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Business Segment
 6 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
Segment Data
Note 15. Business Segments
The Company’s reportable segments consist of “PWB Community Banking,” “National Lending,” and “Other.” In prior periods, the segments consisted of “Banking,” “Asset Financing,” and “Other.” The Asset Financing segment in prior periods included the asset-based lending and leasing operations of Pacific Western Equipment Finance, BFI Business Finance, First Community Financial and Celtic Capital Corporation.
As a result of the CapitalSource Inc. merger, Pacific Western Bank established the CapitalSource Division, which we also refer to as the National Lending segment. The CapitalSource Division, or National Lending segment, includes the lending operations gained through the CapitalSource Inc. merger, Pacific Western Equipment Finance, and the CapitalSource Business Finance Group (formerly BFI Business Finance and First Community Financial). We reorganized our asset-based lending and leasing operations when we established the CapitalSource Division combining BFI Business Finance and First Community Financial into the Capital Source Business Finance Group, selling Celtic Capital Corporation in July 2014, and having Pacific Western Equipment Finance and the Capital Source Business Finance Group become part of the CapitalSource Division. The CapitalSource Division provides on a nationwide basis a full spectrum of financing solutions across numerous industries and property types to middle market businesses, including senior secured real estate loans, equipment loans and leases, asset-based loans, lender finance loans and cash flow loans secured by the enterprise value of the borrowing entity. The CapitalSource Division’s loan and lease origination efforts are conducted through offices located in Chevy Chase, Maryland; Los Angeles and San Jose, California; Denver, Colorado; Chicago, Illinois; New York, New York; and Midvale, Utah.
The PWB Community Banking and National Lending segments include all of the operations of Pacific Western Bank. The PWB Community Banking segment includes the operations of Pacific Western Bank, excluding the CapitalSource Division, and includes lending and deposit gathering activities conducted primarily through its California-based branch offices and the Bank’s treasury management function. The Other segment consists of holding company operations which result in expenses principally for compensation, facilities, professional services, interest on subordinated debentures, and the non-bank subsidiary operations including interest income from a loan portfolio and related loan servicing expense.
The accounting policies of the reported segments are the same as those of the Company described in Note 1, “Nature of Operations and Summary of Significant Accounting Policies,” of our Form 10‑K. Transactions between segments consist primarily of borrowed funds and expense allocations for interest, deposit gathering, corporate overhead and credit loss provisions. Intersegment interest expense is allocated from the PWB Community Banking segment to the National Lending segment based upon National Lending’s average interest-earning assets and operating leases, net of a capital allocation, and the Bank’s total cost of deposits. The PWB Community Banking segment further allocates to the National Lending segment noninterest expense for deposit gathering, maintenance costs and the Bank’s corporate overhead. The provision for credit losses is allocated based on actual charge‑offs for the period as well as net portfolio growth and credit quality trends. All costs associated with investing the Bank’s excess liquidity and the PWB Community Bank’s lending and loan servicing activities are housed in the PWB Community Banking segment. Noninterest income and noninterest expense directly attributable to a segment are assigned to it.
The following tables present information regarding our business segments as of and for the periods indicated:
 
June 30, 2014
 
PWB Community
 
National
 
 
 
Consolidated
Balance Sheet Data
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Loans and leases, net of unearned income
$
3,537,994

 
$
7,599,030

 
$
53,081

 
$
11,190,105

Allowance for loan and lease losses
(66,039
)
 
(16,110
)
 
—

 
(82,149
)
Total loans and leases, net
$
3,471,955

 
$
7,582,920

 
$
53,081

 
$
11,107,956

Goodwill
$
279,296

 
$
1,445,857

 
$
—

 
$
1,725,153

Core deposit and customer relationship intangibles, net
19,330

 
1,101

 
—

 
20,431

Total assets
6,100,939

 
9,275,500

 
308,427

 
15,684,866

Total deposits(1)
11,909,853

 
28,302

 
(270,358
)
 
11,667,797

________________________
(1)
The negative balance for total deposits in the “Other” segment represents the elimination of holding company cash held in deposit accounts at the Bank.
 
June 30, 2013
 
PWB Community
 
National
 
 
 
Consolidated
Balance Sheet Data
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Loans and leases, net of unearned income
$
3,947,322

 
$
472,364

 
$
—

 
$
4,419,686

Allowance for loan and lease losses
(84,917
)
 
(5,726
)
 
—

 
(90,643
)
Total loans and leases, net
$
3,862,405

 
$
466,638

 
$
—

 
$
4,329,043

Goodwill
$
183,512

 
$
25,678

 
$
—

 
$
209,190

Core deposit and customer relationship intangibles, net
17,958

 
2,232

 
—

 
20,190

Total assets
6,189,202

 
510,630

 
9,270

 
6,709,102

Total deposits(1)
5,557,871

 
—

 
(34,871
)
 
5,523,000

________________________
(1)
The negative balance for total deposits in the “Other” segment represents the elimination of holding company cash held in deposit accounts at the Bank.
 
Three Months Ended June 30, 2014
 
PWB Community
 
National
 
 
 
Consolidated
 
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
69,977

 
$
132,742

 
$
1,644

 
$
204,363

Interest expense
(7,450
)
 
(62
)
 
(4,318
)
 
(11,830
)
Intersegment interest income (expense)
4,071

 
(4,071
)
 
—

 
—

Net interest income (expense)
66,598

 
128,609

 
(2,674
)
 
192,533

Negative provision (provision) for credit losses
4,418

 
(9,448
)
 
—

 
(5,030
)
Gain on securities
89

 
—

 
—

 
89

FDIC loss sharing expense
(8,525
)
 
—

 
—

 
(8,525
)
Other noninterest income
3,681

 
12,487

 
747

 
16,915

Total noninterest income
(4,755
)
 
12,487

 
747

 
8,479

Foreclosed assets expense (income), net

(633
)
 
38

 
98

 
(497
)
Intangible asset amortization
(1,530
)
 
(147
)
 
—

 
(1,677
)
Acquisition, integration and reorganization costs
(77,713
)
 
(7,474
)
 
(1,055
)
 
(86,242
)
Other noninterest expense
(51,507
)
 
(24,484
)
 
(5,499
)
 
(81,490
)
Total noninterest expense
(131,383
)
 
(32,067
)
 
(6,456
)
 
(169,906
)
Intersegment noninterest income (expense)
23,533

 
(23,533
)
 
—

 
—

Total noninterest expense - adjusted
(107,850
)
 
(55,600
)
 
(6,456
)
 
(169,906
)
(Loss) earnings from continuing operations before taxes
(41,589
)
 
76,048

 
(8,383
)
 
26,076

Income tax benefit (expense)
12,081

 
(30,259
)
 
3,332

 
(14,846
)
Net (loss) earnings from continuing operations
(29,508
)
 
45,789

 
(5,051
)
 
11,230

Loss from discontinued operations before taxes
(1,151
)
 
—

 
—

 
(1,151
)
Income tax benefit
476

 
—

 
—

 
476

Net loss from discontinued operations
(675
)
 
—

 
—

 
(675
)
Net (loss) earnings
$
(30,183
)
 
$
45,789

 
$
(5,051
)
 
$
10,555


 
Three Months Ended March 31, 2014
 
PWB Community
 
National
 
 
 
Consolidated
 
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
77,595

 
$
10,765

 
$
—

 
$
88,360

Interest expense
(1,227
)
 
(77
)
 
(1,041
)
 
(2,345
)
Intersegment interest income (expense)
222

 
(222
)
 
—

 
—

Net interest income
76,590

 
10,466

 
(1,041
)
 
86,015

Negative provision (provision) for credit losses
826

 
(182
)
 
—

 
644

Gain on securities
4,752

 
—

 
—

 
4,752

FDIC loss sharing (income) expense
(11,430
)
 
—

 
—

 
(11,430
)
Other noninterest income
6,897

 
4,445

 
27

 
11,369

Total noninterest income
219

 
4,445

 
27

 
4,691

Foreclosed assets expense, net
1,861

 
—

 
—

 
1,861

Intangible asset amortization
(1,191
)
 
(173
)
 
—

 
(1,364
)
Acquisition, integration and reorganization costs
(2,200
)
 
—

 
—

 
(2,200
)
Other noninterest expense
(40,990
)
 
(6,573
)
 
(1,603
)
 
(49,166
)
Total noninterest expense
(42,520
)
 
(6,746
)
 
(1,603
)
 
(50,869
)
Earnings (loss) from continuing operations before taxes
35,115

 
7,983

 
(2,617
)
 
40,481

Income tax (expense) benefit
(12,334
)
 
(3,331
)
 
1,089

 
(14,576
)
Net earnings (loss) from continuing operations
22,781

 
4,652

 
(1,528
)
 
25,905

Loss from discontinued operations before taxes
(1,413
)
 
—

 
—

 
(1,413
)
Income tax benefit
588

 
—

 
—

 
588

Net loss from discontinued operations
(825
)
 
—

 
—

 
(825
)
Net earnings (loss)
$
21,956

 
$
4,652

 
$
(1,528
)
 
$
25,080

 
 
Three Months Ended June 30, 2013
 
PWB Community
 
National
 
 
 
Consolidated
 
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
59,321

 
$
12,310

 
$
—

 
$
71,631

Interest expense
(2,080
)
 
(196
)
 
(882
)
 
(3,158
)
Intersegment interest income (expense)
460

 
(460
)
 
—

 
—

Net interest income
57,701

 
11,654

 
(882
)
 
68,473

Negative provision (provision) for credit losses
2,607

 
(765
)
 
—

 
1,842

FDIC loss sharing expense
(5,410
)
 
—

 
—

 
(5,410
)
Other noninterest income
4,995

 
592

 
26

 
5,613

Total noninterest income
(415
)
 
592

 
26

 
203

Foreclosed assets income (expense), net
14

 
—

 
—

 
14

Intangible asset amortization
(1,127
)
 
(157
)
 
—

 
(1,284
)
Acquisition, integration and reorganization costs
(17,997
)
 
—

 
—

 
(17,997
)
Other noninterest expense
(37,571
)
 
(5,980
)
 
(1,398
)
 
(44,949
)
Total noninterest expense
(56,681
)
 
(6,137
)
 
(1,398
)
 
(64,216
)
Earnings (loss) from continuing operations before taxes
3,212

 
5,344

 
(2,254
)
 
6,302

Income tax (expense) benefit
(612
)
 
(2,237
)
 
943

 
(1,906
)
Net earnings (loss) from continuing operations
2,600

 
3,107

 
(1,311
)
 
4,396

Loss from discontinued operations before taxes
(81
)
 
—

 
—

 
(81
)
Income tax benefit
34

 
—

 
—

 
34

Net loss from discontinued operations
(47
)
 
—

 
—

 
(47
)
Net earnings (loss)
$
2,553

 
$
3,107

 
$
(1,311
)
 
$
4,349



 
Six Months Ended June 30, 2014
 
PWB Community
 
National
 
 
 
Consolidated
 
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
147,572

 
$
143,507

 
$
1,644

 
$
292,723

Interest expense
(8,677
)
 
(139
)
 
(5,359
)
 
(14,175
)
Intersegment interest income (expense)
4,293

 
(4,293
)
 
—

 
—

Net interest income (expense)
143,188

 
139,075

 
(3,715
)
 
278,548

Negative provision (provision) for credit losses
5,244

 
(9,630
)
 
—

 
(4,386
)
Gain on securities
4,841

 
—

 
—

 
4,841

FDIC loss sharing expense
(19,955
)
 
—

 
—

 
(19,955
)
Other noninterest income
10,578

 
16,932

 
774

 
28,284

Total noninterest income
(4,536
)
 
16,932

 
774

 
13,170

Foreclosed assets income (expense), net
1,228

 
38

 
98

 
1,364

Intangible asset amortization
(2,721
)
 
(320
)
 
—

 
(3,041
)
Acquisition, integration and reorganization costs
(79,913
)
 
(7,474
)
 
(1,055
)
 
(88,442
)
Other noninterest expense
(92,497
)
 
(31,057
)
 
(7,102
)
 
(130,656
)
Total noninterest expense
(173,903
)
 
(38,813
)
 
(8,059
)
 
(220,775
)
Intersegment noninterest income (expense)
23,533

 
(23,533
)
 
—

 
—

Total noninterest expense - adjusted
(150,370
)
 
(62,346
)
 
(8,059
)
 
(220,775
)
(Loss) earnings from continuing operations before taxes
(6,474
)
 
84,031

 
(11,000
)
 
66,557

Income tax (expense) benefit
(253
)
 
(33,590
)
 
4,421

 
(29,422
)
Net (loss) earnings from continuing operations
(6,727
)
 
50,441

 
(6,579
)
 
37,135

Loss from discontinued operations before taxes
(2,564
)
 
—

 
—

 
(2,564
)
Income tax benefit
1,064

 
—

 
—

 
1,064

Net loss from discontinued operations
(1,500
)
 
—

 
—

 
(1,500
)
Net (loss) earnings
$
(8,227
)
 
$
50,441

 
$
(6,579
)
 
$
35,635


 
Six Months Ended June 30, 2013
 
PWB Community
 
National
 
 
 
Consolidated
 
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
116,228

 
$
24,672

 
$
—

 
$
140,900

Interest expense
(4,730
)
 
(339
)
 
(1,665
)
 
(6,734
)
Intersegment interest income (expense)
931

 
(931
)
 
—

 
—

Net interest income
112,429

 
23,402

 
(1,665
)
 
134,166

Negative provision (provision) for credit losses
271

 
(1,566
)
 
—

 
(1,295
)
Gain on securities
409

 
—

 
—

 
409

FDIC loss sharing expense
(8,547
)
 
—

 
—

 
(8,547
)
Other noninterest income
9,996

 
1,136

 
49

 
11,181

Total noninterest income
1,858

 
1,136

 
49

 
3,043

Foreclosed assets income, net
514

 
—

 
—

 
514

Intangible asset amortization
(2,120
)
 
(340
)
 
—

 
(2,460
)
Acquisition, integration and reorganization costs
(18,689
)
 
—

 
—

 
(18,689
)
Other noninterest expense
(72,917
)
 
(12,033
)
 
(2,814
)
 
(87,764
)
Total noninterest expense
(93,212
)
 
(12,373
)
 
(2,814
)
 
(108,399
)
Earnings (loss) from continuing operations before taxes
21,346

 
10,599

 
(4,430
)
 
27,515

Income tax (expense) benefit
(7,042
)
 
(4,436
)
 
1,853

 
(9,625
)
Net earnings (loss) from continuing operations
14,304

 
6,163

 
(2,577
)
 
17,890

Loss from discontinued operations before taxes
(81
)
 
—

 
—

 
(81
)
Income tax benefit
34

 
—

 
—

 
34

Net loss from discontinued operations
(47
)
 
—

 
—

 
(47
)
Net earnings (loss)
$
14,257

 
$
6,163

 
$
(2,577
)
 
$
17,843

The following tables present information regarding our business segments as of and for the periods indicated:
 
June 30, 2014
 
PWB Community
 
National
 
 
 
Consolidated
Balance Sheet Data
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Loans and leases, net of unearned income
$
3,537,994

 
$
7,599,030

 
$
53,081

 
$
11,190,105

Allowance for loan and lease losses
(66,039
)
 
(16,110
)
 
—

 
(82,149
)
Total loans and leases, net
$
3,471,955

 
$
7,582,920

 
$
53,081

 
$
11,107,956

Goodwill
$
279,296

 
$
1,445,857

 
$
—

 
$
1,725,153

Core deposit and customer relationship intangibles, net
19,330

 
1,101

 
—

 
20,431

Total assets
6,100,939

 
9,275,500

 
308,427

 
15,684,866

Total deposits(1)
11,909,853

 
28,302

 
(270,358
)
 
11,667,797

________________________
(1)
The negative balance for total deposits in the “Other” segment represents the elimination of holding company cash held in deposit accounts at the Bank.
 
June 30, 2013
 
PWB Community
 
National
 
 
 
Consolidated
Balance Sheet Data
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Loans and leases, net of unearned income
$
3,947,322

 
$
472,364

 
$
—

 
$
4,419,686

Allowance for loan and lease losses
(84,917
)
 
(5,726
)
 
—

 
(90,643
)
Total loans and leases, net
$
3,862,405

 
$
466,638

 
$
—

 
$
4,329,043

Goodwill
$
183,512

 
$
25,678

 
$
—

 
$
209,190

Core deposit and customer relationship intangibles, net
17,958

 
2,232

 
—

 
20,190

Total assets
6,189,202

 
510,630

 
9,270

 
6,709,102

Total deposits(1)
5,557,871

 
—

 
(34,871
)
 
5,523,000

________________________
(1)
The negative balance for total deposits in the “Other” segment represents the elimination of holding company cash held in deposit accounts at the Bank.