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Business Segments
 9 Months Ended
Sep. 30, 2015
Segment Reporting [Abstract]  
Business Segments
Business Segments
The Company’s reportable segments consist of “Community Banking," “National Lending,” and “Other.” The Community Banking and National Lending segments include all of the operations of Pacific Western Bank. The Other segment consists of holding company and non-bank subsidiary operations, and intercompany eliminations.
As a result of the CapitalSource Inc. merger, the Bank formed the CapitalSource Division, which we also refer to as the National Lending segment. The National Lending segment includes the lending operations gained through the CapitalSource Inc. merger, Pacific Western Equipment Finance, and the CapitalSource Business Finance Group. We reorganized our asset-based lending and leasing operations when we formed the CapitalSource Division.
The CapitalSource Division lends throughout the United States, providing middle-market businesses asset-secured loans, equipment-secured loans, cash flow loans, and real estate loans secured by various property types. The CapitalSource Division’s loan and lease origination efforts are conducted through offices located in Chevy Chase, Maryland; Los Angeles and San Jose, California; Phoenix, Arizona; St. Louis, Missouri; Denver, Colorado; Chicago, Illinois; New York, New York; and Midvale, Utah.
The 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 and corporate overhead.
The Other segment consists of holding company operations that 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 reportable 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 Community Banking segment to the National Lending segment based upon National Lending’s average earning assets, net of a capital allocation, and the Bank’s total cost of deposits. The Community Banking segment further allocates to the National Lending segment noninterest expense for deposit gathering and 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 are included in the Community Banking segment. Noninterest income and noninterest expense, including lending and loan servicing activity, directly attributable to a segment are assigned to such segment.
The following tables present information regarding our business segments as of and for the periods indicated:
 
September 30, 2015
 
Community
 
National
 
 
 
Consolidated
Balance Sheet Data:
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Loans and leases, net of deferred fees
$
3,141,576

 
$
9,302,580

 
$
8,049

 
$
12,452,205

Allowance for loan and lease losses
(39,522
)
 
(63,749
)
 
—

 
(103,271
)
Total loans and leases, net
$
3,102,054

 
$
9,238,831

 
$
8,049

 
$
12,348,934

Goodwill
$
333,979

 
$
1,394,401

 
$
—

 
$
1,728,380

Core deposit and customer relationship intangibles, net
12,143

 
561

 
—

 
12,704

Total assets
6,288,790

 
10,418,282

 
107,033

 
16,814,105

Total deposits(1)
12,484,050

 
36,586

 
(404,873
)
 
12,115,763

________________________
(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.

 
September 30, 2014
 
Community
 
National
 
 
 
Consolidated
Balance Sheet Data:
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Loans and leases, net of deferred fees
$
3,482,125

 
$
8,064,868

 
$
27,892

 
$
11,574,885

Allowance for loan and lease losses
(56,712
)
 
(25,187
)
 
—

 
(81,899
)
Total loans and leases, net
$
3,425,413

 
$
8,039,681

 
$
27,892

 
$
11,492,986

Goodwill
$
327,728

 
$
1,394,401

 
$
—

 
$
1,722,129

Core deposit and customer relationship intangibles, net
17,814

 
1,009

 
—

 
18,823

Total assets
6,492,674

 
9,182,617

 
262,859

 
15,938,150

Total deposits(1)
11,826,681

 
—

 
(303,244
)
 
11,523,437

________________________
(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 September 30, 2015
 
Community
 
National
 
 
 
Consolidated
Results of Operations:
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
58,368

 
$
148,264

 
$
1,040

 
$
207,672

Interest expense
(10,430
)
 
(42
)
 
(4,680
)
 
(15,152
)
Intersegment interest income (expense)
6,629

 
(6,629
)
 
—

 
—

Net interest income (expense)
54,567

 
141,593

 
(3,640
)
 
192,520

Negative provision (provision) for credit losses
1,309

 
(10,145
)
 
90

 
(8,746
)
Gain on sale of securities
655

 
—

 
—

 
655

FDIC loss sharing expense, net
(4,449
)
 
—

 
—

 
(4,449
)
Other noninterest income
7,956

 
7,478

 
4,118

 
19,552

Total noninterest income
4,162

 
7,478

 
4,118

 
15,758

Foreclosed assets (expense) income, net
(4,787
)
 
39

 
227

 
(4,521
)
Intangible asset amortization
(1,385
)
 
(112
)
 
—

 
(1,497
)
Acquisition, integration and reorganization costs
(747
)
 
—

 
—

 
(747
)
Other noninterest expense
(56,318
)
 
(23,763
)
 
(3,293
)
 
(83,374
)
Total noninterest expense
(63,237
)
 
(23,836
)
 
(3,066
)
 
(90,139
)
Intersegment noninterest income (expense)
28,280

 
(28,280
)
 
—

 
—

Total noninterest expense - adjusted
(34,957
)
 
(52,116
)
 
(3,066
)
 
(90,139
)
Earnings (loss) before taxes
25,081

 
86,810

 
(2,498
)
 
109,393

Income tax (expense) benefit
(9,584
)
 
(33,172
)
 
2,979

 
(39,777
)
Net earnings
$
15,497

 
$
53,638

 
$
481

 
$
69,616

 
Three Months Ended June 30, 2015
 
Community
 
National
 
 
 
Consolidated
Results of Operations:
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
63,392

 
$
154,816

 
$
247

 
$
218,455

Interest expense
(11,273
)
 
(48
)
 
(4,582
)
 
(15,903
)
Intersegment interest income (expense)
7,140

 
(7,140
)
 
—

 
—

Net interest income (expense)
59,259

 
147,628

 
(4,335
)
 
202,552

Negative provision (provision) for credit losses
734

 
(7,263
)
 
—

 
(6,529
)
Loss on sale of securities
(186
)
 
—

 
—

 
(186
)
FDIC loss sharing expense, net
(5,107
)
 
—

 
—

 
(5,107
)
Other noninterest income
4,235

 
14,465

 
6,216

 
24,916

Total noninterest income
(1,058
)
 
14,465

 
6,216

 
19,623

Foreclosed assets (expense) income, net
(351
)
 
(22
)
 
2,713

 
2,340

Intangible asset amortization
(1,390
)
 
(112
)
 
—

 
(1,502
)
Acquisition, integration and reorganization costs
(806
)
 
—

 
(94
)
 
(900
)
Other noninterest expense
(58,304
)
 
(24,164
)
 
(2,746
)
 
(85,214
)
Total noninterest expense
(60,851
)
 
(24,298
)
 
(127
)
 
(85,276
)
Intersegment noninterest income (expense)
28,857

 
(28,857
)
 
—

 
—

Total noninterest expense - adjusted
(31,994
)
 
(53,155
)
 
(127
)
 
(85,276
)
Earnings before taxes
26,941

 
101,675

 
1,754

 
130,370

Income tax (expense) benefit
(10,484
)
 
(39,566
)
 
4,763

 
(45,287
)
Net earnings
$
16,457

 
$
62,109

 
$
6,517

 
$
85,083

 
Three Months Ended September 30, 2014
 
Community
 
National
 
 
 
Consolidated
Results of Operations:
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
67,132

 
$
134,624

 
$
600

 
$
202,356

Interest expense
(8,851
)
 
(45
)
 
(4,614
)
 
(13,510
)
Intersegment interest income (expense)
5,250

 
(5,250
)
 
—

 
—

Net interest income (expense)
63,531

 
129,329

 
(4,014
)
 
188,846

Negative provision (provision) for credit losses
6,314

 
(11,364
)
 
—

 
(5,050
)
FDIC loss sharing expense, net
(7,415
)
 
—

 
—

 
(7,415
)
Other noninterest income
7,566

 
9,953

 
6,210

 
23,729

Total noninterest income
151

 
9,953

 
6,210

 
16,314

Foreclosed assets (expense) income, net
(4,627
)
 
(322
)
 
122

 
(4,827
)
Intangible asset amortization
(1,517
)
 
(91
)
 
—

 
(1,608
)
Acquisition, integration and reorganization costs
(3,953
)
 
(1,240
)
 
—

 
(5,193
)
Other noninterest expense
(53,078
)
 
(24,835
)
 
(5,382
)
 
(83,295
)
Total noninterest expense
(63,175
)
 
(26,488
)
 
(5,260
)
 
(94,923
)
Intersegment noninterest income (expense)
26,411

 
(26,411
)
 
—

 
—

Total noninterest expense - adjusted
(36,764
)
 
(52,899
)
 
(5,260
)
 
(94,923
)
Earnings (loss) from continuing operations before taxes
33,232

 
75,019

 
(3,064
)
 
105,187

Income tax (expense) benefit
(14,576
)
 
(30,113
)
 
1,778

 
(42,911
)
Net earnings (loss) from continuing operations
18,656

 
44,906

 
(1,286
)
 
62,276

Loss from discontinued operations before taxes
(8
)
 
—

 
—

 
(8
)
Income tax benefit
3

 
—

 
—

 
3

Net loss from discontinued operations
(5
)
 
—

 
—

 
(5
)
Net earnings (loss)
$
18,651

 
$
44,906

 
$
(1,286
)
 
$
62,271

 
Nine Months Ended September 30, 2015
 
Community
 
National
 
 
 
Consolidated
Results of Operations:
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
184,716

 
$
454,299

 
$
1,426

 
$
640,441

Interest expense
(32,364
)
 
(143
)
 
(13,787
)
 
(46,294
)
Intersegment interest income (expense)
20,490

 
(20,490
)
 
—

 
—

Net interest income (expense)
172,842

 
433,666

 
(12,361
)
 
594,147

Negative provision (provision) for credit losses
10,107

 
(41,814
)
 
(2
)
 
(31,709
)
Gain on sale of securities
3,744

 
—

 
—

 
3,744

FDIC loss sharing expense, net
(13,955
)
 
—

 
—

 
(13,955
)
Other noninterest income
21,766

 
27,085

 
17,612

 
66,463

Total noninterest income (expense)
11,555

 
27,085

 
17,612

 
56,252

Foreclosed assets (expense) income, net
(5,182
)
 
(44
)
 
2,709

 
(2,517
)
Intangible asset amortization
(4,164
)
 
(336
)
 
—

 
(4,500
)
Acquisition, integration and reorganization costs
(3,443
)
 
—

 
(204
)
 
(3,647
)
Other noninterest expense
(169,827
)
 
(70,764
)
 
(8,520
)
 
(249,111
)
Total noninterest expense
(182,616
)
 
(71,144
)
 
(6,015
)
 
(259,775
)
Intersegment noninterest income (expense)
83,700

 
(83,700
)
 
—

 
—

Total noninterest expense - adjusted
(98,916
)
 
(154,844
)
 
(6,015
)
 
(259,775
)
Earnings (loss) before taxes
95,588

 
264,093

 
(766
)
 
358,915

Income tax (expense) benefit
(36,941
)
 
(102,020
)
 
7,824

 
(131,137
)
Net earnings
$
58,647

 
$
162,073

 
$
7,058

 
$
227,778

 
Nine Months Ended September 30, 2014
 
Community
 
National
 
 
 
Consolidated
Results of Operations:
Banking
 
Lending
 
Other
 
Company
 
(In thousands)
Interest income
$
214,704

 
$
278,131

 
$
2,244

 
$
495,079

Interest expense
(17,528
)
 
(184
)
 
(9,973
)
 
(27,685
)
Intersegment interest income (expense)
9,543

 
(9,543
)
 
—

 
—

Net interest income (expense)
206,719

 
268,404

 
(7,729
)
 
467,394

Negative provision (provision) for credit losses
11,558

 
(20,994
)
 
—

 
(9,436
)
Gain on sale of securities
4,841

 
—

 
—

 
4,841

FDIC loss sharing expense, net
(27,370
)
 
—

 
—

 
(27,370
)
Other noninterest income
18,144

 
26,885

 
6,984

 
52,013

Total noninterest income
(4,385
)
 
26,885

 
6,984

 
29,484

Foreclosed assets (expense) income, net
(3,399
)
 
(284
)
 
220

 
(3,463
)
Intangible asset amortization
(4,238
)
 
(411
)
 
—

 
(4,649
)
Acquisition, integration and reorganization costs
(83,866
)
 
(8,714
)
 
(1,055
)
 
(93,635
)
Other noninterest expense
(144,164
)
 
(55,892
)
 
(12,484
)
 
(212,540
)
Total noninterest expense
(235,667
)
 
(65,301
)
 
(13,319
)
 
(314,287
)
Intersegment noninterest income (expense)
49,944

 
(49,944
)
 
—

 
—

Total noninterest expense - adjusted
(185,723
)
 
(115,245
)
 
(13,319
)
 
(314,287
)
Earnings (loss) from continuing operations before taxes
28,169

 
159,050

 
(14,064
)
 
173,155

Income tax (expense) benefit
(16,240
)
 
(63,703
)
 
6,199

 
(73,744
)
Net earnings (loss) from continuing operations
11,929

 
95,347

 
(7,865
)
 
99,411

Loss from discontinued operations before taxes
(2,572
)
 
—

 
—

 
(2,572
)
Income tax benefit
1,067

 
—

 
—

 
1,067

Net loss from discontinued operations
(1,505
)
 
—

 
—

 
(1,505
)
Net earnings (loss)
$
10,424

 
$
95,347

 
$
(7,865
)
 
$
97,906