45 |
% |
0.50 |
% |
0.47 |
% |
0.68 |
% |
0.69 |
% | |||||
Classified loans and leases held for investment to loans and leases held for investment |
|
1.03 |
% |
1.04 |
% |
1.32 |
% |
1.51 |
% |
1.40 |
% | |||||
Trailing 12 months net charge-offs to average loans and leases held for investment |
|
0.18 |
% |
0.22 |
% |
0.26 |
% |
0.28 |
% |
0.28 |
% | |||||
Allowance for credit losses to loans and leases held for investment |
|
0.92 |
% |
0.95 |
% |
0.94 |
% |
1.03 |
% |
0.99 |
% | |||||
Allowance for credit losses to nonaccrual loans and leases held for investment |
|
209.1 |
% |
195.6 |
% |
213.5 |
% |
156.9 |
% |
147.3 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
PacWest Bancorp Consolidated Capital: |
|
|
|
|
|
|
|
|
|
|
| |||||
Tier 1 leverage ratio (1) |
|
9.49 |
% |
9.38 |
% |
10.13 |
% |
10.10 |
% |
10.33 |
% | |||||
Common equity tier 1 capital ratio (1) |
|
9.53 |
% |
9.48 |
% |
10.01 |
% |
10.18 |
% |
10.59 |
% | |||||
Tier 1 capital ratio (1) |
|
9.53 |
% |
9.48 |
% |
10.01 |
% |
10.18 |
% |
10.59 |
% | |||||
Total capital ratio (1) |
|
12.18 |
% |
12.15 |
% |
12.72 |
% |
13.03 |
% |
13.48 |
% | |||||
Risk-weighted assets (1) |
|
$ |
23,117,367 |
|
$ |
22,939,074 |
|
$ |
22,525,096 |
|
$ |
21,650,542 |
|
$ |
20,929,325 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Equity to assets ratio |
|
18.42 |
% |
18.20 |
% |
18.75 |
% |
19.13 |
% |
19.48 |
% | |||||
Tangible common equity ratio (2) |
|
9.50 |
% |
9.23 |
% |
9.60 |
% |
9.61 |
% |
9.86 |
% | |||||
Book value per share |
|
$ |
40.49 |
|
$ |
39.86 |
|
$ |
39.17 |
|
$ |
38.46 |
|
$ |
38.36 |
|
Tangible book value per share (2) |
|
$ |
18.83 |
|
$ |
18.22 |
|
$ |
18.02 |
|
$ |
17.28 |
|
$ |
17.35 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Pacific Western Bank Capital: |
|
|
|
|
|
|
|
|
|
|
| |||||
Tier 1 leverage ratio (1) |
|
10.76 |
% |
10.57 |
% |
10.80 |
% |
10.78 |
% |
11.11 |
% | |||||
Common equity tier 1 capital ratio (1) |
|
10.80 |
% |
10.69 |
% |
10.68 |
% |
10.87 |
% |
11.40 |
% | |||||
Tier 1 capital ratio (1) |
|
10.80 |
% |
10.69 |
% |
10.68 |
% |
10.87 |
% |
11.40 |
% | |||||
Total capital ratio (1) |
|
11.53 |
% |
11.45 |
% |
11.44 |
% |
11.69 |
% |
12.21 |
% |
(1) Capital information for June 30, 2019 is preliminary.
(2) Non-GAAP measure.
GAAP TO NON-GAAP RECONCILIATIONS
This press release contains certain non-GAAP financial disclosures for: (1) return on average tangible equity, (2) tangible common equity ratio, and (3) tangible book value per share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Companys 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, and tangible book value per share is prevalent among banking regulators, investors and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) return on average equity, (2) equity to assets ratio, and (3) 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 |
|
Six Months Ended |
| |||||||||||
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
| |||||||
Return on Average Tangible Equity |
|
2019 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
| |||||
|
|
(Dollars in thousands) |
| |||||||||||||
Net earnings |
|
$ |
128,125 |
|
$ |
112,604 |
|
$ |
115,735 |
|
$ |
240,729 |
|
$ |
234,011 |
|
Average stockholders equity |
|
$ |
4,818,889 |
|
$ |
4,815,965 |
|
$ |
4,832,480 |
|
$ |
4,817,435 |
|
$ |
4,866,654 |
|
Less: Average intangible assets |
|
2,598,762 |
|
2,603,842 |
|
2,619,351 |
|
2,601,288 |
|
2,622,455 |
| |||||
Average tangible common equity |
|
$ |
2,220,127 |
|
$ |
2,212,123 |
|
$ |
2,213,129 |
|
$ |
2,216,147 |
|
$ |
2,244,199 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Return on average equity (1) |
|
10.66 |
% |
9.48 |
% |
9.61 |
% |
10.08 |
% |
9.70 |
% | |||||
Return on average tangible equity (2) |
|
23.15 |
% |
20.64 |
% |
20.98 |
% |
21.91 |
% |
21.03 |
% |
(1) Annualized net earnings divided by average stockholders equity.
(2) Annualized net earnings divided by average tangible common equity.
Tangible Common Equity Ratio/ |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| |||||
Tangible Book Value Per Share |
|
2019 |
|
2019 |
|
2018 |
|
2018 |
|
2018 |
| |||||
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
Stockholders equity |
|
$ |
4,852,010 |
|
$ |
4,790,982 |
|
$ |
4,825,588 |
|
$ |
4,741,685 |
|
$ |
4,777,959 |
|
Less: Intangible assets |
|
2,596,050 |
|
2,600,920 |
|
2,605,790 |
|
2,610,776 |
|
2,616,363 |
| |||||
Tangible common equity |
|
$ |
2,255,960 |
|
$ |
2,190,062 |
|
$ |
2,219,798 |
|
$ |
2,130,909 |
|
$ |
2,161,596 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total assets |
|
$ |
26,344,414 |
|
$ |
26,324,138 |
|
$ |
25,731,354 |
|
$ |
24,782,126 |
|
$ |
24,529,557 |
|
Less: Intangible assets |
|
2,596,050 |
|
2,600,920 |
|
2,605,790 |
|
2,610,776 |
|
2,616,363 |
| |||||
Tangible assets |
|
$ |
23,748,364 |
|
$ |
23,723,218 |
|
$ |
23,125,564 |
|
$ |
22,171,350 |
|
$ |
21,913,194 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Equity to assets ratio |
|
18.42 |
% |
18.20 |
% |
18.75 |
% |
19.13 |
% |
19.48 |
% | |||||
Tangible common equity ratio (1) |
|
9.50 |
% |
9.23 |
% |
9.60 |
% |
9.61 |
% |
9.86 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Book value per share |
|
$ |
40.49 |
|
$ |
39.86 |
|
$ |
39.17 |
|
$ |
38.46 |
|
$ |
38.36 |
|
Tangible book value per share (2) |
|
$ |
18.83 |
|
$ |
18.22 |
|
$ |
18.02 |
|
$ |
17.28 |
|
$ |
17.35 |
|
Shares outstanding |
|
119,829,104 |
|
120,201,149 |
|
123,189,833 |
|
123,283,450 |
|
124,567,950 |
|
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.
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. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of the Companys management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. 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. Forward-Looking Statements
Presentation Index Second Quarter Highlights 4 Loans and Leases 9 Credit Quality 13 Deposits 17 Investment Securities 19 Controlled Expenses 20 Non-GAAP Measurements 21
Second Quarter Highlights Net income of $128.1 million Earnings per share of $1.07 ROAA of 1.99% ROATE of 23.15% Gain on sale of securities of $22.2 million in Q2, or $0.13 per diluted share Robust Earnings High Performing Net interest margin of 4.72% Loan yield of 6.26% Cost of deposits of 81 bps Efficiency ratio of 41.6% Noninterest expense to average assets of 1.95% Loan Growth & Credit Quality Loan production of $1.4 billion Annualized loan growth of 4% Classified loans to total loans of 1.03% Net charge-offs of $11.2 million Provision for credit losses of $8.0 million Strong Deposit Base & Capital Core deposits at 83% of total deposits Noninterest-bearing demand deposits at 39% of total deposits Tangible common equity ratio of 9.50% CET1 ratio of 9.53%
Quarter-Over-Quarter Financial Highlights See Non-GAAP Measurements slide on page 21. ? ($ in millions, except per share amounts) 2Q19 1Q19 Q / Q Total Assets 26,344 $ 26,324 $ 0% Loans and Leases HFI, net of deferred fees 18,473 $ 18,308 $ 1% Total Deposits 18,806 $ 19,286 $ -2% Core Deposits 15,617 $ 16,128 $ -3% Net Earnings 128.1 $ 112.6 $ 14% Earnings Per Share 1.07 $ 0.92 $ 16% Return on Average Assets ("ROAA") 1.99% 1.77% 0.22 Return on Average Tangible Equity ("ROATE") (1) 23.15% 20.64% 2.51 Tangible Common Equity Ratio (1) 9.50% 9.23% 0.27 Tangible Book Value Per Share (1) 18.83 $ 18.22 $ 3% Tax Equivalent Net Interest Margin 4.72% 4.69% 0.03 Efficiency Ratio 41.6% 42.4% -0.8
Year-Over-Year Financial Highlights See Non-GAAP Measurements slide on page 21. ? ($ in millions, except per share amounts) 2Q19 2Q18 Y / Y Total Assets 26,344 $ 24,530 $ 7% Loans and Leases HFI, net of deferred fees 18,473 $ 16,885 $ 9% Total Deposits 18,806 $ 17,929 $ 5% Core Deposits 15,617 $ 15,586 $ 0% Net Earnings 128.1 $ 115.7 $ 11% Earnings Per Share 1.07 $ 0.92 $ 16% Return on Average Assets ("ROAA") 1.99% 1.93% 0.06 Return on Average Tangible Equity ("ROATE") (1) 23.15% 20.98% 2.17 Tangible Common Equity Ratio (1) 9.50% 9.86% -0.36 Tangible Book Value Per Share (1) 18.83 $ 17.35 $ 9% Tax Equivalent Net Interest Margin 4.72% 5.18% -0.46 Efficiency Ratio 41.6% 39.8% 1.8
Solid Earnings Track Record CUB acquisition ($ in millions, except Diluted EPS) 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Net Earnings 93.6 $ 101.5 $ 84.0 $ 118.3 $ 115.7 $ 116.3 $ 115.0 $ 112.6 $ 128.1 $ Diluted EPS 0.77 $ 0.84 $ 0.66 $ 0.93 $ 0.92 $ 0.94 $ 0.93 $ 0.92 $ 1.07 $ $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 $0 $20 $40 $60 $80 $100 $120 $140 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Diluted EPS Millions Net Earnings Diluted EPS
Solid Capital Position 2Q19 (Preliminary) Source: S&P Global Market Intelligence. Peer data through 1Q19. Peer group is banks in the KBW Regional Bank Index KRX 11.75% 12.02% 10.50% 10.43% 9.86% 9.61% 9.60% 9.23% 9.50% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 TCE / TA PACW KRX 11.90% 12.02% 10.66% 10.66% 10.33% 10.10% 10.13% 9.38% 9.49% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 T1 Leverage PACW KRX 15.42% 15.74% 13.75% 14.11% 13.48% 13.03% 12.73% 12.15% 12.18% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Total Capital PACW KRX 12.28% 12.52% 10.91% 11.16% 10.59% 10.18% 10.02% 9.48% 9.53% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 CET1 PACW KRX
Diversified Loan and Lease Portfolio Net of deferred fees and costs Commercial mortgage Income producing and other residential Commercial construction Residential construction Asset - based Venture capital Other commercial Consumer As of June 30, 2019 ($ in millions) $ Mix $ Mix Real Estate Mortgage: Commercial 4,435 $ 24% 5,010 $ 30% Income producing and other residential 3,641 20% 2,556 15% Total Real Estate Mortgage 8,076 44% 7,566 45% RE Construction & Land: Commercial 973 5% 831 5% Residential 1,403 8% 1,043 6% Total RE Construction & Land 2,376 13% 1,874 11% Total Real Estate 10,452 57% 9,440 56% Commercial: Asset-based 3,606 19% 3,184 19% Venture capital 2,195 12% 2,008 12% Other commercial 1,774 10% 1,874 11% Total Commercial 7,575 41% 7,066 42% Consumer 446 2% 379 2% Total Loans HFI (1) 18,473 $ 100% 16,885 $ 100% Unfunded commitments 7,611 $ 6,430 $ 6/30/2019 6/30/2018
Diversified Loan and Lease Portfolio Of which land represents $159 million and $203 million as of 6/30/19 and 6/30/18. Other Commercial, $3,015mm, 29% SBA, $557mm, 5% Hospitality, $535mm, 5% Income Producing Residential, $3,535mm, 34% Healthcare, $328mm, 3% Other Residential, $106mm, 1% Construction & Land, $2,376mm, 23% Real Estate ($10.5B) Lender Finance & Timeshare, $2,022mm, 56% Equipment Finance, $765mm, 21% Premium Finance, $411mm, 12% Other, $408mm, 11% Asset - Based ($3.6B) ($ in millions) $ Mix $ Mix Real Estate: Income Producing Residential 3,535 $ 34% 2,414 $ 26% Other Commercial 3,015 29% 3,305 35% Construction & Land (1) 2,376 23% 1,874 20% SBA 557 5% 542 6% Hospitality 535 5% 552 6% Healthcare 328 3% 611 6% Other Residential 106 1% 142 1% Total Real Estate 10,452 $ 100% 9,440 $ 100% 6/30/2019 6/30/2018 ($ in millions) $ Mix $ Mix Asset-Based: Lender Finance & Timeshare 2,022 $ 56% 1,821 $ 57% Equipment Finance 765 21% 663 21% Premium Finance 411 12% 300 9% Other 408 11% 400 13% Total Asset-Based 3,606 $ 100% 3,184 $ 100% 6/30/2019 6/30/2018
Diversified Loan and Lease Portfolio Security Monitoring, $630mm, 36% Municipal, $126mm, 7% Cash Flow, $88mm, 5% SBA, $85mm, 5% Secured Business Loans, $557mm, 31% HOA Loans, $68mm, 4% Unsecured Business Loans, $220mm, 12% Other Commercial ($1.8B) Equity Fund Loans, $1,116mm, 51% Expansion Stage, $785mm, 36% Early Stage, $221mm, 10% Late Stage, $73mm, 3% Venture Capital ($2.2B) ($ in millions) $ Mix $ Mix Venture Capital: Equity Fund Loans 1,116 $ 51% 551 $ 27% Expansion Stage 785 36% 1,010 50% Early Stage 221 10% 292 15% Late Stage 73 3% 155 8% Total Venture Capital 2,195 $ 100% 2,008 $ 100% 6/30/2019 6/30/2018 ($ in millions) $ Mix $ Mix Other Commercial: Security Monitoring 630 $ 36% 577 $ 30% Secured Business Loans 557 31% 687 37% Unsecured Business Loans 220 12% 223 12% Municipal 126 7% 95 5% Cash Flow 88 5% 134 7% SBA 85 5% 88 5% HOA Loans 68 4% 70 4% Total Other Commercial 1,774 $ 100% 1,874 $ 100% 6/30/2019 6/30/2018
Loan and Lease Production of $1.4 Billion in 2Q19 The weighted average rate on production presents contractual rates and does not include amortized fees. Amortized fees added approximately 32 basis points to loan yields in 2019 and 31 basis points in 2018. Net of deferred fees and costs Quarterly change equals Net Difference plus transfers to loans held for sale, transfers to OREO, charge-offs and loan sales. $1,257 $1,316 $1,572 $1,175 $1,436 $1,204 $967 $1,186 $1,193 $1,294 $1,154 $1,133 $1,071 $933 $1,529 $829 $795 $921 $1,039 $980 $2,461 $2,283 $2,758 $2,368 $2,730 $1,983 $1,928 $1,991 $1,972 $2,509 4.0% 4.5% 5.0% 5.5% 6.0% $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2Q18 3Q18 4Q18 1Q19 2Q19 Avg. Rate on Production Millions Production Disbursements Payoffs Paydowns Avg Production/Disbursements Avg Payoffs/Paydowns Rate on Production ($ in millions) Production/ Disbursements Payoffs/ Paydowns Net Difference Rate on Production (1) ($ in millions) Loans Beginning Balance (2) Loans Ending Balance (2) Quarterly Change (3) 2Q19 2,730 $ 2,509 $ 221 $ 5.15% 2Q19 18,308 $ 18,473 $ 165 $ 1Q19 2,368 1,972 396 5.11% 1Q19 17,958 18,308 350 4Q18 2,758 1,991 767 5.38% 4Q18 17,230 17,958 728 3Q18 2,283 1,928 355 5.17% 3Q18 16,885 17,230 344 2Q18 2,461 1,983 478 5.04% 2Q18 16,455 16,885 430
Quarterly Credit Quality Trends Classified loans and leases are those with a credit risk rating of substandard or doubtful. Allowance for credit losses includes allowance for loan and lease losses and reserve for unfunded loan commitments. ($ in thousands) 2Q18 3Q18 4Q18 1Q19 2Q19 Nonaccrual Loans and Leases HFI $ 113,745 112,972 79,333 88,527 81,265 As a % of Loans and Leases HFI % 0.67% 0.66% 0.44% 0.48% 0.44% Nonperforming Assets $ 115,976 117,379 84,632 91,818 82,737 As a % of Loans and Leases & Foreclosed Assets % 0.69% 0.68% 0.47% 0.50% 0.45% Classified Loans and Leases HFI (1) $ 236,292 260,459 237,110 190,305 190,979 As a % of Loans and Leases HFI % 1.40% 1.51% 1.32% 1.04% 1.03% Credit Loss Provision $ 17,500 11,500 12,000 4,000 8,000 As a % of Average Loans and Leases (annualized) % 0.42% 0.27% 0.28% 0.09% 0.18% Net Charge-offs $ 17,136 1,719 19,948 191 11,244 As a % of Average Loans and Leases (annualized) % 0.41% 0.04% 0.46% 0.00% 0.25% Trailing Twelve Months Net Charge-offs $ 45,912 46,568 43,758 38,994 33,102 As a % of Average Loans and Leases % 0.28% 0.28% 0.26% 0.22% 0.18% Allowance for Credit Losses (ACL) (2) $ 167,500 177,281 169,333 173,142 169,898 As a % of Loans and Leases HFI % 0.99% 1.03% 0.94% 0.95% 0.92% ACL / Nonaccrual Loans and Leases HFI % 147.26% 156.92% 213.45% 195.58% 209.07%
Key Credit Trends Loans HFI 0.28% 0.28% 0.26% 0.22% 0.18% 2Q18 3Q18 4Q18 1Q19 2Q19 Trailing Twelve Months Net Charge - offs / Average Loans and Leases 0.67% 0.66% 0.44% 0.48% 0.44% 2Q18 3Q18 4Q18 1Q19 2Q19 Nonaccrual Loans and Leases / Loans and Leases 0.99% 1.03% 0.94% 0.95% 0.92% 2Q18 3Q18 4Q18 1Q19 2Q19 ACL / Loans and Leases 1.40% 1.51% 1.32% 1.04% 1.03% 2Q18 3Q18 4Q18 1Q19 2Q19 Classified Loans and Leases/ Loans and Leases
Credit Quality Trends(1) Amounts and ratios related to 2019 and 2018 periods are for total loans and leases. Amounts and ratios for 2017 and 2016 are for Non-PCI loans and leases. Classified loans and leases are those with a credit risk rating of substandard or doubtful. Allowance for credit losses includes allowance for loan and lease losses and reserve for unfunded loan commitments. ($ in thousands) 2016 2017 2018 YTD 2019 Nonaccrual Loans and Leases HFI $ 170,599 155,784 79,333 81,265 As a % of Loans and Leases HFI % 1.11% 0.92% 0.44% 0.44% Nonperforming Assets $ 183,575 157,113 84,632 82,737 As a % of Loans and Leases & Foreclosed Assets % 1.20% 0.93% 0.47% 0.45% Classified Loans and Leases HFI (2) $ 409,645 278,405 237,110 190,979 As a % of Loans and Leases HFI % 2.67% 1.65% 1.32% 1.03% Credit Loss Provision $ 61,000 59,000 45,000 12,000 As a % of Average Loans and Leases (annualized) % 0.42% 0.37% 0.27% 0.13% Net Charge-offs $ 21,990 62,957 43,758 11,435 As a % of Average Loans and Leases (annualized) % 0.15% 0.40% 0.26% 0.13% Allowance for Credit Losses (ACL) (3) $ 161,278 161,647 169,333 169,898 As a % of Loans and Leases HFI % 1.05% 0.96% 0.94% 0.92% ACL / Nonaccrual Loans and Leases HFI % 94.54% 103.76% 213.45% 209.07%
Nonaccrual & Delinquent Loan and Lease Detail % of Loan % of Loan 6/30/2019 3/31/2019 ($ in thousands) Balance Category Balance Category Balance Balance Real estate mortgage: Commercial 17,012 $ 0.4% 12,750 $ 0.3% 3,948 $ 6,863 $ Income producing and other residential 2,883 0.1% 2,444 0.1% 3,262 1,853 Total real estate mortgage 19,895 0.2% 15,194 0.2% 7,210 8,716 Real estate construction and land: Commercial 390 0.0% 430 0.0% - - Residential - 0.0% - 0.0% 4,672 8,949 Total R.E. construction and land 390 0.0% 430 0.0% 4,672 8,949 Commercial: Asset-based 32,236 0.9% 43,406 1.3% 12,382 3,750 Venture capital 22,501 1.0% 20,437 1.0% - 4,500 Other commercial 5,799 0.3% 8,633 0.4% 439 1,694 Total commercial 60,536 0.8% 72,476 1.0% 12,821 9,944 Consumer 444 0.1% 427 0.1% 964 614 Total 81,265 $ 0.4% 88,527 $ 0.5% 25,667 $ 28,223 $ 6/30/2019 Nonaccrual Loans and Leases 3/31/2019 Accruing and 30 -89 Days Past Due
Deposit Detail Does not include $2.0 billion and $2.5 billion of client investment funds held at June 30, 2019 and June 30, 2018, respectively. Core: 83% Core: 87% ($ in millions) Deposit Category Average $ Quarter-End $ Mix Average $ Quarter-End $ Mix Noninterest-bearing demand 7,544 $ 7,299 $ 39% 8,254 $ 8,126 $ 45% Interest checking 3,190 3,220 17% 2,097 2,185 12% Money market 4,650 4,578 24% 4,615 4,632 26% Savings 526 520 3% 656 644 4% Total core deposits 15,910 15,617 83% 15,622 15,587 87% Non-core non-maturity deposits 449 437 2% 545 607 3% Total non-maturity deposits 16,359 16,054 85% 16,167 16,194 90% Time deposits $250,000 and under 2,278 2,284 12% 1,445 1,394 8% Time deposits over $250,000 453 468 3% 345 341 2% Total time deposits 2,731 2,752 15% 1,790 1,735 10% Total deposits (1) 19,090 $ 18,806 $ 100% 17,957 $ 17,929 $ 100% At or For the Quarter Ended June 30, 2019 At or For the Quarter Ended June 30, 2018 Noninterest - bearing demand deposits Interest checking deposits Money market deposits Savings deposits Non - core non - maturity deposits Time deposits $250,000 and under Time deposits over $250,000 June 30, 2019 Noninterest - bearing demand deposits Interest checking deposits Money market deposits Savings deposits Non - core non - maturity deposits Time deposits $250,000 and under Time deposits over $250,000 June 30, 2018
Deposit Portfolio Includes brokered deposits of $1.3 billion with a weighted average maturity of 4 months and a weighted average cost of 2.37%. $17.9 $17.9 $18.9 $19.3 $18.8 0.68% 0.83% 1.10% 1.24% 1.35% 0.37% 0.46% 0.62% 0.73% 0.81% 0.00% 0.50% 1.00% 1.50% 2.00% 0.0 5.0 10.0 15.0 20.0 25.0 2Q18 3Q18 4Q18 1Q19 2Q19 Cost Balance ($ in Billions) Core Deposits Non-Core Deposits Cost of Average Interest-Bearing Deposits Cost of Average Total Deposits ($ in millions) Time Deposits Time Deposits Total Time Maturities $250,000 and Under Over $250,000 Deposits Due in three months or less 1,045 $ 188 $ 1,233 $ Due in over three months through six months 534 168 702 Due in over six months through twelve months 599 92 691 Due in over 12 months through 24 months 84 18 102 Due in over 24 months 22 2 24 Total 2,284 $ (1) 468 $ 2,752 $ June 30, 2019
Diversified Investment Portfolio (1) Fair value at 6/30/19 (2) Yield is for 2Q19 (3) Not rated category comprised primarily of not rated revenue bonds backed by an underlying agency security or CRA-related revenue bonds. S&P Ratings % Total Issue Type % Total AAA 8% G.O. Limited 5% AA 79% G.O. Unlimited 44% A 3% Revenue 51% BBB 1% Not Rated (3) 9% 100% 100% 3.12% overall portfolio tax equivalent yield (2) Municipal Securities Composition Asset - backed Securities , $227mm , 6% Agency Residential MBS , $351mm , 9% Agency Residential CMOs , $1,150mm , 30% Agency Commercial MBS , $1,059mm , 28% Private CMOs , $112mm , 3% Municipal Securities , $737mm , 19% Other , $171mm , 5% $3.8 Billion Total Investment Portfolio (1) 6.4 6.3 5.8 5.6 6.0 5.6 5.3 5.2 5.0 4.5 4 5 6 7 2Q18 3Q18 4Q18 1Q19 2Q19 Years Average Life and Effective Duration Average Life Effective Duration
Efficiency Ratio Trend 40.3% 40.4% 41.0% 41.7% 39.8% 40.9% 41.7% 42.4% 41.6% 56.9% 56.0% 55.9% 56.6% 54.8% 53.7% 54.7% 55.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 PACW Efficiency Ratio Median Efficiency Ratio Banks in KRX Index
Non-GAAP Measurements The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Companys operational performance and to enhance investors overall understanding of such financial performance. These non-GAAP financial measures should not be considered a substitute for financial measures presented in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. The table below presents reconciliations of certain GAAP to non-GAAP financial measures: ($ in thousands, except per share amounts) June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 Tangible Common Equity Ratio & Tangible Book Value Per Share Stockholders' equity 4,852,010 $ 4,790,982 $ 4,825,588 $ 4,741,685 $ 4,777,959 $ Less: Intangible assets 2,596,050 2,600,920 2,605,790 2,610,776 2,616,363 Tangible common equity 2,255,960 $ 2,190,062 $ 2,219,798 $ 2,130,909 $ 2,161,596 $ Total assets 26,344,414 $ 26,324,138 $ 25,731,354 $ 24,782,126 $ 24,529,557 $ Less: Intangible assets 2,596,050 2,600,920 2,605,790 2,610,776 2,616,363 Tangible assets 23,748,364 $ 23,723,218 $ 23,125,564 $ 22,171,350 $ 21,913,194 $ Equity to assets ratio 18.42% 18.20% 18.75% 19.13% 19.48% Tangible common equity ratio (1) 9.50% 9.23% 9.60% 9.61% 9.86% Book value per share 40.49 $ 39.86 $ 39.17 $ 38.46 $ 38.36 $ Tangible book value per share (2) 18.83 $ 18.22 $ 18.02 $ 17.28 $ 17.35 $ Shares outstanding 119,829,104 120,201,149 123,189,833 123,283,450 124,567,950 Return on Average Tangible Equity Net earnings 128,125 $ 112,604 $ 115,041 $ 116,287 $ 115,735 $ Average stockholders' equity 4,818,889 $ 4,815,965 $ 4,758,401 $ 4,748,819 $ 4,832,480 $ Less: Average intangible assets 2,598,762 2,603,842 2,608,497 2,614,055 2,619,351 Average tangible common equity 2,220,127 $ 2,212,123 $ 2,149,904 $ 2,134,764 $ 2,213,129 $ Return on average equity 10.66% 9.48% 9.59% 9.72% 9.61% Return on average tangible equity (3) 23.15% 20.64% 21.23% 21.61% 20.98% (1) Tangible common equity divided by tangible assets (2) Tangible common equity divided by shares outstanding (3) Annualized net earnings divided by average tangible common equity.
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