UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02 Results of Operations and Financial Condition.*
On July 20, 2022, PacWest Bancorp (the “Company”) announced its results of operations and financial condition for the three and six months ended June 30, 2022. The press release announcing the financial results for the three and six months ended June 30, 2022 is furnished as Exhibit 99.1 and incorporated herein by reference. A presentation regarding the Company’s financial results for the three and six months ended June 30, 2022 is furnished as Exhibit 99.2 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.*
(d) Exhibits.
Exhibit
Number Description
99.1 | Press release dated July 20, 2022 announcing PacWest’s results of operations and financial condition for the three and six months ended June 30, 2022. |
99.2 | Earnings Release Presentation |
104 | Cover page interactive data file (embedded within the Inline XBRL document) |
*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.
PacWest Bancorp | ||
By: | /s/ Bart R. Olson | |
Name: | Bart R. Olson | |
Title: | Executive Vice President | |
Chief Financial Officer |
Date: July 20, 2022
Exhibit 99.1
July 20, 2022 | ![]() |
PACWEST BANCORP ANNOUNCES RESULTS FOR THE SECOND QUARTER 2022
FOR IMMEDIATE RELEASE
SECOND QUARTER 2022 RESULTS
SECOND QUARTER 2022 HIGHLIGHTS
• | Net Earnings of $122.4 Million or $1.02 Per Diluted Share |
• | Net Interest Income (TE) of $327.8 Million in 2Q22 vs. $312.7 Million in 1Q22; Up 4.8% |
• | Provision for Credit Losses of $11.5 Million in 2Q22, of Which $1.5 Million Related to Held-to-Maturity Securities (HTM), vs. No Provision for Credit Losses in 1Q22 |
• | Noninterest Income of $34.3 Million in 2Q22 vs. $20.8 Million in 1Q22 |
• | Noninterest Expense of $183.6 Million in 2Q22 vs. $167.4 Million in 1Q22; Driven by Loan Growth |
• | Loan Growth of $2.1 Billion or 8.8% from Prior Quarter |
• | ACL Ratio of 1.07% and ALLL Ratio of 0.71% at 2Q22 vs. 1.12% and 0.81% at 1Q22, Respectively |
• | Core Deposits Down $2.5 Billion or 7.8%, of Which $1.9 Billion related to Venture Banking |
• | Tier 1 and Total Capital Ratios Increased Due to Preferred Stock Offering Offset by Growth in Risk-Weighted Assets – Tier 1 Ratio of 10.15% and Total Capital Ratio of 13.12% at 2Q22 |
• | Available-for-Sale Securities (AFS) Decreased from $10.0 Billion at 1Q22 to $6.8 Billion at 2Q22; $2.3 Billion was Reclassified to HTM on June 1; AOCI Net Unrealized Loss on the AFS Portfolio Increased from $376.5 Million at 1Q22 to $428.2 Million at 2Q22; Total AOCI Net Unrealized Loss of $644.8 Million at 2Q22 |
CEO COMMENTARY
Matt Wagner, CEO, commented, “Our organic loan growth during the second quarter was exceptionally strong as we continued to see high demand from our clients. Loans grew by $2.1 billion in the second quarter to an all-time high of $26.5 billion. Given the high level of economic uncertainty and interest rate volatility, we are taking a cautious approach and expect slower loan growth in the second half of the year. On the deposits side, we continued to see net outflows in the venture banking business as private fundraising and capital market activities for late stage companies continues to be muted. With venture banking deposits down $1.9 billion during the quarter, we used wholesale deposits to fund the loan growth, which increased deposit costs.”
“Credit quality remains strong as evidenced by net recoveries of two basis points and a slight net recovery on a year-to-date basis, and most credit metrics remain at historically low levels. We recorded a provision for credit losses on loans of $10.0 million during the quarter primarily as a result of the $2.0 billion increase in unfunded commitments. Our ACL ratio of 1.07% remains above the CECL adoption level of 0.97%.”
“Our Tier 1 and Total capital ratios increased during the second quarter of 2022 due to the preferred stock issuance in early June. The increase was partially offset by an increase in risk-weighted assets of $2.7 billion primarily as a result of continued loan growth and increases in unfunded commitments. Capital and balance sheet optimization remain a focus area as we look to grow our capital levels to those more similar to the first half of 2021.”
Page 1
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) | 2022 | 2022 | (Decrease) | 2022 | 2021 | (Decrease) | ||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||||||
Net earnings | $ | 122,360 | $ | 120,128 | $ | 2,232 | $ | 242,488 | $ | 330,918 | $ | (88,430 | ) | |||||||||||
Diluted earnings per common share | $ | 1.02 | $ | 1.01 | $ | 0.01 | $ | 2.03 | $ | 2.78 | $ | (0.75 | ) | |||||||||||
Pre-provision, pre-tax net revenue ("PPNR") (2) | $ | 174,626 | $ | 162,109 | $ | 12,517 | $ | 336,735 | $ | 310,891 | $ | 25,844 | ||||||||||||
Return on average assets | 1.23 | % | 1.22 | % | 0.01 | 1.22 | % | 2.03 | % | (0.81 | ) | |||||||||||||
PPNR return on average assets (2) | 1.75 | % | 1.65 | % | 0.10 | 1.70 | % | 1.91 | % | (0.21 | ) | |||||||||||||
Return on average tangible common equity (2) | 24.42 | % | 20.93 | % | 3.49 | 22.55 | % | 27.51 | % | (4.96 | ) | |||||||||||||
Yield on average loans and leases (tax equivalent) | 4.65 | % | 4.66 | % | (0.01 | ) | 4.66 | % | 5.19 | % | (0.53 | ) | ||||||||||||
Cost of average total deposits | 0.18 | % | 0.07 | % | 0.11 | 0.13 | % | 0.11 | % | 0.02 | ||||||||||||||
Net interest margin ("NIM") (tax equivalent) | 3.56 | % | 3.43 | % | 0.13 | 3.50 | % | 3.53 | % | (0.03 | ) | |||||||||||||
Efficiency ratio | 49.5 | % | 50.1 | % | (0.6 | ) | 49.8 | % | 47.2 | % | 2.6 | |||||||||||||
Total assets | $ | 40,950,723 | $ | 39,249,639 | $ | 1,701,084 | $ | 40,950,723 | $ | 34,867,987 | $ | 6,082,736 | ||||||||||||
Loans and leases held for investment, net of deferred fees | $ | 26,501,137 | $ | 24,352,072 | $ | 2,149,065 | $ | 26,501,137 | $ | 19,506,257 | $ | 6,994,880 | ||||||||||||
Noninterest-bearing demand deposits | $ | 13,338,029 | $ | 14,057,051 | $ | (719,022 | ) | $ | 13,338,029 | $ | 11,252,286 | $ | 2,085,743 | |||||||||||
Core deposits | $ | 29,218,646 | $ | 31,676,404 | $ | (2,457,758 | ) | $ | 29,218,646 | $ | 27,038,161 | $ | 2,180,485 | |||||||||||
Total deposits | $ | 33,968,152 | $ | 33,224,895 | $ | 743,257 | $ | 33,968,152 | $ | 29,647,034 | $ | 4,321,118 | ||||||||||||
As percentage of total deposits: | ||||||||||||||||||||||||
Noninterest-bearing demand deposits | 39 | % | 42 | % | (3 | ) | 39 | % | 38 | % | 1 | |||||||||||||
Core deposits | 86 | % | 95 | % | (9 | ) | 86 | % | 91 | % | (5 | ) | ||||||||||||
Equity to assets ratio | 9.72 | % | 9.30 | % | 0.42 | 9.72 | % | 11.03 | % | (1.31 | ) | |||||||||||||
Common equity tier 1 capital ratio | 8.24 | % | 8.64 | % | (0.40 | ) | 8.24 | % | 10.41 | % | (2.17 | ) | ||||||||||||
Tier 1 capital ratio | 10.15 | % | 9.07 | % | 1.08 | 10.15 | % | 10.41 | % | (0.26 | ) | |||||||||||||
Total capital ratio | 13.12 | % | 12.27 | % | 0.85 | 13.12 | % | 14.99 | % | (1.87 | ) | |||||||||||||
Tangible common equity ratio (2) | 5.15 | % | 5.83 | % | (0.68 | ) | 5.15 | % | 7.80 | % | (2.65 | ) | ||||||||||||
Book value per common share | $ | 28.93 | $ | 30.52 | $ | (1.59 | ) | $ | 28.93 | $ | 32.17 | $ | (3.24 | ) | ||||||||||
Tangible book value per common share (2) | $ | 16.93 | $ | 18.42 | $ | (1.49 | ) | $ | 16.93 | $ | 21.95 | $ | (5.02 | ) |
(1) | The operations of the HOA Business are included from its October 8, 2021 acquisition date and the operations of Civic are included from its February 1, 2021 acquisition date. |
(2) | Non-GAAP measure. |
Page 2
INCOME STATEMENT HIGHLIGHTS
NET INTEREST INCOME
Net interest income increased by $15.2 million to $323.9 million for the second quarter of 2022 compared to $308.7 million for the first quarter of 2022 due mainly to higher income on loans and leases resulting primarily from higher average balances and higher income on deposits in financial institutions, offset partially by higher interest expense on deposits and borrowings. Income on loans and leases increased by $25.5 million in the second quarter of 2022 due to a $2.0 billion increase in the balance of average loans and leases and one more day compared to the first quarter of 2022. Income on deposits in financial institutions increased by $2.6 million in the second quarter of 2022 due to a 65 basis point increase in the yield on average deposits in financial institutions, offset partially by a $909.1 million decrease in the average balance. The tax equivalent yield on average loans and leases was 4.65% for the second quarter of 2022 compared to 4.66% for the first quarter of 2022. The slight decrease in the tax equivalent yield on average loans and leases was due primarily to interest recapture on nonaccrual loans being lower by $2.3 million and amortized loan fees being lower by $1.3 million. Interest expense on deposits increased by $9.2 million in the second quarter of 2022 due mainly to a higher level of wholesale deposits which contributed to an 11 basis points increase in the cost of deposits. Interest expense on borrowings increased by $2.3 million due to a $1.1 billion increase in average balance and 50 basis points increase in cost of average borrowings.
The tax equivalent NIM was 3.56% for the second quarter of 2022 compared to 3.43% for the first quarter of 2022. The increase in the NIM was due mainly to the change in the interest-earning assets mix driven by the increase in the balance of average loans and leases as a percentage of average interest-earning assets from 64% to 69%, the decrease in the balance of average investment securities as a percentage of average interest-earning assets from 28% to 26%, and the decrease in the balance of average deposits in financial institutions as a percentage of average interest-earning assets from 8% to 5%. The balance of average loans and leases increased by $2.0 billion to $25.4 billion, the balance of average investment securities decreased by $909.1 million to $9.5 billion, and the balance of average deposits in financial institutions decreased by $1.1 billion to $2.0 billion. The increase in the balance of average loans and leases was the result of the Company’s strong organic loan growth.
The cost of average total deposits was 0.18% in the second quarter of 2022 compared to 0.07% in the first quarter of 2022 due mainly to higher average balances and rates on higher-cost wholesale money market and brokered time deposits, as well as higher market rates on our deposit products. Given strong loan growth and declines in core deposits, wholesale deposits increased by $2.9 billion during the second quarter from $0.5 billion to $3.4 billion.
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 | 2022 | 2022 | (Decrease) | |||||||||
(In thousands) | ||||||||||||
Reduction in allowance for loan and lease losses | $ | (10,000 | ) | $ | (2,000 | ) | $ | (8,000 | ) | |||
Addition to reserve for unfunded loan commitments | 20,000 | 2,000 | 18,000 | |||||||||
Total loan-related provision | 10,000 | - | 10,000 | |||||||||
Addition to allowance for held-to-maturity securities | 1,500 | - | 1,500 | |||||||||
Total provision for credit losses | $ | 11,500 | $ | - | $ | 11,500 |
Page 3
The provision for credit losses was $11.5 million for the second quarter of 2022 compared to no provision for credit losses for the first quarter of 2022. The $10.0 million increase in the loan-related provision was due mainly to the growth in unfunded commitments of $2.0 billion during the second quarter of 2022. The $1.5 million provision for credit losses on held-to-maturity securities is related to our $2.3 billion transfer from available-for-sale securities in the second quarter of 2022 and the estimated current expected credit loss on those held-to-maturity securities.
Noninterest Income
The following table presents details of noninterest income for the periods indicated:
Three Months Ended | ||||||||||||
June 30, | March 31, | Increase | ||||||||||
Noninterest Income | 2022 | 2022 | (Decrease) | |||||||||
(In thousands) | ||||||||||||
Service charges on deposit accounts | $ | 3,634 | $ | 3,571 | $ | 63 | ||||||
Other commissions and fees | 10,813 | 11,580 | (767 | ) | ||||||||
Leased equipment income | 12,335 | 13,094 | (759 | ) | ||||||||
Gain on sale of loans and leases | 12 | 60 | (48 | ) | ||||||||
(Loss) gain on sale of securities | (1,209 | ) | 104 | (1,313 | ) | |||||||
Dividends and gains (losses) on equity investments | 4,097 | (11,375 | ) | 15,472 | ||||||||
Warrant income | 1,615 | 629 | 986 | |||||||||
Other income | 3,049 | 3,155 | (106 | ) | ||||||||
Total noninterest income | $ | 34,346 | $ | 20,818 | $ | 13,528 |
Noninterest income increased by $13.5 million to $34.3 million for the second quarter of 2022 compared to $20.8 million for the first quarter of 2022 due primarily to an increase of $15.5 million in dividends and gains on equity investments, offset partially by an increase in loss on sale of securities. Dividends and gains on equity investments increased to $4.1 million for the second quarter of 2022 compared to a negative $11.4 million in the first quarter of 2022 due primarily to higher fair value gains on equity investments still held and lower fair value marks and losses on sales of equity investments. The increase in loss on sale of securities resulted from the sale of $393.4 million of securities for a net loss of $1.2 million for the second quarter of 2022 compared to sales of $206.1 million of securities for a net gain of $0.1 million for the first quarter of 2022. Warrant income was higher due primarily to merger and acquisition activities of three underlying companies.
Noninterest Expense
The following table presents details of noninterest expense for the periods indicated:
Three Months Ended | ||||||||||||
June 30, | March 31, | Increase | ||||||||||
Noninterest Expense | 2022 | 2022 | (Decrease) | |||||||||
(In thousands) | ||||||||||||
Compensation | $ | 102,542 | $ | 92,240 | $ | 10,302 | ||||||
Occupancy | 15,268 | 15,200 | 68 | |||||||||
Data processing | 9,258 | 9,629 | (371 | ) | ||||||||
Other professional services | 6,726 | 5,954 | 772 | |||||||||
Insurance and assessments | 5,632 | 5,490 | 142 | |||||||||
Intangible asset amortization | 3,649 | 3,649 | - | |||||||||
Leased equipment depreciation | 8,934 | 9,189 | (255 | ) | ||||||||
Foreclosed assets (income) expense, net | (28 | ) | (3,353 | ) | 3,325 | |||||||
Customer related expense | 11,748 | 12,655 | (907 | ) | ||||||||
Loan expense | 7,037 | 5,157 | 1,880 | |||||||||
Other | 12,879 | 11,616 | 1,263 | |||||||||
Total noninterest expense | $ | 183,645 | $ | 167,426 | $ | 16,219 |
Page 4
Noninterest expense increased by $16.2 million to $183.6 million for the second quarter of 2022 compared to $167.4 million for the first quarter of 2022 due primarily to an increase of $10.3 million in compensation expense, a decrease of $3.3 million in foreclosed assets income, an increase of $1.9 million in loan expense, and an increase of $1.3 million in other expense. The increase in compensation expense was due mainly to higher commissions, salaries, and bonus expense attributable mostly to strong loan growth and a full quarter of annual merit increases along with higher headcount which increased by 95 FTEs. The decrease in foreclosed assets income was due to a $3.2 million gain on the sale of our largest foreclosed property in the first quarter of 2022. The increase in loan expense was due mainly to higher loan-related legal expenses related to higher loan production. The increase in other expense was due mostly to higher employee costs for business travel.
Income Taxes
The effective income tax rate was 25.0% for the second quarter of 2022 compared to 25.9% for the first quarter of 2022. The decrease was due primarily to higher tax credits in the second quarter of 2022. The effective tax rate for the full year 2022 is currently 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, 2022 | March 31, 2022 | June 30, 2021 | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
Deposit Composition | Balance | Total | Balance | Total | Balance | Total | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Noninterest-bearing demand | $ | 13,338,029 | 39 | % | $ | 14,057,051 | 42 | % | $ | 11,252,286 | 38 | % | ||||||||||||
Interest checking | 6,197,234 | 18 | % | 6,673,696 | 20 | % | 7,394,472 | 25 | % | |||||||||||||||
Money market | 9,029,433 | 27 | % | 10,301,996 | 31 | % | 7,777,199 | 26 | % | |||||||||||||||
Savings | 653,950 | 2 | % | 643,661 | 2 | % | 614,204 | 2 | % | |||||||||||||||
Total core deposits | 29,218,646 | 86 | % | 31,676,404 | 95 | % | 27,038,161 | 91 | % | |||||||||||||||
Non-core non-maturity deposits | 2,185,248 | 6 | % | 322,732 | 1 | % | 1,122,971 | 4 | % | |||||||||||||||
Total non-maturity deposits | 31,403,894 | 92 | % | 31,999,136 | 96 | % | 28,161,132 | 95 | % | |||||||||||||||
Time deposits $250,000 and under | 1,898,312 | 6 | % | 878,383 | 3 | % | 913,371 | 3 | % | |||||||||||||||
Time deposits over $250,000 | 665,946 | 2 | % | 347,376 | 1 | % | 572,531 | 2 | % | |||||||||||||||
Total time deposits | 2,564,258 | 8 | % | 1,225,759 | 4 | % | 1,485,902 | 5 | % | |||||||||||||||
Total deposits | $ | 33,968,152 | 100 | % | $ | 33,224,895 | 100 | % | $ | 29,647,034 | 100 | % |
At June 30, 2022, core deposits totaled $29.2 billion or 86% of total deposits, including $13.3 billion of noninterest-bearing demand deposits or 39% of total deposits. Core deposits decreased by $2.5 billion or 7.8% in the second quarter of 2022 driven primarily by a $1.9 billion decrease in balances from our venture banking clients. Total deposits increased by $743.3 million or 2.2% in the second quarter of 2022 due to a $1.9 billion increase in non-core non-maturity deposits and a $1.3 billion increase in time deposits, offset partially by the decrease in core deposits. Total venture banking deposits decreased from $14.0 billion as of March 31, 2022 to $12.1 billion as of June 30, 2022.
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 increased from $1.7 billion as of March 31, 2022 to $2.1 billion as of June 30, 2022, of which $1.5 billion was managed by PWAM.
Page 5
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 | |||||||||||
June 30, | March 31, | June 30, | ||||||||||
Roll Forward of Loans and Leases Held for Investment, Net of Deferred Fees | 2022 | 2022 | 2022 | |||||||||
(Dollars in thousands) | ||||||||||||
Balance, beginning of period | $ | 24,352,072 | $ | 22,941,548 | $ | 22,941,548 | ||||||
Additions: | ||||||||||||
Production | 2,815,181 | 2,574,860 | 5,390,041 | |||||||||
Disbursements | 1,871,627 | 1,589,152 | 3,460,779 | |||||||||
Total production and disbursements | 4,686,808 | 4,164,012 | 8,850,820 | |||||||||
Reductions: | ||||||||||||
Payoffs | (1,347,447 | ) | (1,448,680 | ) | (2,796,127 | ) | ||||||
Paydowns | (1,183,178 | ) | (1,264,571 | ) | (2,447,749 | ) | ||||||
Total payoffs and paydowns | (2,530,625 | ) | (2,713,251 | ) | (5,243,876 | ) | ||||||
Sales | (4,319 | ) | (36,698 | ) | (41,017 | ) | ||||||
Transfers to foreclosed assets | - | (305 | ) | (305 | ) | |||||||
Charge-offs | (2,799 | ) | (3,234 | ) | (6,033 | ) | ||||||
Total reductions | (2,537,743 | ) | (2,753,488 | ) | (5,291,231 | ) | ||||||
Net increase (decrease) | 2,149,065 | 1,410,524 | 3,559,589 | |||||||||
Balance, end of period | $ | 26,501,137 | $ | 24,352,072 | $ | 26,501,137 | ||||||
Weighted average rate on production (1) | 4.61 | % | 4.31 | % | 4.46 | % |
(1) | The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees. Amortized fees added approximately 23 basis points to loan yields in 2022. |
Loans and leases held for investment, net of deferred fees, increased by $2.1 billion or 8.8% in the second quarter of 2022 to $26.5 billion at June 30, 2022. The overall increase in the loans and leases balance for the second quarter of 2022 was due primarily to increases in the residential real estate mortgage, asset-based, and residential real estate construction portfolios.
Civic loan production was $847 million for the second quarter of 2022 compared to $559 million for the first quarter of 2022. The Civic loan portfolio as of June 30, 2022 totaled $2.4 billion.
The weighted average rate on the $2.8 billion of production for the second quarter of 2022 increased to 4.61% from 4.31% in the first quarter of 2022 due primarily to the loan mix (lower levels of single-family loan pool purchases and higher level of Civic fundings). In the second quarter of 2022, we purchased $69 million of single-family loan pools compared to $587 million in the first quarter of 2022. The single-family loan pool purchase portfolio as of June 30, 2022 totaled $2.9 billion. Purchases of single-family loan pools ceased in April 2022.
PPP loans declined by $37.4 million in the second quarter of 2022, as the program continues to wind down. Net fees for PPP loans were $1.0 million in the second quarter of 2022, down from $2.5 million in the first quarter of 2022. Remaining PPP loans totaled $33.0 million as of June 30, 2022, with $0.6 million of net fees to amortize over the remaining life of the loans.
Page 6
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, 2022 | March 31, 2022 | June 30, 2021 | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
Loan and Lease Portfolio | Balance | Total | Balance | Total | Balance | Total | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Real estate mortgage: | ||||||||||||||||||||||||
Commercial | $ | 3,670,515 | 14 | % | $ | 3,669,741 | 15 | % | $ | 3,792,198 | 19 | % | ||||||||||||
Residential | 9,879,131 | 37 | % | 8,369,550 | 35 | % | 4,620,822 | 24 | % | |||||||||||||||
Total real estate mortgage | 13,549,646 | 51 | % | 12,039,291 | 50 | % | 8,413,020 | 43 | % | |||||||||||||||
Real estate construction and land: | ||||||||||||||||||||||||
Commercial | 837,423 | 3 | % | 802,022 | 3 | % | 930,785 | 5 | % | |||||||||||||||
Residential | 3,153,616 | 12 | % | 2,891,467 | 12 | % | 2,574,799 | 13 | % | |||||||||||||||
Total real estate construction and land | 3,991,039 | 15 | % | 3,693,489 | 15 | % | 3,505,584 | 18 | % | |||||||||||||||
Total real estate | 17,540,685 | 66 | % | 15,732,780 | 65 | % | 11,918,604 | 61 | % | |||||||||||||||
Commercial: | ||||||||||||||||||||||||
Asset-based | 5,068,112 | 19 | % | 4,739,220 | 19 | % | 3,550,903 | 18 | % | |||||||||||||||
Venture capital | 2,179,190 | 8 | % | 2,077,339 | 9 | % | 1,749,432 | 9 | % | |||||||||||||||
Other commercial | 1,229,504 | 5 | % | 1,298,136 | 5 | % | 1,921,909 | 10 | % | |||||||||||||||
Total commercial | 8,476,806 | 32 | % | 8,114,695 | 33 | % | 7,222,244 | 37 | % | |||||||||||||||
Consumer | 483,646 | 2 | % | 504,597 | 2 | % | 365,409 | 2 | % | |||||||||||||||
Total loans and leases held for investment, net of deferred fees | $ | 26,501,137 | 100 | % | $ | 24,352,072 | 100 | % | $ | 19,506,257 | 100 | % | ||||||||||||
Total unfunded loan commitments | $ | 11,866,437 | $ | 9,899,345 | $ | 7,891,875 |
Allowance for Credit Losses ON LOANS AND LEASES
The following tables present roll forwards of the allowance for credit losses on loans and leases for the periods indicated:
Three Months Ended June 30, 2022 | ||||||||||||
Allowance for | Reserve for | Total | ||||||||||
Loan and | Unfunded Loan | Allowance for | ||||||||||
Allowance for Credit Losses Rollforward | Lease Losses | Commitments | Credit Losses | |||||||||
(In thousands) | ||||||||||||
Beginning balance | $ | 197,398 | $ | 75,071 | $ | 272,469 | ||||||
Charge-offs | (2,799 | ) | - | (2,799 | ) | |||||||
Recoveries | 4,106 | - | 4,106 | |||||||||
Net recoveries | 1,307 | - | 1,307 | |||||||||
Provision | (10,000 | ) | 20,000 | 10,000 | ||||||||
Ending balance | $ | 188,705 | $ | 95,071 | $ | 283,776 |
Three Months Ended March 31, 2022 | ||||||||||||
Allowance for | Reserve for | Total | ||||||||||
Loan and | Unfunded Loan | Allowance for | ||||||||||
Allowance for Credit Losses Rollforward | Lease Losses | Commitments | Credit Losses | |||||||||
(In thousands) | ||||||||||||
Beginning balance | $ | 200,564 | $ | 73,071 | $ | 273,635 | ||||||
Charge-offs | (3,234 | ) | - | (3,234 | ) | |||||||
Recoveries | 2,068 | - | 2,068 | |||||||||
Net charge-offs | (1,166 | ) | - | (1,166 | ) | |||||||
Provision | (2,000 | ) | 2,000 | - | ||||||||
Ending balance | $ | 197,398 | $ | 75,071 | $ | 272,469 |
Page 7
The following table presents allowance for credit losses information on loans and leases as of and for the dates and periods indicated:
June 30, | March 31, | Increase | ||||||||||
Allowance for Credit Losses | 2022 | 2022 | (Decrease) | |||||||||
(Dollars in thousands) | ||||||||||||
Allowance for loan and lease losses | $ | 188,705 | $ | 197,398 | $ | (8,693 | ) | |||||
Reserve for unfunded loan commitments | 95,071 | 75,071 | 20,000 | |||||||||
Allowance for credit losses | $ | 283,776 | $ | 272,469 | $ | 11,307 | ||||||
Provision for credit losses (for the quarter) | $ | 10,000 | $ | - | $ | 10,000 | ||||||
Net (recoveries) charge-offs (for the quarter) | $ | (1,307 | ) | $ | 1,166 | $ | (2,473 | ) | ||||
Net (recoveries) charge-offs to average loans and leases (for the quarter) | (0.02 | )% | 0.02 | % | ||||||||
Allowance for loan and lease losses to loans and leases held for investment | 0.71 | % | 0.81 | % | ||||||||
Allowance for credit losses to loans and leases held for investment | 1.07 | % | 1.12 | % |
The allowance for credit losses increased by $11.3 million in the second quarter of 2022 to $283.8 million at June 30, 2022. The increase in the allowance for credit losses during the second quarter of 2022 was attributable to a $10.0 million provision for credit losses and $1.3 million in net recoveries.
Net recoveries were $1.3 million for the second quarter of 2022 as gross charge-offs of $2.8 million were reduced by recoveries of $4.1 million.
Net charge-offs were $1.2 million for the first quarter of 2022 as gross charge-offs of $3.2 million were reduced by recoveries of $2.0 million.
Page 8
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 | 2022 | 2022 | (Decrease) | |||||||||
(Dollars in thousands) | ||||||||||||
NPAs and Performing TDRs: | ||||||||||||
Nonaccrual loans and leases held for investment (1) | $ | 78,527 | $ | 66,538 | $ | 11,989 | ||||||
Accruing loans contractually past due 90 days or more | - | - | - | |||||||||
Foreclosed assets, net | - | 304 | (304 | ) | ||||||||
Total nonperforming assets ("NPAs") | $ | 78,527 | $ | 66,842 | $ | 11,685 | ||||||
Performing TDRs held for investment | $ | 11,723 | $ | 16,781 | $ | (5,058 | ) | |||||
Nonaccrual loans and leases held for investment to loans and leases held for investment | 0.30 | % | 0.27 | % | ||||||||
Nonperforming assets to loans and leases held for investment and foreclosed assets | 0.30 | % | 0.27 | % | ||||||||
Allowance for credit losses to nonaccrual loans and leases held for investment | 361.4 | % | 409.5 | % | ||||||||
Loan and Lease Credit Risk Ratings: | ||||||||||||
Pass | $ | 25,916,612 | $ | 23,892,689 | $ | 2,023,923 | ||||||
Special mention | 480,261 | 377,315 | 102,946 | |||||||||
Classified | 104,264 | 82,068 | 22,196 | |||||||||
Total loans and leases held for investment, net of deferred fees | $ | 26,501,137 | $ | 24,352,072 | $ | 2,149,065 | ||||||
Special mention loans and leases held for investment to loans and leases held for investment | 1.81 | % | 1.55 | % | ||||||||
Classified loans and leases held for investment to loans and leases held for investment | 0.39 | % | 0.34 | % |
(1) Nonaccrual loans include SBA guaranteed amounts of $13.8 million at June 30, 2022 and $13.4 million at March 31, 2022.
Classified loans and leases were at historically low levels as of the end of the first quarter of 2022 but saw an increase of $22.2 million during the second quarter due mainly to a $10.7 million increase in classified commercial real estate mortgage loans and a $9.6 million increase in classified residential real estate mortgage loans. Special mention loans and leases increased by $102.9 million during the second quarter due mostly to an $86.9 million increase in special mention commercial real estate construction loans and a $23.6 million increase in special mention residential real estate construction loans. Nonaccrual loans and leases increased by $12.0 million to $78.5 million in the second quarter of 2022 due primarily to a $17.2 million increase in nonaccrual Civic residential mortgage and residential renovation loans partially offset by declines in nonaccrual loans in all other portfolios.
Page 9
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, 2022 | March 31, 2022 | Increase (Decrease) | ||||||||||||||||||||||
Accruing | Accruing | Accruing | ||||||||||||||||||||||
and 30-89 | and 30-89 | and 30-89 | ||||||||||||||||||||||
Days Past | Days Past | Days Past | ||||||||||||||||||||||
Nonaccrual | Due | Nonaccrual | Due | Nonaccrual | Due | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Real estate mortgage: | ||||||||||||||||||||||||
Commercial | $ | 28,529 | $ | 14 | $ | 32,071 | $ | 2,090 | $ | (3,542 | ) | $ | (2,076 | ) | ||||||||||
Residential | 27,524 | 13,577 | 17,463 | 31,103 | 10,061 | (17,526 | ) | |||||||||||||||||
Total real estate mortgage | 56,053 | 13,591 | 49,534 | 33,193 | 6,519 | (19,602 | ) | |||||||||||||||||
Real estate construction and land: | ||||||||||||||||||||||||
Commercial | - | - | - | - | - | - | ||||||||||||||||||
Residential | 13,287 | 25,981 | 6,215 | 21,413 | 7,072 | 4,568 | ||||||||||||||||||
Total real estate construction and land | 13,287 | 25,981 | 6,215 | 21,413 | 7,072 | 4,568 | ||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Asset-based | 1,189 | - | 1,323 | - | (134 | ) | - | |||||||||||||||||
Venture capital | 3,120 | - | 3,659 | - | (539 | ) | - | |||||||||||||||||
Other commercial | 4,655 | 9,503 | 5,420 | 47 | (765 | ) | 9,456 | |||||||||||||||||
Total commercial | 8,964 | 9,503 | 10,402 | 47 | (1,438 | ) | 9,456 | |||||||||||||||||
Consumer | 223 | 1,711 | 387 | 994 | (164 | ) | 717 | |||||||||||||||||
Total held for investment | $ | 78,527 | $ | 50,786 | $ | 66,538 | $ | 55,647 | $ | 11,989 | $ | (4,861 | ) |
Loans and leases accruing and 30-89 days past due generally fluctuate from period to period. The $4.9 million decrease in the second quarter of 2022 was primarily in Civic residential mortgage loans, offset partially by a $9.5 million increase in the other commercial category due primarily to five PPP loans that are under review by the SBA for forgiveness, of which $6.2 million was forgiven in July 2022.
CAPITAL
Our Tier 1, Total capital, and Tier 1 leverage capital ratios increased during the second quarter of 2022 due mainly to the $513.2 million preferred stock issuance in June 2022. The net proceeds of $498.5 million increased stockholders’ equity, offset partially by an increase in risk-weighted assets of $2.7 billion primarily as a result of loan growth and the increase in unfunded commitments. We continue to consider additional capital enhancing strategies, such as a credit risk transfer transaction, to increase capital given our loan growth during the first half of the year. The following table presents capital ratios as of the dates indicated:
June 30, | March 31, | |||||||
2022 | 2022 | |||||||
PacWest Bancorp Consolidated: | ||||||||
Tier 1 leverage capital ratio (1) | 8.52 | % | 7.11 | % | ||||
Common equity tier 1 capital ratio (1) | 8.24 | % | 8.64 | % | ||||
Tier 1 capital ratio (1) | 10.15 | % | 9.07 | % | ||||
Total capital ratio (1) | 13.12 | % | 12.27 | % | ||||
Risk-weighted assets (1) (in thousands) | $ | 33,011,062 | $ | 30,297,312 | ||||
Tangible common equity ratio (2) | 5.15 | % | 5.83 | % |
(1) Capital information for June 30, 2022 is preliminary.
(2) Non-GAAP measure.
Page 10
ABOUT PACWEST BANCORP
PacWest Bancorp (“PacWest”) is a bank holding company with over $40 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 is focused on relationship-based business banking to small, middle-market, and venture-backed businesses nationwide. The Bank offers a broad range of loan and lease and deposit products and services through 69 full-service branches located in California, one branch located in Durham, North Carolina, one branch located in Denver, Colorado, and numerous loan production offices across the country. 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 provides 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. The Bank also offers financing of business-purpose, non-owner-occupied investor properties through Civic, a wholly-owned subsidiary. The Bank also provides a specialized suite of services for the HOA industry. 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 often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” 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, which may cause actual results, performance, or achievements to differ materially from those expressed in them. The ongoing COVID-19 pandemic continues to affect 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 due in part to the new variants of COVID-19. 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, inflation, 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, 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.
All forward-looking statements in this communication are based on information available at the time the statement is made. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Page 11
PACWEST BANCORP AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEET |
June 30, | March 31, | June 30, | ||||||||||
2022 | 2022 | 2021 | ||||||||||
(Dollars in thousands, except per share data) | ||||||||||||
ASSETS: | ||||||||||||
Cash and due from banks | $ | 197,027 | $ | 205,446 | $ | 179,505 | ||||||
Interest-earning deposits in financial institutions | 2,192,877 | 1,865,235 | 5,678,587 | |||||||||
Total cash and cash equivalents | 2,389,904 | 2,070,681 | 5,858,092 | |||||||||
Securities available-for-sale, at estimated fair value | 6,780,648 | 9,975,109 | 7,198,608 | |||||||||
Securities held-to-maturity, at amortized cost, net of allowance for credit losses | 2,260,367 | - | - | |||||||||
Federal Home Loan Bank stock, at cost | 33,210 | 17,250 | 17,250 | |||||||||
Total investment securities | 9,074,225 | 9,992,359 | 7,215,858 | |||||||||
Gross loans and leases held for investment | 26,608,541 | 24,439,749 | 19,580,731 | |||||||||
Deferred fees, net | (107,404 | ) | (87,677 | ) | (74,474 | ) | ||||||
Total loans and leases held for investment, net of deferred fees | 26,501,137 | 24,352,072 | 19,506,257 | |||||||||
Allowance for loan and lease losses | (188,705 | ) | (197,398 | ) | (225,600 | ) | ||||||
Total loans and leases held for investment, net | 26,312,432 | 24,154,674 | 19,280,657 | |||||||||
Equipment leased to others under operating leases | 324,233 | 325,305 | 313,574 | |||||||||
Premises and equipment, net | 51,083 | 51,011 | 39,541 | |||||||||
Foreclosed assets, net | - | 304 | 13,227 | |||||||||
Goodwill | 1,405,736 | 1,405,736 | 1,204,118 | |||||||||
Core deposit and customer relationship intangibles, net | 37,659 | 41,308 | 18,423 | |||||||||
Other assets | 1,355,451 | 1,208,261 | 924,497 | |||||||||
Total assets | $ | 40,950,723 | $ | 39,249,639 | $ | 34,867,987 | ||||||
LIABILITIES: | ||||||||||||
Noninterest-bearing deposits | $ | 13,338,029 | $ | 14,057,051 | $ | 11,252,286 | ||||||
Interest-bearing deposits | 20,630,123 | 19,167,844 | 18,394,748 | |||||||||
Total deposits | 33,968,152 | 33,224,895 | 29,647,034 | |||||||||
Borrowings | 1,592,000 | 991,000 | 6,625 | |||||||||
Subordinated debt | 863,756 | 863,880 | 861,788 | |||||||||
Accrued interest payable and other liabilities | 548,412 | 519,269 | 505,859 | |||||||||
Total liabilities | 36,972,320 | 35,599,044 | 31,021,306 | |||||||||
STOCKHOLDERS' EQUITY (1) | 3,978,403 | 3,650,595 | 3,846,681 | |||||||||
Total liabilities and stockholders’ equity | $ | 40,950,723 | $ | 39,249,639 | $ | 34,867,987 | ||||||
Book value per common share | $ | 28.93 | $ | 30.52 | $ | 32.17 | ||||||
Tangible book value per common share (2) | $ | 16.93 | $ | 18.42 | $ | 21.95 | ||||||
Common shares outstanding | 120,288,024 | 119,601,766 | 119,555,102 |
(1) Includes net unrealized (loss) gain on: | ||||||||||||
Securities available-for-sale, net | $ | (428,242 | ) | $ | (376,475 | ) | $ | 145,516 | ||||
Securities transferred from available-for-sale to held-to-maturity | $ | (216,508 | ) | $ | - | $ | - | |||||
(2) Non-GAAP measure. |
Page 12
PACWEST BANCORP AND SUBSIDIARIES | |||||||||
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||
Loans and leases | $ | 293,286 | $ | 267,759 | $ | 244,529 | $ | 561,045 | $ | 486,073 | ||||||||||
Investment securities | 52,902 | 53,422 | 33,954 | 106,324 | 64,219 | |||||||||||||||
Deposits in financial institutions | 4,330 | 1,723 | 2,022 | 6,053 | 3,550 | |||||||||||||||
Total interest income | 350,518 | 322,904 | 280,505 | 673,422 | 553,842 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 15,362 | 6,208 | 7,269 | 21,570 | 14,769 | |||||||||||||||
Borrowings | 2,441 | 161 | 265 | 2,602 | 458 | |||||||||||||||
Subordinated debt | 8,790 | 7,818 | 6,663 | 16,608 | 11,038 | |||||||||||||||
Total interest expense | 26,593 | 14,187 | 14,197 | 40,780 | 26,265 | |||||||||||||||
Net interest income | 323,925 | 308,717 | 266,308 | 632,642 | 527,577 | |||||||||||||||
Provision for credit losses | 11,500 | - | (88,000 | ) | 11,500 | (136,000 | ) | |||||||||||||
Net interest income after provision for credit losses | 312,425 | 308,717 | 354,308 | 621,142 | 663,577 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Service charges on deposit accounts | 3,634 | 3,571 | 3,452 | 7,205 | 6,386 | |||||||||||||||
Other commissions and fees | 10,813 | 11,580 | 10,704 | 22,393 | 19,862 | |||||||||||||||
Leased equipment income | 12,335 | 13,094 | 10,847 | 25,429 | 22,201 | |||||||||||||||
Gain on sale of loans and leases | 12 | 60 | 1,422 | 72 | 1,561 | |||||||||||||||
(Loss) gain on sale of securities | (1,209 | ) | 104 | - | (1,105 | ) | 101 | |||||||||||||
Dividends and gains (losses) on equity investments | 4,097 | (11,375 | ) | 5,394 | (7,278 | ) | 16,298 | |||||||||||||
Warrant income | 1,615 | 629 | 5,650 | 2,244 | 11,773 | |||||||||||||||
Other income | 3,049 | 3,155 | 2,902 | 6,204 | 7,018 | |||||||||||||||
Total noninterest income | 34,346 | 20,818 | 40,371 | 55,164 | 85,200 | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Compensation | 102,542 | 92,240 | 90,807 | 194,782 | 170,689 | |||||||||||||||
Occupancy | 15,268 | 15,200 | 14,784 | 30,468 | 28,838 | |||||||||||||||
Data processing | 9,258 | 9,629 | 7,758 | 18,887 | 14,715 | |||||||||||||||
Other professional services | 6,726 | 5,954 | 5,256 | 12,680 | 10,382 | |||||||||||||||
Insurance and assessments | 5,632 | 5,490 | 3,745 | 11,122 | 8,648 | |||||||||||||||
Intangible asset amortization | 3,649 | 3,649 | 2,889 | 7,298 | 5,968 | |||||||||||||||
Leased equipment depreciation | 8,934 | 9,189 | 8,614 | 18,123 | 17,583 | |||||||||||||||
Foreclosed assets (income) expense, net | (28 | ) | (3,353 | ) | (119 | ) | (3,381 | ) | (118 | ) | ||||||||||
Acquisition, integration and reorganization costs | - | - | 200 | - | 3,625 | |||||||||||||||
Customer related expense | 11,748 | 12,655 | 4,973 | 24,403 | 9,791 | |||||||||||||||
Loan expense | 7,037 | 5,157 | 4,031 | 12,194 | 7,224 | |||||||||||||||
Other expense | 12,879 | 11,616 | 8,812 | 24,495 | 24,541 | |||||||||||||||
Total noninterest expense | 183,645 | 167,426 | 151,750 | 351,071 | 301,886 | |||||||||||||||
Earnings before income taxes | 163,126 | 162,109 | 242,929 | 325,235 | 446,891 | |||||||||||||||
Income tax expense | 40,766 | 41,981 | 62,417 | 82,747 | 115,973 | |||||||||||||||
Net earnings | $ | 122,360 | $ | 120,128 | $ | 180,512 | $ | 242,488 | $ | 330,918 | ||||||||||
Basic and diluted earnings per common share | $ | 1.02 | $ | 1.01 | $ | 1.52 | $ | 2.03 | $ | 2.78 | ||||||||||
Dividends declared and paid per common share | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.50 | $ | 0.50 |
Page 13
PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||
NET EARNINGS PER COMMON SHARE |
Three Months Ended | Six Months Ended | |||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
2022 | 2022 | 2021 | 2022 | 2021 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Basic Earnings Per Common Share: | ||||||||||||||||||||
Net earnings | $ | 122,360 | $ | 120,128 | $ | 180,512 | $ | 242,488 | $ | 330,918 | ||||||||||
Less: earnings allocated to unvested restricted stock (1) | (2,351 | ) | (2,037 | ) | (3,172 | ) | (4,389 | ) | (5,495 | ) | ||||||||||
Net earnings allocated to common shares | $ | 120,009 | $ | 118,091 | $ | 177,340 | $ | 238,099 | $ | 325,423 | ||||||||||
Weighted average basic shares and unvested restricted stock outstanding | 120,022 | 119,595 | 119,386 | 119,810 | 119,121 | |||||||||||||||
Less: weighted average unvested restricted stock outstanding | (2,460 | ) | (2,246 | ) | (2,356 | ) | (2,354 | ) | (2,181 | ) | ||||||||||
Weighted average basic shares outstanding | 117,562 | 117,349 | 117,030 | 117,456 | 116,940 | |||||||||||||||
Basic earnings per common share | $ | 1.02 | $ | 1.01 | $ | 1.52 | $ | 2.03 | $ | 2.78 | ||||||||||
Diluted Earnings Per Common Share: | ||||||||||||||||||||
Net earnings allocated to common shares | $ | 120,009 | $ | 118,091 | $ | 177,340 | $ | 238,099 | $ | 325,423 | ||||||||||
Weighted average diluted shares outstanding | 117,562 | 117,349 | 117,030 | 117,456 | 116,940 | |||||||||||||||
Diluted earnings per common share | $ | 1.02 | $ | 1.01 | $ | 1.52 | $ | 2.03 | $ | 2.78 |
(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. |
Page 14
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
Three Months Ended | |||||||||||||||||||||||||||
June 30, 2022 | March 31, 2022 | June 30, 2021 | |||||||||||||||||||||||||
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) | $ | 25,449,773 | $ | 295,154 | 4.65 | % | $ | 23,433,019 | $ | 269,521 | 4.66 | % | $ | 19,057,420 | $ | 246,147 | 5.18 | % | |||||||||
Investment securities (3) | 9,488,653 | 54,910 | 2.32 | % | 10,397,709 | 55,594 | 2.17 | % | 6,492,721 | 36,111 | 2.23 | % | |||||||||||||||
Deposits in financial institutions | 1,984,751 | 4,330 | 0.88 | % | 3,083,159 | 1,723 | 0.23 | % | 6,347,764 | 2,022 | 0.13 | % | |||||||||||||||
Total interest-earning assets (1) | 36,923,177 | 354,394 | 3.85 | % | 36,913,887 | 326,838 | 3.59 | % | 31,897,905 | 284,280 | 3.57 | % | |||||||||||||||
Other assets | 3,108,714 | 2,969,417 | 2,428,207 | ||||||||||||||||||||||||
Total assets | $ | 40,031,891 | $ | 39,883,304 | $ | 34,326,112 | |||||||||||||||||||||
Liabilities and Stockholders' Equity: | |||||||||||||||||||||||||||
Interest checking | $ | 6,517,381 | 3,816 | 0.23 | % | $ | 7,094,623 | 1,776 | 0.10 | % | $ | 7,235,726 | 2,394 | 0.13 | % | ||||||||||||
Money market | 10,553,942 | 8,448 | 0.32 | % | 10,852,454 | 3,461 | 0.13 | % | 8,484,933 | 3,318 | 0.16 | % | |||||||||||||||
Savings | 650,479 | 41 | 0.03 | % | 642,709 | 39 | 0.02 | % | 598,225 | 36 | 0.02 | % | |||||||||||||||
Time | 1,939,816 | 3,057 | 0.63 | % | 1,278,609 | 932 | 0.30 | % | 1,498,169 | 1,521 | 0.41 | % | |||||||||||||||
Total interest-bearing deposits | 19,661,618 | 15,362 | 0.31 | % | 19,868,395 | 6,208 | 0.13 | % | 17,817,053 | 7,269 | 0.16 | % | |||||||||||||||
Borrowings | 1,356,616 | 2,441 | 0.72 | % | 298,444 | 161 | 0.22 | % | 225,446 | 265 | 0.47 | % | |||||||||||||||
Subordinated debt | 863,653 | 8,790 | 4.08 | % | 863,572 | 7,818 | 3.67 | % | 735,725 | 6,663 | 3.63 | % | |||||||||||||||
Total interest-bearing liabilities | 21,881,887 | 26,593 | 0.49 | % | 21,030,411 | 14,187 | 0.27 | % | 18,778,224 | 14,197 | 0.30 | % | |||||||||||||||
Noninterest-bearing demand deposits | 13,987,398 | 14,463,667 | 11,304,757 | ||||||||||||||||||||||||
Other liabilities | 510,238 | 541,745 | 504,089 | ||||||||||||||||||||||||
Total liabilities | 36,379,523 | 36,035,823 | 30,587,070 | ||||||||||||||||||||||||
Stockholders' equity | 3,652,368 | 3,847,481 | 3,739,042 | ||||||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 40,031,891 | $ | 39,883,304 | $ | 34,326,112 | |||||||||||||||||||||
Net interest income (1) | $ | 327,801 | $ | 312,651 | $ | 270,083 | |||||||||||||||||||||
Net interest spread (1) | 3.36 | % | 3.32 | % | 3.27 | % | |||||||||||||||||||||
Net interest margin (1) | 3.56 | % | 3.43 | % | 3.40 | % | |||||||||||||||||||||
Total deposits (4) | $ | 33,649,016 | $ | 15,362 | 0.18 | % | $ | 34,332,062 | $ | 6,208 | 0.07 | % | $ | 29,121,810 | $ | 7,269 | 0.10 | % |
(1) | Tax equivalent. |
(2) | Includes net loan premium amortization of $5.8 million, $5.7 million, and $1.5 million for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021, respectively. |
(3) | Includes tax-equivalent adjustments of $2.0 million, $2.2 million, and $2.2 million for the three months ended June 30, 2022, March 31, 2022, and June 30, 2021 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. |
Page 15
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
ASSETS: | ||||||||||||||||||||
Cash and due from banks | $ | 197,027 | $ | 205,446 | $ | 112,548 | $ | 174,585 | $ | 179,505 | ||||||||||
Interest-earning deposits in financial institutions | 2,192,877 | 1,865,235 | 3,944,686 | 3,524,613 | 5,678,587 | |||||||||||||||
Total cash and cash equivalents | 2,389,904 | 2,070,681 | 4,057,234 | 3,699,198 | 5,858,092 | |||||||||||||||
Securities available-for-sale | 6,780,648 | 9,975,109 | 10,694,458 | 9,276,926 | 7,198,608 | |||||||||||||||
Securities held-to-maturity | 2,260,367 | - | - | - | - | |||||||||||||||
Federal Home Loan Bank stock | 33,210 | 17,250 | 17,250 | 17,250 | 17,250 | |||||||||||||||
Total investment securities | 9,074,225 | 9,992,359 | 10,711,708 | 9,294,176 | 7,215,858 | |||||||||||||||
Gross loans and leases held for investment | 26,608,541 | 24,439,749 | 23,026,308 | 20,588,255 | 19,580,731 | |||||||||||||||
Deferred fees, net | (107,404 | ) | (87,677 | ) | (84,760 | ) | (77,235 | ) | (74,474 | ) | ||||||||||
Total loans and leases held for investment, net of deferred fees | 26,501,137 | 24,352,072 | 22,941,548 | 20,511,020 | 19,506,257 | |||||||||||||||
Allowance for loan and lease losses | (188,705 | ) | (197,398 | ) | (200,564 | ) | (203,733 | ) | (225,600 | ) | ||||||||||
Total loans and leases held for investment, net | 26,312,432 | 24,154,674 | 22,740,984 | 20,307,287 | 19,280,657 | |||||||||||||||
Equipment leased to others under operating leases | 324,233 | 325,305 | 339,150 | 334,275 | 313,574 | |||||||||||||||
Premises and equipment, net | 51,083 | 51,011 | 46,740 | 47,246 | 39,541 | |||||||||||||||
Foreclosed assets, net | - | 304 | 12,843 | 13,364 | 13,227 | |||||||||||||||
Goodwill | 1,405,736 | 1,405,736 | 1,405,736 | 1,204,118 | 1,204,118 | |||||||||||||||
Core deposit and customer relationship intangibles, net | 37,659 | 41,308 | 44,957 | 15,533 | 18,423 | |||||||||||||||
Other assets | 1,355,451 | 1,208,261 | 1,083,992 | 970,479 | 924,497 | |||||||||||||||
Total assets | $ | 40,950,723 | $ | 39,249,639 | $ | 40,443,344 | $ | 35,885,676 | $ | 34,867,987 | ||||||||||
LIABILITIES: | ||||||||||||||||||||
Noninterest-bearing deposits | $ | 13,338,029 | $ | 14,057,051 | $ | 14,543,133 | $ | 12,881,806 | $ | 11,252,286 | ||||||||||
Interest-bearing deposits | 20,630,123 | 19,167,844 | 20,454,624 | 17,677,939 | 18,394,748 | |||||||||||||||
Total deposits | 33,968,152 | 33,224,895 | 34,997,757 | 30,559,745 | 29,647,034 | |||||||||||||||
Borrowings | 1,592,000 | 991,000 | - | - | 6,625 | |||||||||||||||
Subordinated debt | 863,756 | 863,880 | 863,283 | 862,447 | 861,788 | |||||||||||||||
Accrued interest payable and other liabilities | 548,412 | 519,269 | 582,674 | 545,050 | 505,859 | |||||||||||||||
Total liabilities | 36,972,320 | 35,599,044 | 36,443,714 | 31,967,242 | 31,021,306 | |||||||||||||||
STOCKHOLDERS' EQUITY (1) | 3,978,403 | 3,650,595 | 3,999,630 | 3,918,434 | 3,846,681 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 40,950,723 | $ | 39,249,639 | $ | 40,443,344 | $ | 35,885,676 | $ | 34,867,987 | ||||||||||
Book value per common share | $ | 28.93 | $ | 30.52 | $ | 33.45 | $ | 32.77 | $ | 32.17 | ||||||||||
Tangible book value per common share (2) | $ | 16.93 | $ | 18.42 | $ | 21.31 | $ | 22.57 | $ | 21.95 | ||||||||||
Common shares outstanding | 120,288,024 | 119,601,766 | 119,584,854 | 119,579,566 | 119,555,102 |
(1) Includes net unrealized (loss) gain on: | ||||||||||||||||||||
Securities available-for-sale, net | $ | (428,242 | ) | $ | (376,475 | ) | $ | 65,968 | $ | 98,859 | $ | 145,516 | ||||||||
Securities transferred from available-for-sale to held-to-maturity | $ | (216,508 | ) | $ | - | $ | - | $ | - | $ | - | |||||||||
(2) Non-GAAP measure. |
Page 16
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
Three Months Ended | ||||||||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||
Loans and leases | $ | 293,286 | $ | 267,759 | $ | 263,662 | $ | 246,722 | $ | 244,529 | ||||||||||
Investment securities | 52,902 | 53,422 | 48,469 | 40,780 | 33,954 | |||||||||||||||
Deposits in financial institutions | 4,330 | 1,723 | 2,674 | 2,580 | 2,022 | |||||||||||||||
Total interest income | 350,518 | 322,904 | 314,805 | 290,082 | 280,505 | |||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 15,362 | 6,208 | 6,622 | 6,417 | 7,269 | |||||||||||||||
Borrowings | 2,441 | 161 | 64 | 101 | 265 | |||||||||||||||
Subordinated debt | 8,790 | 7,818 | 7,714 | 7,722 | 6,663 | |||||||||||||||
Total interest expense | 26,593 | 14,187 | 14,400 | 14,240 | 14,197 | |||||||||||||||
Net interest income | 323,925 | 308,717 | 300,405 | 275,842 | 266,308 | |||||||||||||||
Provision for credit losses | 11,500 | - | (6,000 | ) | (20,000 | ) | (88,000 | ) | ||||||||||||
Net interest income after provision for credit losses | 312,425 | 308,717 | 306,405 | 295,842 | 354,308 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Service charges on deposit accounts | 3,634 | 3,571 | 3,476 | 3,407 | 3,452 | |||||||||||||||
Other commissions and fees | 10,813 | 11,580 | 10,633 | 11,792 | 10,704 | |||||||||||||||
Leased equipment income | 12,335 | 13,094 | 12,602 | 10,943 | 10,847 | |||||||||||||||
Gain on sale of loans and leases | 12 | 60 | 172 | - | 1,422 | |||||||||||||||
(Loss) gain on sale of securities | (1,209 | ) | 104 | 999 | 515 | - | ||||||||||||||
Dividends and gains (losses) on equity investments | 4,097 | (11,375 | ) | (1,570 | ) | 8,387 | 5,394 | |||||||||||||
Warrant income | 1,615 | 629 | 23,990 | 13,578 | 5,650 | |||||||||||||||
Other income | 3,049 | 3,155 | 7,080 | 2,723 | 2,902 | |||||||||||||||
Total noninterest income | 34,346 | 20,818 | 57,382 | 51,345 | 40,371 | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Compensation | 102,542 | 92,240 | 99,700 | 98,061 | 90,807 | |||||||||||||||
Occupancy | 15,268 | 15,200 | 14,656 | 14,928 | 14,784 | |||||||||||||||
Data processing | 9,258 | 9,629 | 8,171 | 7,391 | 7,758 | |||||||||||||||
Other professional services | 6,726 | 5,954 | 5,946 | 5,164 | 5,256 | |||||||||||||||
Insurance and assessments | 5,632 | 5,490 | 5,032 | 3,685 | 3,745 | |||||||||||||||
Intangible asset amortization | 3,649 | 3,649 | 3,876 | 2,890 | 2,889 | |||||||||||||||
Leased equipment depreciation | 8,934 | 9,189 | 9,569 | 8,603 | 8,614 | |||||||||||||||
Foreclosed assets (income) expense, net | (28 | ) | (3,353 | ) | (260 | ) | 165 | (119 | ) | |||||||||||
Acquisition, integration and reorganization costs | - | - | 5,590 | 200 | 200 | |||||||||||||||
Customer related expense | 11,748 | 12,655 | 6,175 | 4,538 | 4,973 | |||||||||||||||
Loan expense | 7,037 | 5,157 | 5,627 | 4,180 | 4,031 | |||||||||||||||
Other expense | 12,879 | 11,616 | 12,028 | 9,616 | 8,812 | |||||||||||||||
Total noninterest expense | 183,645 | 167,426 | 176,110 | 159,421 | 151,750 | |||||||||||||||
Earnings before income taxes | 163,126 | 162,109 | 187,677 | 187,766 | 242,929 | |||||||||||||||
Income tax expense | 40,766 | 41,981 | 51,632 | 47,770 | 62,417 | |||||||||||||||
Net earnings | $ | 122,360 | $ | 120,128 | $ | 136,045 | $ | 139,996 | $ | 180,512 | ||||||||||
Basic and diluted earnings per common share | $ | 1.02 | $ | 1.01 | $ | 1.14 | $ | 1.17 | $ | 1.52 | ||||||||||
Dividends declared and paid per common share | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 |
Page 17
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, | ||||||||||||||||
2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Return on average assets (1) | 1.23 | % | 1.22 | % | 1.34 | % | 1.55 | % | 2.11 | % | ||||||||||
Pre-provision, pre-tax net revenue ("PPNR") return on average assets (1)(2) | 1.75 | % | 1.65 | % | 1.79 | % | 1.86 | % | 1.81 | % | ||||||||||
Return on average equity (1) | 13.44 | % | 12.66 | % | 13.65 | % | 14.18 | % | 19.36 | % | ||||||||||
Return on average tangible common equity (1)(2) | 24.42 | % | 20.93 | % | 22.06 | % | 21.03 | % | 29.25 | % | ||||||||||
Efficiency ratio | 49.5 | % | 50.1 | % | 46.2 | % | 47.2 | % | 47.9 | % | ||||||||||
Noninterest expense as a percentage of average assets (1) | 1.84 | % | 1.70 | % | 1.73 | % | 1.76 | % | 1.77 | % | ||||||||||
Average Yields/Costs (1): | ||||||||||||||||||||
Yield on: | ||||||||||||||||||||
Average loans and leases (3) | 4.65 | % | 4.66 | % | 4.93 | % | 5.01 | % | 5.18 | % | ||||||||||
Average investment securities (3) | 2.32 | % | 2.17 | % | 2.02 | % | 2.12 | % | 2.23 | % | ||||||||||
Average interest-earning assets (3) | 3.85 | % | 3.59 | % | 3.39 | % | 3.50 | % | 3.57 | % | ||||||||||
Cost of: | ||||||||||||||||||||
Average interest-bearing deposits | 0.31 | % | 0.13 | % | 0.13 | % | 0.14 | % | 0.16 | % | ||||||||||
Average total deposits | 0.18 | % | 0.07 | % | 0.08 | % | 0.08 | % | 0.10 | % | ||||||||||
Average interest-bearing liabilities | 0.49 | % | 0.27 | % | 0.27 | % | 0.29 | % | 0.30 | % | ||||||||||
Net interest spread (3) | 3.36 | % | 3.32 | % | 3.12 | % | 3.21 | % | 3.27 | % | ||||||||||
Net interest margin (3) | 3.56 | % | 3.43 | % | 3.24 | % | 3.33 | % | 3.40 | % | ||||||||||
Average Balances: | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
Loans and leases, net of deferred fees | $ | 25,449,773 | $ | 23,433,019 | $ | 21,367,665 | $ | 19,670,671 | $ | 19,057,420 | ||||||||||
Investment securities | 9,488,653 | 10,397,709 | 9,964,568 | 8,047,098 | 6,492,721 | |||||||||||||||
Deposits in financial institutions | 1,984,751 | 3,083,159 | 5,961,104 | 5,657,768 | 6,347,764 | |||||||||||||||
Interest-earning assets | 36,923,177 | 36,913,887 | 37,293,337 | 33,375,537 | 31,897,905 | |||||||||||||||
Total assets | 40,031,891 | 39,883,304 | 40,358,147 | 35,871,664 | 34,326,112 | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Noninterest-bearing deposits | 13,987,398 | 14,463,667 | 14,713,385 | 12,198,313 | 11,304,757 | |||||||||||||||
Interest-bearing deposits | 19,661,618 | 19,868,395 | 20,050,310 | 18,130,694 | 17,817,053 | |||||||||||||||
Total deposits | 33,649,016 | 34,332,062 | 34,763,695 | 30,329,007 | 29,121,810 | |||||||||||||||
Borrowings | 1,356,616 | 298,444 | 234,391 | 238,335 | 225,446 | |||||||||||||||
Subordinated debt | 863,653 | 863,572 | 862,777 | 862,272 | 735,725 | |||||||||||||||
Interest-bearing liabilities | 21,881,887 | 21,030,411 | 21,147,478 | 19,231,301 | 18,778,224 | |||||||||||||||
Stockholders' equity | 3,652,368 | 3,847,481 | 3,954,267 | 3,916,621 | 3,739,042 |
(1) Annualized.
(2) Non-GAAP measure.
(3) Tax equivalent.
Page 18
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, | ||||||||||||||||
2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Credit Quality Ratios: | ||||||||||||||||||||
Nonaccrual loans and leases held for investment to loans and leases held for investment | 0.30 | % | 0.27 | % | 0.27 | % | 0.31 | % | 0.29 | % | ||||||||||
Nonperforming assets to loans and leases held for investment and foreclosed assets | 0.30 | % | 0.27 | % | 0.32 | % | 0.38 | % | 0.36 | % | ||||||||||
Classified loans and leases held for investment to loans and leases held for investment | 0.39 | % | 0.34 | % | 0.51 | % | 0.69 | % | 0.75 | % | ||||||||||
Provision for credit losses (for the quarter) to average loans and leases held for investment (annualized) | 0.16 | % | 0.00 | % | (0.11 | )% | (0.40 | )% | (1.85 | )% | ||||||||||
Net charge-offs (for the quarter) to average loans and leases held for investment (annualized) | (0.02 | )% | 0.02 | % | 0.00 | % | 0.01 | % | (0.11 | )% | ||||||||||
Trailing 12 months net charge-offs to average loans and leases held for investment | 0.00 | % | (0.02 | )% | (0.01 | )% | 0.09 | % | 0.27 | % | ||||||||||
Allowance for loan and lease losses to loans and leases held for investment | 0.71 | % | 0.81 | % | 0.87 | % | 0.99 | % | 1.16 | % | ||||||||||
Allowance for credit losses to loans and leases held for investment | 1.07 | % | 1.12 | % | 1.19 | % | 1.36 | % | 1.54 | % | ||||||||||
Allowance for credit losses to nonaccrual loans and leases held for investment | 361.4 | % | 409.5 | % | 447.3 | % | 433.8 | % | 528.4 | % | ||||||||||
PacWest Bancorp Consolidated: | ||||||||||||||||||||
Tier 1 leverage capital ratio (1) | 8.52 | % | 7.11 | % | 6.84 | % | 8.05 | % | 7.67 | % | ||||||||||
Common equity tier 1 capital ratio (1) | 8.24 | % | 8.64 | % | 8.86 | % | 10.15 | % | 10.41 | % | ||||||||||
Tier 1 capital ratio (1) | 10.15 | % | 9.07 | % | 9.32 | % | 10.65 | % | 10.41 | % | ||||||||||
Total capital ratio (1) | 13.12 | % | 12.27 | % | 12.69 | % | 14.36 | % | 14.99 | % | ||||||||||
Risk-weighted assets (1) | $ | 33,011,062 | $ | 30,297,312 | $ | 28,508,808 | $ | 26,057,583 | $ | 24,274,256 | ||||||||||
Equity to assets ratio | 9.72 | % | 9.30 | % | 9.89 | % | 10.92 | % | 11.03 | % | ||||||||||
Tangible common equity ratio (2) | 5.15 | % | 5.83 | % | 6.54 | % | 7.79 | % | 7.80 | % | ||||||||||
Book value per common share | $ | 28.93 | $ | 30.52 | $ | 33.45 | $ | 32.77 | $ | 32.17 | ||||||||||
Tangible book value per common share (2) | $ | 16.93 | $ | 18.42 | $ | 21.31 | $ | 22.57 | $ | 21.95 | ||||||||||
Pacific Western Bank: | ||||||||||||||||||||
Tier 1 leverage capital ratio (1) | 8.21 | % | 7.31 | % | 7.00 | % | 8.40 | % | 8.47 | % | ||||||||||
Common equity tier 1 capital ratio (1) | 9.78 | % | 9.32 | % | 9.56 | % | 11.12 | % | 11.51 | % | ||||||||||
Tier 1 capital ratio (1) | 9.78 | % | 9.32 | % | 9.56 | % | 11.12 | % | 11.51 | % | ||||||||||
Total capital ratio (1) | 11.77 | % | 11.45 | % | 11.80 | % | 13.59 | % | 14.22 | % |
(1) Capital information for June 30, 2022 is preliminary.
(2) Non-GAAP measure.
Page 19
GAAP TO NON-GAAP RECONCILIATIONS
This press release contains certain non-GAAP financial disclosures for: (1) Pre-provision, pre-tax net revenue (“PPNR”), (2) PPNR return on average assets (3) return on average tangible common equity, (4) tangible common equity ratio, and (5) tangible book value per common share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. In particular, the use of PPNR, return on average tangible common equity, tangible common equity ratio, and tangible book value per common share is prevalent among banking regulators, investors, and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) net earnings, (2) return on average assets, (3) return on average equity, (4) equity to assets ratio, and (5) book value per common 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 | |||||||||||||||||||
PPNR and PPNR Return | June 30, | March 31, | June 30, | June 30, | ||||||||||||||||
on Average Assets | 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net earnings | $ | 122,360 | $ | 120,128 | $ | 180,512 | $ | 242,488 | $ | 330,918 | ||||||||||
Add: Provision for credit losses | 11,500 | - | (88,000 | ) | 11,500 | (136,000 | ) | |||||||||||||
Add: Income tax expense | 40,766 | 41,981 | 62,417 | 82,747 | 115,973 | |||||||||||||||
Pre-provision, pre-tax net revenue ("PPNR") | $ | 174,626 | $ | 162,109 | $ | 154,929 | $ | 336,735 | $ | 310,891 | ||||||||||
Average assets | $ | 40,031,891 | $ | 39,883,304 | $ | 34,326,112 | $ | 39,958,008 | $ | 32,879,037 | ||||||||||
Return on average assets (1) | 1.23 | % | 1.22 | % | 2.11 | % | 1.22 | % | 2.03 | % | ||||||||||
PPNR return on average assets (2) | 1.75 | % | 1.65 | % | 1.81 | % | 1.70 | % | 1.91 | % |
(1) Annualized net earnings divided by average assets.
(2) Annualized PPNR divided by average assets.
Three Months Ended | Six Months Ended | |||||||||||||||||||
Return on Average | June 30, | March 31, | June 30, | June 30, | ||||||||||||||||
Tangible Common Equity | 2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Net earnings | $ | 122,360 | $ | 120,128 | $ | 180,512 | $ | 242,488 | $ | 330,918 | ||||||||||
Add: Intangible asset amortization | 3,649 | 3,649 | 2,889 | 7,298 | 5,968 | |||||||||||||||
Adjusted net earnings | $ | 126,009 | $ | 123,777 | $ | 183,401 | $ | 249,786 | $ | 336,886 | ||||||||||
Average stockholders' equity | $ | 3,652,368 | $ | 3,847,481 | $ | 3,739,042 | $ | 3,749,386 | $ | 3,678,481 | ||||||||||
Less: Average intangible assets | 1,445,333 | 1,449,056 | 1,224,208 | 1,447,184 | 1,208,581 | |||||||||||||||
Less: Average preferred stock | 137,100 | - | - | 68,929 | - | |||||||||||||||
Average tangible common equity | $ | 2,069,935 | $ | 2,398,425 | $ | 2,514,834 | $ | 2,233,273 | $ | 2,469,900 | ||||||||||
Return on average equity (1) | 13.44 | % | 12.66 | % | 19.36 | % | 13.04 | % | 18.14 | % | ||||||||||
Return on average tangible common equity (2) | 24.42 | % | 20.93 | % | 29.25 | % | 22.55 | % | 27.51 | % |
(1) Annualized net earnings divided by average stockholders’ equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.
Page 20
Tangible Common Equity Ratio/ | ||||||||||||||||||||
Tangible Book Value Per | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
Common Share | 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Stockholders' equity | $ | 3,978,403 | $ | 3,650,595 | $ | 3,999,630 | $ | 3,918,434 | $ | 3,846,681 | ||||||||||
Less: Preferred stock | 498,516 | - | - | - | - | |||||||||||||||
Total common equity | 3,479,887 | 3,650,595 | 3,999,630 | 3,918,434 | 3,846,681 | |||||||||||||||
Less: Intangible assets | 1,443,395 | 1,447,044 | 1,450,693 | 1,219,651 | 1,222,541 | |||||||||||||||
Tangible common equity | $ | 2,036,492 | $ | 2,203,551 | $ | 2,548,937 | $ | 2,698,783 | $ | 2,624,140 | ||||||||||
Total assets | $ | 40,950,723 | $ | 39,249,639 | $ | 40,443,344 | $ | 35,885,676 | $ | 34,867,987 | ||||||||||
Less: Intangible assets | 1,443,395 | 1,447,044 | 1,450,693 | 1,219,651 | 1,222,541 | |||||||||||||||
Tangible assets | $ | 39,507,328 | $ | 37,802,595 | $ | 38,992,651 | $ | 34,666,025 | $ | 33,645,446 | ||||||||||
Equity to assets ratio | 9.72 | % | 9.30 | % | 9.89 | % | 10.92 | % | 11.03 | % | ||||||||||
Tangible common equity ratio (1) | 5.15 | % | 5.83 | % | 6.54 | % | 7.79 | % | 7.80 | % | ||||||||||
Book value per common share (2) | $ | 28.93 | $ | 30.52 | $ | 33.45 | $ | 32.77 | $ | 32.17 | ||||||||||
Tangible book value per common share (3) | $ | 16.93 | $ | 18.42 | $ | 21.31 | $ | 22.57 | $ | 21.95 | ||||||||||
Common shares outstanding | 120,288,024 | 119,601,766 | 119,584,854 | 119,579,566 | 119,555,102 |
(1) Tangible common equity divided by tangible assets.
(2) Total common equity divided by common shares outstanding.
(3) Tangible common equity divided by common shares outstanding.
CONTACTS
Matthew P. Wagner CEO 303.802.8900
|
Bart R. Olson EVP and CFO 714.989.4149
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William J. Black EVP Strategy and Corporate Development 919.597.7466
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Page 21
Exhibit 99.2
Second Quarter 2022 Results Earnings Release Presentation July 20, 2022
Second Quarter 2022 | PACW | p. 2 Key Second Quarter Takeaways » We are focused on optimizing the balance sheet and rebuilding our capital ratios » 2Q had exceptional loan growth which had four material impacts on 2Q22: • drove $15mm of net interest income growth vs. 1Q22 • led to the first loan loss provision since 4Q20 due to unfunded commitment growth • h igher expenses due to elevated bonus accruals/commissions as well as loan related expenses which accounted for ~$7mm of the quarterly increase • was a factor in upsizing our preferred capital raise » Higher rates, slower economic growth and greater uncertainty are expected to slow loan growth in the second half of the year » Higher interest rates should benefit earnings and show up more in the second half of 2022 » C ontinued deposit headwinds in our Venture business – with deposit outflows of $1.9bn in the quarter ($500M moved to PWAM) which was offset by increases in wholesale deposits » C redit quality metrics remain near historic lows » Raised $513mm in preferred equity advancing our capital plan, capital ratios should benefit from increasing profitability and slower balance sheet growth
Second Quarter 2022 | PACW | p. 3 Second Quarter 2022 Highlights • $34.0bn low - cost deposit base • 86% of deposits are core deposits; 39% are noninterest - bearing • Loan to deposit ratio up to 77% from 73% at 1Q22 • ACL ratio of 1.07% • Classified loans ratio of 0.39% • Nonaccrual loans ratio of 0.30% • Net recoveries of $1.3 million • Cash and investments 30% of earning assets • Total capital ratio of 13.12%; Tier 1 ratio of 10.15%; CET1 ratio of 8.24% Strong Balance Sheet Profitability • Net earnings of $122.4mm, or $1.02 per diluted share • Pre - provision, pre - tax net revenues (“PPNR”) of $174.6mm (1) • ROAA of 1.23% • ROATCE of 24.42% (1) • Net interest income increased $15.2mm or 4.9% compared to 1Q22 • Net interest margin of 3.56%, up 13 bps from 1Q22 • Loan and lease yield of 4.65% • Cost of deposits of 18 bps; up due to increase in wholesale deposits • Efficiency ratio of 49.5% • Provision for credit losses $10.0mm for loans and $1.5mm for HTM securities • Warrant income of $1.6 mm vs. $0.6mm in 1Q22 Growth • Loan production of $2.8bn at weighted average rate of 4.61% • Loan growth of $2.1bn or 8.8% compared to 1Q22 • Total assets increased $1.7bn or 4.3% compared to 1Q22 • Core deposits decreased $2.5bn or 7.8% compared to 1Q22 primarily from venture banking clients • Total deposits increased $0.7bn or 2.2% compared to 1Q22, primarily due to higher wholesale deposits (1) See “Non - GAAP Measurements” slides starting on page 30.
Second Quarter 2022 | PACW | p. 4 $19.5bn $20.5bn $22.9bn $24.4bn $26.5bn 1.19% 1.01% 0.88% 0.81% 0.71% 2Q21 3Q21 4Q21 1Q22 2Q22 Loans and Leases, Net of Deferred Fees (5) $29.6bn $30.6bn $35.0bn $33.2bn $34.0bn 0.10% 0.08% 0.08% 0.07% 0.18% 2Q21 3Q21 4Q21 1Q22 2Q22 Core and Total Deposits (1)(2) $7.2bn $9.3bn $10.7bn $10.0bn $9.1bn 2.23% 2.12% 2.02% 2.17% 2.32% 2Q21 3Q21 4Q21 1Q22 2Q22 Total Investments and Yield (3)(4) Balance Sheet Highlights $300.2mm $279.8mm $273.6mm $272.5mm $283.8mm 1.59% 1.38% 1.20% 1.12% 1.07% 2Q21 3Q21 4Q21 1Q22 2Q22 Allowance for Credit Losses (6) (1) ■ Core Deposits ■ Non - core Deposits (2) Line is quarterly cost of average total deposits (3) ■ AFS securities ■ HTM securities (4) Line is quarterly yield on average investment securities (5) Line is ALLL as % of loans and leases, excluding PPP loans (6) Line is ACL as % of loans and leases, excluding PPP loans
Second Quarter 2022 | PACW | p. 5 $151.8mm $159.4mm $176.1mm $167.4mm $183.6mm 47.9% 47.2% 46.2% 50.1% 49.5% 2Q21 3Q21 4Q21 1Q22 2Q22 Noninterest Expense & Efficiency Ratio Profitability Highlights $180.5mm $140.0mm $136.0mm $120.1mm $122.4mm $1.52 $1.17 $1.14 $1.01 $1.02 2Q21 3Q21 4Q21 1Q22 2Q22 Net Earnings & EPS 2.11% 1.55% 1.34% 1.22% 1.23% 29.25% 21.03% 22.06% 20.93% 24.42% 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 ROAA ROATCE (1) $154.9mm $167.8mm $181.7mm $162.1mm $174.6mm 1.81% 1.86% 1.79% 1.65% 1.75% 2Q21 3Q21 4Q21 1Q22 2Q22 PPNR & PPNR ROAA (1) (1) See “Non - GAAP Measurements” slides starting on page 30.
Second Quarter 2022 | PACW | p. 6 0.10% 0.08% 0.08% 0.07% 0.18% 0.13% 0.11% 0.10% 0.08% 2Q21 3Q21 4Q21 1Q22 2Q22 Cost of Total Deposits PACW Avg. Total Deposits Cost KRX Median Deposits Cost 5.18% 5.01% 4.93% 4.66% 4.65% 4.04% 4.03% 3.95% 3.86% 2Q21 3Q21 4Q21 1Q22 2Q22 Loan and Lease Yield (TE) PACW TE Avg. KRX Median 3.40% 3.33% 3.24% 3.43% 3.56% 3.02% 2.94% 2.90% 2.92% 2Q21 3Q21 4Q21 1Q22 2Q22 Net Interest Margin (TE) PACW Reported TE NIM KRX Median NIM $266.3mm $275.8mm $300.4mm $308.7mm $323.9mm 2Q21 3Q21 4Q21 1Q22 2Q22 Net Interest Income Growing Net Interest Income Source: S&P Global Market Intelligence. Peer data is through 1Q22. Peer group is banks in the KBW Nasdaq Regional Bank Index – “KRX”.
Second Quarter 2022 | PACW | p. 7 $21.95 $22.57 $21.31 $18.42 $16.93 10.41% 10.15% 8.86% 8.64% 8.24% 10.41% 10.65% 9.32% 9.07% 10.15% 14.99% 14.36% 12.69% 12.27% 13.12% 2Q21 3Q21 4Q21 1Q22 2Q22 Tangible BV and Capital Ratios (1) Tangible BV per Share CET1 Capital Tier 1 Capital Total Capital Capital Ratios Capital Change Drivers ▪ 2Q22 increase due to $513mm preferred stock issued partially offset by increase in risk - weighted assets of $2.7 billion due primarily to growth in loans and unfunded commitments ▪ 1Q22 decrease due to increase in risk - weighted assets of $1.8 billion due primarily to growth in loans and unfunded commitments ▪ 4Q21 decrease due to increase in goodwill from HOA acquisition and deployment of approximately $3.8 billion in excess cash into higher risk - weighted assets ▪ 3Q21 decrease due to approximately $3.0 billion of excess cash deployed into higher risk - weighted assets ▪ 2Q21 increase due to sub - debt capital raise of $400 million at 3.25% at the Bank level ▪ Planning to grow capital to operating levels more similar to the first half of 2021 ▪ 2Q22 dividend of $0.25 per share, consistent since May 2020 ▪ Bank capital ratios at 6/30/22: CET1 – 9.78%, Tier 1 – 9.78%, Total – 11.77% 8.00% 6.00% 4.50% 10.50% 8.50% 7.00% 13.12% 10.15% 8.24% Total Capital Tier 1 capital CET1 Capital Minimum Capital Conservation Buffer PACW Capital Levels $410mm $544mm $865mm Capital in Excess of Conservation Buffer (1) See “Non - GAAP Measurements” slides starting on page 30.
Second Quarter 2022 | PACW | p. 8 Commercial RE 14% Residential RE 37% Commercial construction 3% Residential construction 12% Asset - based 19% Venture capital 8% Other commercial 5% Consumer 2% As of June 30, 2022 ($ in millions) $ Mix $ Mix $ Mix Real Estate Mortgage: Commercial RE 3,671$ 14% 3,670$ 16% 3,792$ 19% Residential RE 9,879 37% 8,369 34% 4,621 24% Total Real Estate Mortgage 13,550 51% 12,039 50% 8,413 43% RE Construction & Land: Commercial 837 3% 802 3% 931 5% Residential 3,154 12% 2,892 12% 2,575 13% Total RE Construction & Land 3,991 15% 3,694 15% 3,506 18% Total Real Estate 17,541 66% 15,733 65% 11,919 61% Commercial: Asset-based 5,068 19% 4,739 19% 3,551 18% Venture capital 2,179 8% 2,077 9% 1,749 9% Other commercial 1,229 5% 1,298 5% 1,922 10% Total Commercial 8,476 32% 8,114 33% 7,222 37% Consumer 484 2% 505 2% 365 2% Total Loans HFI (1) 26,501$ 100% 24,352$ 100% 19,506$ 100% Unfunded commitments 11,866$ 9,899$ 7,892$ 3/31/2022 6/30/20216/30/2022 Diversified Loan and Lease Portfolio (1) Net of deferred fees and costs
Second Quarter 2022 | PACW | p. 9 ($ in millions) $ Mix $ Mix $ Mix Real Estate: Multi-family 5,062$ 29% 4,080$ 26% 3,998$ 34% Construction - Res. & Coml. (1) 3,487 20% 3,224 20% 3,089 26% Residential mortgage loans 2,965 17% 2,969 19% 242 2% Commercial RE (2) 2,498 14% 2,496 16% 2,645 22% Investor-owned residential 1,852 11% 1,320 8% 381 3% SBA 621 4% 622 4% 625 5% Hotel 551 3% 552 4% 522 4% Construction - Renovation 505 3% 470 3% 417 4% Total Real Estate 17,541$ 101% 15,733$ 100% 11,919$ 100% 6/30/2022 6/30/20213/31/2022 Commercial RE, $2,496mm, 14% SBA , $621mm , 3% Hotel , $551mm , 3% Multi - family, $5,062mm, 29% Investor - owned residential , $1,852mm , 11% Residential mortgage loans , $2,965mm , 17% Construction - renovation , $505mm , 3% Construction & Land , $3,487mm , 20% Real Estate ($17.5B) Lender Finance $3,181mm , 63% Equipment Finance $856mm , 17% Premium Finance $781mm , 15% Other $250mm , 5% Asset - Based ($5.1B) ($ in millions) $ Mix $ Mix $ Mix Asset-Based: Lender Finance 3,181$ 63% 3,100$ 65% 2,257$ 63% Equipment finance (1) 856 17% 771 16% 639 18% Premium Finance 781 15% 651 14% 483 14% Other 250 5% 217 5% 172 5% Total Asset-Based 5,068$ 100% 4,739$ 100% 3,551$ 100% 6/30/2022 6/30/20213/31/2022 Diversified Loan and Lease Portfolio (1) Of which land represents $116 million, $165 million and $153 million at 6/30/22, 3/31/22 and 6/30/21. (2) Comprised of 34% office, 20% industrial, 19% retail and 27% other at 6/30/22. (1) Amount excludes equipment leased to others under operating leases which is included in Other Assets.
Second Quarter 2022 | PACW | p. 10 ($ in millions) $ Mix $ Mix $ Mix Venture Capital: Equity Fund Loans 1,618$ 74% 1,543$ 74% 1,245$ 71% Venture Lending 561 26% 534 26% 504 29% Total Venture Capital 2,179$ 100% 2,077$ 100% 1,749$ 100% 6/30/2022 6/30/20213/31/2022 ($ in millions) $ Mix $ Mix $ Mix Other Commercial: Secured Business Loans 501$ 41% 479$ 37% 434$ 23% Unsecured Business Loans 325 26% 306 24% 247 13% Municipal 213 17% 213 16% 263 14% Paycheck Protection Program 33 3% 70 5% 609 32% Security Monitoring 12 1% 77 6% 207 11% Other 145 12% 153 12% 162 8% Total Other Commercial 1,229$ 100% 1,298$ 100% 1,922$ 101% 6/30/2022 6/30/20213/31/2022 Paycheck Protection Program , $33mm , 3% Secured Business Loans , $501mm , 41% Security Monitoring , $12mm , 1% Unsecured Business Loans , $325mm , 26% Municipal , $213mm , 17% Other , $145mm , 12% Other Commercial ($1.2B) Equity Fund Loans , $1,618mm , 74% Venture Lending , $561mm , 26% Venture Capital ($2.2B) Diversified Loan and Lease Portfolio
Second Quarter 2022 | PACW | p. 11 $1,662 $2,406 $3,373 $2,575 $2,815 $1,664 $1,349 $1,917 $1,589 $1,872 $1,969 $1,733 $2,000 $1,449 $1,347 $802 $1,014 $845 $1,265 $1,183 $3,326 $3,755 $5,290 $4,164 $4,687 $2,771 $2,747 $2,845 $2,714 $2,530 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2Q21 3Q21 4Q21 1Q22 2Q22 Avg. Rate on Production Millions Production Disbursements Payoffs Paydowns Rate on Production ($ 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) 2Q22 4,687$ 2,530$ 2,157$ 4.61% 2Q22 24,352$ 26,501$ 2,149$ 1Q22 4,164 2,714 1,450 4.31% 1Q22 22,942 24,352 1,410 4Q21 5,290 2,845 2,445 3.89% 4Q21 20,511 22,942 2,431 3Q21 3,755 2,747 1,008 4.24% 3Q21 19,506 20,511 1,005 2Q21 3,326 2,771 555 4.55% 2Q21 18,979 19,506 527 Loan and Lease Production of $2.8 Billion in 2Q22 (1) The weighted average TE rate on production presents contractual rates and does not include amortized fees. Amortized fees add ed approximately 23 basis points to loan yields in 2022 and 38 basis points in 2021. (2) Net of deferred fees and costs. (3) “Quarterly Change” equals “Net Difference” plus transfers to loans held for sale, transfers to OREO, charge - offs, loan sales and loans acquired through acquisitions.
Second Quarter 2022 | PACW | p. 12 California, 46% Colorado , 11% Florida , 6% Virginia , 3% Arizona , 3% New York , 9% Washington , 3% Others , 14% Texas , 2% Wash. DC , 3% $5.4bn (1) MF Construction Commitments Multi - Family Loans Principal Balance Amount Count 6/30/22 Tota l 6/30/22 % of Tota l $0 ~ $5mm 843 1,706mm 34% $5mm ~ $10mm 170 1,144mm 22% $10mm ~ $30mm 60 943mm 19% $30mm ~ $171mm 21 1,269mm 25% Total 1,094 $ 5,062mm California , 71% Colorado , 2% Florida , 5% Arizona , 2% Washington , 6% Other , 4% Nevada , 3% Oregon , 2% Texas , 5% $5.1bn (2) Multi - family Residential Portfolio By State Multi - family Residential (1) MF construction commitments have an average loan - to - cost ratio of 64% as of June 30, 2022. (2) $1.3bn, or approximately 33%, of MF portfolio is 50% risk - weighted. (3) Included in MF construction commitments are $2.0bn of commitments to build low income housing MF projects with a weighted average LTC of 71%. LTC > 70% , 19% LTC 20% - 50% , 5% LTC 50% - 60% , 32% LTC 60% - 70% , 44% MF Construction Commitments By Loan - To - Cost Range (3) Risk Rating Count 6/30/22 Tota l Pass/Watch 1,091 $ 5,045mm Special Mention 1 13mm Classified 2 4mm Total 1,094 $ 5,062mm
Second Quarter 2022 | PACW | p. 13 Multi - Family Apts, 70% Condominiums , 2% Hotel , 6% Office, 5% Industrial , 2% Retail , 1% Mixed - Use, 3% Land & Other, 4% SFR , 7% Commitments by Property Type Construction & Land Loans California , 46% Colorado , 10% Florida , 6% Virginia , 2% Arizona , 3% New York , 10% Washington , 3% Other , 14% Wash. DC , 3% New Jersey , 3% Commitments by State Commitment Amount Count 6/30/22 Commitment 6/30/22 Outstanding 3/31/22 % of Tota l Civic 1,058 $ 592mm $ 529mm 13% $0 ~ $10mm 137 417mm 228mm 6% $10mm ~ $25mm 72 1,205mm 521mm 13% $25mm ~ $50mm 68 2,551mm 1,085mm 27% $50mm ~ $100mm 47 3,178mm 994mm 25% $100mm ~ $181mm 15 1,886mm 635mm 16% Total 1,397 $ 9,829mm $ 3,992mm LTC 40% - 50%, 7% LTC 50% - 60%, 36% LTC 60% - 70%, 42% LTC > 70%, 15% (2) Commitments By Loan - To - Cost Range (1) Risk Rating Count 6/30/22 Tota l Pass/Watch 1,349 $ 3,784mm Special Mention 17 195mm Classified 31 13mm Total 1,397 $ 3,992mm (1) Excludes land and Civic commitments. (2) 86% of commitments with LTC > 70% are for low income housing projects.
Second Quarter 2022 | PACW | p. 14 For - rent Residential , $505mm , 60% Residential Bridge , $138mm , 16% Construction - Renovation , $159mm , 19% Multi - family , $45mm , 5% Loan Production in 2Q22 – $847 Million (1) Civic Loans 6/30/22 3/31/22 $ % $ % For - rent residential $ 1,372mm 57% $ 906mm 49% Residential - bridge 361mm 15% 331mm 18% Multi - family 119mm 5% 83mm 4% Total investor - owned residential 1,852mm 1,320mm Construction - renovation 542mm 23% 531mm 29% Total Civic $ 2,394mm 100% $ 1,851mm 100% Risk Rating Count 6/30/22 Tota l Pass/Watch 6,544 $ 2,309mm Special Mention 35 45mm Classified 107 40mm Total 6,686 $ 2,394mm (1) WAC on new production, excluding fees was 6.19% Credit Quality 6/30/22 12/31/21 Accruing and 30 - 89 days past due $ 36.0mm $ 27.7mm Non - accrual $ 39.8mm $ 15.9mm YTD net charge - offs $ 41K $ 87K Foreclosed Assets $ --- $ --- $423mm $481mm $480mm $559mm $847mm $1,020mm $1,305mm $1,566mm $1,851mm $2,394mm 2Q21 3Q21 4Q21 1Q22 2Q22 Loan Production & Portfolio Balance Production Ending Balance Portfolio Composition (1) (1) At June 30, 2022 average loan size is $358,000 and average LTV is approximately 71.5%.
Second Quarter 2022 | PACW | p. 15 ($ in millions) Variable Loans by Rate Index Amount % of Total Variable 1 - month LIBOR $2,921 3 - month LIBOR 15 6 - month LIBOR 252 12 - month LIBOR 129 Total LIBOR - based Loans $3,317 29% SOFR 3,570 31% Other Index 930 8% Prime Rate 3,731 32% Total Variable Loans $11,089 100% Interest Rate Components of the Loan and Lease Portfolio Fixed - Rate , 37% Variable - Rate, 44% Hybrid , 19% Loan Portfolio by Repricing Type $1,339mm $1,001mm $5,051mm $7,670mm 1 Year 2 Years 3 - 5 Years > 5 Years Fixed/Hybrid Years to Maturity/Repricing ($ in millions) Basis Points of Rate Increases Variable Rate Loans At or Below Their Floors That will Reprice as Rates Increase 50 bps $955 100 bps 641 150 bps 279 200 bps 9 >200 bps 24 Total $1,908 Note: Since March 31, 2022, $4.6 billion of loans have come off their floors.
Second Quarter 2022 | PACW | p. 16 • Base case above is static balances applying forward rate curve as of 06/30/22 (which assumes five 25 bps rate hikes over the next 12 months) • Based on static 6/30/22 balances using the forward curve, forecasted 12 - month NII is at $1.39 billion and the corresponding NIM is at 3.61% • Up/down scenarios above are based on instantaneous rate shocks • Net interest income up $105.1 million or 20% in first half of 2022 vs, first half of 2021; combination of growth and rates Forecasted Forecasted Forecasted Net Interest June 30, 2022 Net Interest Percentage Net Interest Margin NII Income Change Margin Change Interest Rate Scenario (Tax Equivalent) From Base (Tax Equivalent) From Base (In millions) Up 300 basis points 1,459.1$ 4.70% 3.78% 0.17% Up 200 basis points 1,438.0$ 3.18% 3.73% 0.11% Up 100 basis points 1,417.1$ 1.68% 3.67% 0.06% BASE CASE 1,393.6$ 0.00% 3.61% —% Down 25 basis points 1,393.6$ 0.00% 3.61% 0.00% Down 50 basis points 1,391.9$ -0.12% 3.61% (0.00)% Down 100 basis points 1,383.5$ -0.73% 3.59% (0.03)% Interest Rate Sensitivity Balance Sheet Positioning • 2Q22 low - cost average deposit base of $34.0 billion at 18 bps • Balance sheet provides opportunities for re - mixing of earning assets • Well - positioned balance sheet for increases in interest rates • As of 6/30/22: • Cash and cash equivalents were 6% of earning assets, down from 11% at 12/31/21 • AFS securities were 24% of earning assets, down from 28% at 12/31/21 • Loans and leases were 70% of earning assets, up from 61% at 12/31/21 • Loans to deposits ratio of 77%, up from 65% at 12/31/21 Interest - bearing, 61% Noninterest bearing, 39% Deposits by Type Business Model Fixed - Rate , 37% Variable - Rate, 44% Hybrid , 19% Loan Portfolio by Repricing Type Balance Sheet Positioning & Interest Rate Sensitivity
Second Quarter 2022 | PACW | p. 17 $536.1mm $496.4mm $391.6mm $377.3mm $480.3mm 2.75% 2.42% 1.71% 1.55% 1.81% 2Q21 3Q21 4Q21 1Q22 2Q22 Special Mention Loans and Leases (1) Key Credit Quality Trends $147.3mm $141.6mm $116.1mm $82.1mm $104.3mm 0.75% 0.69% 0.51% 0.34% 0.39% 2Q21 3Q21 4Q21 1Q22 2Q22 Classified Loans and Leases (1) $56.8mm $65.5mm $61.2mm $66.5mm $78.5mm 0.29% 0.31% 0.27% 0.27% 0.30% 2Q21 3Q21 4Q21 1Q22 2Q22 Nonaccrual Loans and Leases (1) ($5.2mm) $0.4mm $0.2mm $1.2mm ($1.3mm) 0.27% 0.09% - 0.01% - 0.02% 0.00% - 0.11% 0.01% 0.00% 0.02% - 0.02% 2Q21 3Q21 4Q21 1Q22 2Q22 Net Charge - offs/(Recoveries) (2) (1) Line is as a percentage of total loans and leases (2) ■ Net charge - offs/(recoveries) for quarter ■ Trailing 12 months net C/O % ■ Net C/O as a % of average loans land leases (annualized)
Second Quarter 2022 | PACW | p. 18 Allowance for Credit Losses (ACL ) ▪ Provision in Q2 of $10.0 million driven primarily by increase in unfunded commitments of $2.0 billion. ▪ Used the Moody’s Consensus Scenario Forecast dated June 9, 2022 for 2Q22. ▪ Decline in ACL ratio consistent with continuing strong credit performance. ▪ ACL and ALLL ratios of 1.07% and 0.71% at 6/30/22. ▪ ACL and ALLL ratios were 0.97% and 0.76% at adoption of CECL on 1/1/20. $112.0mm $120.0mm $97.0mm $10.0mm - $48.0mm - $88.0mm - $20.0mm - $6.0mm $0.0mm $10.0mm Provision for Credit Losses $182.0mm $274.9mm $381.6mm $442.5mm $433.8mm $383.0mm $300.2mm $279.8mm $273.6mm $272.5mm $283.8mm 0.97% 1.39% 2.06% 2.48% 2.41% 2.14% 1.59% 1.38% 1.20% 1.12% 1.07% 0.76% 1.12% 1.63% 1.94% 1.93% 1.63% 1.19% 1.01% 0.88% 0.81% 0.71% 1/1/2020 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 Allowance for Credit Losses (2) (1) Excludes $1.5mm provision for HFS securities (2) ■ ALLL as % of loans and leases, excluding PPP loans ■ ACL as % of loans and leases, excluding PPP loans
Second Quarter 2022 | PACW | p. 19 Noninterest - bearing demand Interest checking Money market Savings deposits Non - core non - maturity deposits Time deposits $250,000 and under Time deposits over $250,000 June 30, 2022 Noninterest - bearing demand Interest checking Money market Savings deposits Non - core non - maturity deposits Time deposits $250,000 and under Time deposits over $250,000 June 30, 2021 Deposit Detail (1) Does not include $2.1 billion and $1.3 billion of client investment funds held at June 30, 2022 and June 30, 2021, respective ly. (2) Wholesale deposits of $3.5 billion at 6/30/22 up from $528 million at 3/31/22. Core: 86% Core: 91% ($ in millions) Deposit Category Average $ Quarter-End $ Mix Average $ Quarter-End $ Mix Noninterest-bearing demand 13,987$ 13,338$ 39% 11,305$ 11,252$ 38% Interest checking 6,386 6,197 18% 7,166 7,395 25% Money market 9,526 9,030 27% 7,423 7,777 26% Savings 651 654 2% 598 614 2% Total core deposits 30,550 29,219 86% 26,492 27,038 91% Non-core non-maturity deposits 1,159 2,185 6% 1,132 1,123 4% Total non-maturity deposits 31,709 31,404 92% 27,624 28,161 95% Time deposits $250,000 and under 1,395 1,898 6% 930 913 3% Time deposits over $250,000 545 666 2% 568 573 2% Total time deposits 1,940 2,564 8% 1,498 1,486 5% Total deposits (1)(2) 33,649$ 33,968$ 100% 29,122$ 29,647$ 100% At or For the Quarter Ended June 30, 2022 At or For the Quarter Ended June 30, 2021
Second Quarter 2022 | PACW | p. 20 $7.2bn $9.3bn $10.7bn $10.0bn $9.1bn 2.23% 2.12% 2.02% 2.17% 2.32% 7.0 6.2 5.9 6.9 7.7 5.1 4.8 4.8 5.7 6.2 2Q21 3Q21 4Q21 1Q22 2Q22 TE Yield, Avg. Life & Effective Duration AFS Securities HTM Secruties TE Yield Average Life (Yrs) Effective Duration (Yrs) Diversified Investment Portfolio (1) Fair value at 6/30/22 (2) Amortized cost at 6/30/22 (3) Yield is for 2Q22 Asset - backed Securities , $33mm , 1% Agency Residential MBS , $2,578mm , 38% Agency Residential CMOs , $803mm , 12% Agency Commercial MBS , $976mm , 14% Private Residential CMOs , $216mm , 3% Corporate Securities , $369mm , 6% Municipal Securities , $701mm , 10% Collateralized Loan Obligations , $352mm , 5% Other, $25mm , 0% Private Commercial MBS , $33mm , 1% U.S. Treasuries , $696mm ,10% $6.8 Billion AFS Investment Portfolio (1) 2.32% overall portfolio tax equivalent yield (3) Second Quarter Activity: ▪ Reclassified $2.3 billion to HTM as of June 1, 2022; AOCI at transfer of ($217mm) ▪ Purchased one corporate bond for $18.7 million in 2Q22 ▪ Sold $393.4 million in 2Q22 at a net loss of $1.2 million ▪ Net pre - tax unrealized loss of $519.0 million at 3/31/22 ▪ Net pre - tax unrealized loss of $888.8 million at 6/30/22 ▪ Increase in total AOCI net unrealized loss of ($268.3mm) in 2Q22; No impact to regulatory capital ratios Agency Commercial MBS , $424mm , 19% Private Label CMOs , $344mm , 15% Corporate Securities , $68mm , 3% Municipal Securities , $1,241mm , 55% U.S. Treasuries , $183mm , 8% $2.3 Billion HTM Investment Portfolio (2)
Second Quarter 2022 | PACW | p. 21 10.91% 10.01% 9.78% 10.53% 8.86% 8.24% 10.91% 10.01% 9.78% 10.53% 9.32% 10.15% 13.75% 12.72% 12.41% 13.76% 12.69% 13.12% 2017 2018 2019 2020 2021 2Q22 Consolidated CET 1, Tier 1 & Total Capital Ratios (1)(2) $15.9bn $16.3bn $16.2bn $22.3bn $32.7bn $29.2bn $18.9bn $18.9bn $19.2bn $24.9bn $35.0bn $34.0bn 2017 2018 2019 2020 2021 2Q22 Core and Total Deposits (3) Historical Financial Trends $25.0bn $25.7bn $26.8bn $29.5bn $40.4bn $41.0bn 2017 2018 2019 2020 2021 2Q22 Total Assets (1) ■ CET 1 capital ratio, ■ Tier 1 capital ratio, ■ Total capital ratio (2) CET 1 ratio equaled Tier 1 ratio prior to 2021 (3) ■ Core deposits (4) Net of deferred fees $16.9bn $18.0bn $18.8bn $19.1bn $22.9bn $26.5bn 2017 2018 2019 2020 2021 2Q22 Loans and Leases, Net (4)
Second Quarter 2022 | PACW | p. 22 Historical Financial Trends $18.24 $18.02 $19.77 $21.05 $21.31 $16.93 2017 2018 2019 2020 2021 2Q22(2) Tangible Book Value Per Common Share (2)(3) $2.91 $3.72 $3.90 $1.97 $5.10 $2.03 2017 2018 2019 2020 2021 YTD '22 Earnings Per Common Share (1) 15.75% 22.25% 21.49% 10.36% 24.41% 22.55% 2017 2018 2019 2020 2021 YTD '22 Return on Average Tangible Common Equity (1)(3) (1) 2020 excludes goodwill impairment of $1.47 billion (2) Decrease in 2022 primarily due to $5.91 decrease from change to other comprehensive loss resulting from net unrealized losses on the investment portfolio (3) See “Non - GAAP Measurements” slides starting on slide 30 $357.8mm $465.3mm $468.6mm $232.4mm $607.0mm $242.5mm 2017 2018 2019 2020 2021 YTD '22 Net Earnings (1)
Second Quarter 2022 | PACW | p. 23 » Loan activity – slower loan growth than first half of the year » Core deposit activity – flat to down depending on venture banking activity highly influenced by the capital markets and private fundraising; expect some migration to PWAM to continue » Noninterest income – second quarter was in line with historical averages pre - 2021, expect trend to continue; muted capital markets activity will likely keep warrant income at historical averages when excluding 4Q20 to 4Q21 » Noninterest expense – based on 2Q22 and excluding impact of exceptional loan growth; would expect expenses to be slightly lower depending on timing of hiring and spend related to digital strategy and innovation projects » ACL ratio – flat to slightly down; dependent on economic conditions/forecasts, trends in credit quality and loan growth » Capital – raised $513mm of preferred; plan to build capital levels via earnings to levels similar to first half of 2021; considering various capital management options, such as a credit risk transfer related to purchased SFR portfolio General Outlook Ahead – Second Half of Year
Second Quarter 2022 | PACW | p. 24 » Key Initiatives • Balance sheet optimization • Maturation of Civic • Organic loan growth; no headwinds from exited portfolios • Capital management – maintaining focus on solid balance sheet; grow capital to keep pace with loan growth • Digital innovation » Looking Ahead • Organic growth – continued investment in existing business lines • Disciplined strategic growth – any acquisition should add new products, talent and/or markets; striving for better not just bigger Strategic Approach for Sustainable EPS Growth
Second Quarter 2022 | PACW | p. 25 $ Digital Innovation CLIENT - CENTRIC DIGITAL EXPERIENCE Simplified Digital Account Opening • Reimagined Experience Leveraging Data - driven Insights • Electronic Signatures and Records • Digital Forms Stronger Client Relationships Increased Cross - Selling Opportunities Seamless and Contextual Client Experience Accelerated Innovation Streamlined API Connectivity provides Flexibility and Choice • Accounting and ERP Platform Connectivity • HOA Platform Connectivity Delivers Segment Depth • Enhanced Payment Capability via Connectivity Solutions Modernized and Intuitive Digital Experience Across the Client Journey • Online and Mobile Banking • Merchant Services • Virtual Cards • Foreign Exchange ONBOARD | CONNECT | TRANSACT Leverage FinTech Partnerships to Deliver Digital Solutions Across the Client Journey
Second Quarter 2022 | PACW | p. 26 Update on Our ESG Journey » Issued our second annual ESG Report on April 7, 2022 » ESG Report included the SASB disclosure matrix and the GRI content index matrix » Expanded the ESG disclosures in our 2022 Proxy Statement » Board Oversight, Executive Management ESG Committee and working groups continue to drive enhancements in our program and reporting » Comprehensive Enterprise Risk Management program with mature BSA, cybersecurity and data privacy programs » Strong corporate governance with 92% independent directors, separate Chairman and CEO roles and all board committees chaired by independent directors » Monitoring new SEC climate risk disclosure proposal » Expect to complete a climate risk impact assessment in 2022
Second Quarter 2022 | PACW | p. 27 Product Offerings Community Banking National Lending Venture Banking • Attractive branch network with 69 full service branches in California and one in Denver, Colorado • Offers a full suite of deposit products and services, including on - line banking • Business lending products: includes secured business, asset - based and tax - exempt loans • Real estate lending products: includes multi - family, commercial real estate and construction loans • Limited consumer loan offerings • Borrower relationships generally include a deposit relationship • Specialized suite of products for HOA industry • Diversified by loan and lease type, geography and industry o Asset - Based Lending (ABL) ▪ Lender Finance, Equipment Financing and Premium Finance o Commercial Real Estate ▪ Multi - family , Hotel, Office, Retail, Industrial, SBA and Construction • Focus on small to middle - market businesses nationally • Expertise in niche segments (aviation lending and corporate finance) limits new competitors • Borrower relationships may include deposit accounts and treasury services • Four product offerings: Technology, Life Sciences, Fund Finance, Structured Finance • National business with offices located in key innovative hubs across the United States • Offers a comprehensive suite of financial services for venture - backed companies and their venture capital and private equity investors • Provides comprehensive treasury management solutions, including credit cards, international - related products and asset management services to clients • Borrower relationships almost always include a deposit relationship • Branch office in Durham, North Carolina Civic Financial Services • Four product offerings: Construction – Renovation, Residential – Bridge, For - Rent Residential, Multi - family • Lends to investors who want to renovate and “flip” property or rent property • Offices located in 11 states; make loans in 28 states and the District of Columbia • Headquartered in Redondo Beach, CA • Subsidiary of Pacific Western Bank
Second Quarter 2022 | PACW | p. 28 Durham, NC Los Angeles, CA Nationwide Lender Combined with California Branch Network Chevy Chase, MD Chicago, IL Denver, CO New York, NY Boston, MA Minneapolis, MN Campbell, CA Menlo Park, CA San Francisco, CA National Lending office Venture Banking office Community Banking branch Primary offices in 14 states San Diego, CA Austin, TX
Second Quarter 2022 | PACW | p. 29 Company History of Quality Growth Below is a timeline showing the Company’s 31 acquisitions over its history along with its related growth in asset size.
Second Quarter 2022 | PACW | p. 30 Non - GAAP Measurements The Company uses certain non - GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. 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, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 Tangible Common Equity Ratio & Tangible Book Value Per Common Share Stockholders' equity 3,978,403$ 3,650,595$ 3,999,630$ 3,918,434$ 3,846,681$ Less: Preferred stock 498,516 - - - - Total common equity 3,479,887 3,650,595$ 3,999,630$ 3,918,434$ 3,846,681$ Less: Intangible assets 1,443,395 1,447,044 1,450,693 1,219,651 1,222,541 Tangible common equity 2,036,492$ 2,203,551$ 2,548,937$ 2,698,783$ 2,624,140$ Total assets 40,950,723$ 39,249,639$ 40,443,344$ 35,885,676$ 34,867,987$ Less: Intangible assets 1,443,395 1,447,044 1,450,693 1,219,651 1,222,541 Tangible assets 39,507,328$ 37,802,595$ 38,992,651$ 34,666,025$ 33,645,446$ Equity to assets ratio 9.72% 9.30% 9.89% 10.92% 11.03% Tangible common equity ratio (1) 5.15% 5.83% 6.54% 7.79% 7.80% Book value per common share 28.93$ 30.52$ 33.45$ 32.77$ 32.17$ Tangible book value per common share (2) 16.93$ 18.42$ 21.31$ 22.57$ 21.95$ Shares outstanding 120,288,024 119,610,766 119,584,854 119,579,566 119,555,102 Return on Average Tangible Common Equity Net earnings 122,360$ 120,128$ 136,045$ 139,996$ 180,512$ Add: intangible amortization 3,649 3,649 3,876 2,890 2,889 Adjusted net earnings 126,009$ 123,777$ 139,921$ 142,886$ 183,401$ Average stockholders' equity 3,652,368$ 3,847,481$ 3,954,267$ 3,916,621$ 3,739,042$ Less: Average intangible assets 1,445,333 1,449,056 1,437,780 1,221,253 1,224,208 Less: Average preferred stock 137,100 - - - - Average tangible common equity 2,069,935$ 2,398,425$ 2,516,487$ 2,695,368$ 2,514,834$ Return on average equity 13.44% 12.66% 13.65% 14.18% 19.36% Return on average tangible equity (3) 24.42% 20.93% 22.06% 21.03% 29.25% (1) Tangible common equity divided by tangible assets (2) Tangible common equity divided by shares outstanding (3) Annualized adjusted net earnings divided by average tangible common equity
Second Quarter 2022 | PACW | p. 31 ($ in thousands) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 June 30, 2021 PPNR and PPNR Return on Average Assets Net earnings 122,360$ 120,128$ 136,045$ 139,996$ 180,512$ Add: Provision for credit losses 11,500 - (6,000) (20,000) (88,000) Add: Income tax expense 40,766 41,981 51,632 47,770 62,417 Pre-provision, pre-tax revenue ("PPNR") 174,626$ 162,109$ 181,677$ 167,766$ 154,929$ Average assets 40,031,891$ 39,883,304$ 40,358,147$ 35,871,664$ 34,326,112$ Return on average assets (1) 1.23% 1.22% 1.34% 1.56% 2.11% PPNR return on average assets (2) 1.75% 1.65% 1.79% 1.86% 1.81% (1) Annualized net earnings divided by average assets (2) Annualized PPNR divided by average asets Three Months Ended Non - GAAP Measurements The table below presents reconciliations of certain GAAP to non - GAAP financial measures. PPNR represents pre - provision, pre - tax net revenue.
Second Quarter 2022 | PACW | p. 32 Bank Holding Companies and Banks in the KRX Index Total Assets ( in billions ) Source: S&P Global Market Intelligence. Total assets as of March 31, 2022. Banks in the KRX Index as of June 30, 2022. 1 Popular, Inc. BPOP $ 69.525 26 Fulton Financial Corporation FULT $ 25.598 2 Webster Financial Corporation WBS $ 65.131 27 First Hawaiian Inc. FHB $ 25.043 3 East West Bancorp Inc. EWBC $ 62.241 28 Simmons First National Corporation SFNC $ 24.482 4 Western Alliance Bancorporation WAL $ 60.576 29 United Community Banks, Inc. UCBI $ 24.374 5 Synovus Financial Corp. SNV $ 56.420 30 Ameris Bancorp ABCB $ 23.560 6 Cullen/Frost Bankers, Inc. CFR $ 51.296 31 Bank of Hawaii Corporation BOH $ 23.000 7 Wintrust Financial Corporation WTFC $ 50.251 32 Eastern Bankshares , Inc. EBC $ 22.836 8 Cadence Bank CADE $ 47.204 33 Pacific Premier Bancorp, Inc. PPBI $ 21.622 9 South State Corporation SSB $ 46.202 34 WSFS Financial Corporation WSFS $ 20.965 10 Old National Bancorp ONB $ 45.835 35 Columbia Banking Systems, Inc. COLB $ 20.964 11 Valley National Bancorp VLY $ 43.551 36 Cathay General Bancorp CATY $ 20.867 12 F.N.B. Corporation FNB $ 42.022 37 Washington Federal, Inc. WAFD $ 20.560 13 UMB Financial Corporation UMBF $ 40.606 38 Independent Bank Corp INDB $ 20.159 14 Pinnacle Financial Partners, Inc. PNFP $ 39.400 39 First Bancorp FBP $ 19.929 15 PacWest Bancorp PACW $ 39.250 40 Atlantic Union Bankshares AUB $ 19.782 16 Prosperity Bancshares, Inc. PB $ 38.271 41 Home Bancshares, Inc. HOMB $ 18.618 17 BankUnited , Inc. BKU $ 36.332 42 Hope Bancorp, Inc. HOPE $ 17.804 18 Hancock Whitney Corporation HWC $ 36.317 43 CVB Financial Corp. CVBF $ 17.539 19 Commerce Bankshares , Inc. CBSH $ 34.987 44 Trustmark Corporation TRMK $ 17.442 20 Associated Banc - Corp ASB $ 34.956 45 First Financial Bancorp FFBC $ 16.009 21 First Interstate Bancsystem , Inc. FIBK $ 33.162 46 Community Bank Systems, Inc. CBU $ 15.626 22 Texas Capital Bankshares , Inc. TCBI $ 31.085 47 Provident Financial Services, Inc. PFS $ 13.617 23 United Bankshares , Inc. UBSI $ 29.366 48 First Financial Bankshares , Inc. FFIN $ 13.314 24 Bank OZK OZK $ 26.562 49 First Commonwealth Financial Corporation FCF $ 9.642 25 Glacier Bancorp, Inc. GBCI $ 26.100 50 Brookline Bancorp, Inc. BRKL $ 8.634
Second Quarter 2022 | PACW | p. 33 This communication contains certain forward - looking information about PacWest Bancorp (the “Company”) that is intended to be covered by the safe harbor for “forward - looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward - looking statements. Such statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” intends,” “plans,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” 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, which may cause actual results, performance, or achievements to differ materially from those expressed in them. The ongoing COVID - 19 pandemic continues to affect PacWest Bancorp, its employees, customers and third - party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity and prospects is uncertain, due in part to new variants of COVID - 19. 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 Bancorp’s revenues and the values of its assets and liabilities, including goodwill, lead to a tightening of credit and increase stock price volatility. In addition, PacWest Bancorp’s results could be adversely affected by changes in interest rates, inflation, 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, and legal and regulatory developments. Actual results may differ materially from those set forth or implied in the forward - looking statements due to a variety of factors, including the risk factors described in documents filed by the Company with the U.S. Securities and Exchange Commission. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward - looking statements, whether as a result of new information, future events or otherwise, except as required by law . Forward - Looking Statements
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