Highlights
- Net Earnings of $128.1 Million, or $1.07 Per Diluted Share; Up 16% from Prior Quarter
- Tax Equivalent Net Interest Margin of 4.72%; Up 3 Basis Points from Prior Quarter
- Loan and Lease Production of $1.4 Billion; $165 Million of Net Loan Growth
- Core Deposits Represent 83% of Total Deposits
LOS ANGELES, July 16, 2019 (GLOBE NEWSWIRE) -- PacWest Bancorp PACW today announced net earnings for the second quarter of 2019 of $128.1 million, or $1.07 per diluted share, compared to net earnings for the first quarter of 2019 of $112.6 million, or $0.92 per diluted share. The increase in net earnings in the second quarter included a $22.2 million pre-tax gain on the sale of securities which contributed $0.13 per diluted share.
Matt Wagner, President and CEO, commented, "We continue to see favorable results from our credit de-risking strategy with sustained improvement in our credit quality metrics. Year-to-date net charge-offs are 48% lower than the same period in 2018 and year-to-date credit loss provisions are 44% lower than the same period in 2018. Our second quarter of 2019 results produced a return on assets of 1.99% and a return on tangible equity of 23.15%."
Mr. Wagner continued, "We experienced solid loan production in the second quarter bringing our net loan growth to $515 million for the first half of 2019. However, competition for core deposits and customers desiring higher yields on their funds resulted in total deposits being flat in the first half of 2019. Core deposit generation remains a priority in order to help fund loan growth and maintain our net interest margin."
FINANCIAL HIGHLIGHTS
| At or For the | At or For the | ||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | March 31, | Increase | June 30, | Increase | |||||||||||||||||||
| Financial Highlights | 2019 | 2019 | (Decrease) | 2019 | 2018 | (Decrease) | |||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||||||
| Net earnings | $ | 128,125 | $ | 112,604 | $ | 15,521 | $ | 240,729 | $ | 234,011 | $ | 6,718 | |||||||||||
| Diluted earnings per share | $ | 1.07 | $ | 0.92 | $ | 0.15 | $ | 1.99 | $ | 1.85 | $ | 0.14 | |||||||||||
| Return on average assets | 1.99 | % | 1.77 | % | 0.22 | 1.88 | % | 1.96 | % | (0.08 | ) | ||||||||||||
| Return on average | |||||||||||||||||||||||
| tangible equity (1) | 23.15 | % | 20.64 | % | 2.51 | 21.91 | % | 21.03 | % | 0.88 | |||||||||||||
| Net interest margin ("NIM") | |||||||||||||||||||||||
| (tax equivalent) | 4.72 | % | 4.69 | % | 0.03 | 4.70 | % | 5.15 | % | (0.45 | ) | ||||||||||||
| Yield on average loans and | |||||||||||||||||||||||
| leases (tax equivalent) | 6.26 | % | 6.16 | % | 0.10 | 6.21 | % | 6.21 | % | - | |||||||||||||
| Cost of average total | |||||||||||||||||||||||
| deposits | 0.81 | % | 0.73 | % | 0.08 | 0.77 | % | 0.34 | % | 0.43 | |||||||||||||
| Efficiency ratio | 41.6 | % | 42.4 | % | (0.8 | ) | 42.0 | % | 40.7 | % | 1.3 | ||||||||||||
| Total assets | $ | 26,344,414 | $ | 26,324,138 | $ | 20,276 | $ | 26,344,414 | $ | 24,529,557 | $ | 1,814,857 | |||||||||||
| Loans and leases held | |||||||||||||||||||||||
| for investment, | |||||||||||||||||||||||
| net of deferred fees | $ | 18,472,852 | $ | 18,307,697 | $ | 165,155 | $ | 18,472,852 | $ | 16,885,192 | $ | 1,587,660 | |||||||||||
| Noninterest-bearing | |||||||||||||||||||||||
| demand deposits | $ | 7,299,213 | $ | 7,712,409 | $ | (413,196 | ) | $ | 7,299,213 | $ | 8,126,153 | $ | (826,940 | ) | |||||||||
| Core deposits | $ | 15,617,488 | $ | 16,127,638 | $ | (510,150 | ) | $ | 15,617,488 | $ | 15,586,238 | $ | 31,250 | ||||||||||
| Total deposits | $ | 18,805,756 | $ | 19,285,927 | $ | (480,171 | ) | $ | 18,805,756 | $ | 17,929,192 | $ | 876,564 | ||||||||||
| As percentage of total | |||||||||||||||||||||||
| deposits: | |||||||||||||||||||||||
| Noninterest-bearing | |||||||||||||||||||||||
| demand deposits | 39 | % | 40 | % | (1 | ) | 39 | % | 45 | % | (6 | ) | |||||||||||
| Core deposits | 83 | % | 84 | % | (1 | ) | 83 | % | 87 | % | (4 | ) | |||||||||||
| Equity to assets ratio | 18.42 | % | 18.20 | % | 0.22 | 18.42 | % | 19.48 | % | (1.06 | ) | ||||||||||||
| Tangible common equity | |||||||||||||||||||||||
| ratio (1) | 9.50 | % | 9.23 | % | 0.27 | 9.50 | % | 9.86 | % | (0.36 | ) | ||||||||||||
| Book value per share | $ | 40.49 | $ | 39.86 | $ | 0.63 | $ | 40.49 | $ | 38.36 | $ | 2.13 | |||||||||||
| Tangible book value per | |||||||||||||||||||||||
| share (1) | $ | 18.83 | $ | 18.22 | $ | 0.61 | $ | 18.83 | $ | 17.35 | $ | 1.48 | |||||||||||
| (1) Non-GAAP measure. | |||||||||||||||||||||||
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income increased by $6.0 million to $260.9 million for the second quarter of 2019 compared to $254.9 million for the first quarter of 2019 due to a higher yield on average loans and leases, a higher balance of average loans and leases, and one more day in the second quarter of 2019, offset partially by higher deposit costs. The tax equivalent yield on average loans and leases was 6.26% for the second quarter of 2019 compared to 6.16% for the first quarter of 2019. The increase in the yield on average loans and leases was due principally to loan prepayment fees being $6.3 million higher in the second quarter compared to the first quarter. The prepayment fees added 11 basis points to the second quarter loan yield and were primarily from two loans.
The tax equivalent NIM was 4.72% for the second quarter of 2019 compared to 4.69% for the first quarter of 2019. The increase in the NIM was due mainly to higher loan prepayment fees, partially offset by higher deposit costs.
The cost of average total deposits increased to 0.81% for the second quarter of 2019 from 0.73% for the first quarter of 2019 due to a lower average balance of noninterest-bearing deposits and higher rates paid on deposits.
Provision for Credit Losses
The following table presents details of the provision for credit losses for the periods indicated:
| Three Months Ended | |||||||||||
| June 30, | March 31, | Increase | |||||||||
| Provision for Credit Losses | 2019 | 2019 | (Decrease) | ||||||||
| (In thousands) | |||||||||||
| Addition to allowance for loan and lease losses | $ | 10,000 | $ | 4,000 | $ | 6,000 | |||||
| Reduction to reserve for unfunded loan commitments | (2,000 | ) | - | (2,000 | ) | ||||||
| Total provision for credit losses | $ | 8,000 | $ | 4,000 | $ | 4,000 | |||||
Noninterest Income
The following table presents details of noninterest income for the periods indicated:
| Three Months Ended | |||||||||||
| June 30, | March 31, | Increase | |||||||||
| Noninterest Income | 2019 | 2019 | (Decrease) | ||||||||
| (In thousands) | |||||||||||
| Service charges on deposit accounts | $ | 3,771 | $ | 3,730 | $ | 41 | |||||
| Other commissions and fees | 11,590 | 11,008 | 582 | ||||||||
| Leased equipment income | 9,182 | 9,282 | (100 | ) | |||||||
| Gain on sale of loans and leases | 326 | - | 326 | ||||||||
| Gain on sale of securities | 22,192 | 2,161 | 20,031 | ||||||||
| Other income: | |||||||||||
| Dividends and (losses) gains on equity investments | (83 | ) | 296 | (379 | ) | ||||||
| Warrant income | 1,214 | 2,279 | (1,065 | ) | |||||||
| Other | 2,701 | 2,308 | 393 | ||||||||
| Total noninterest income | $ | 50,893 | $ | 31,064 | $ | 19,829 | |||||
Noninterest income increased by $19.8 million to $50.9 million for the second quarter of 2019 compared to $31.1 million for the first quarter of 2019 due mainly to a $20.0 million increase in the gain on sale of securities attributable to a $22.2 million net gain on sales of $980.4 million in the second quarter of 2019 compared to a net gain of $2.2 million on sales of $405.8 million in the first quarter of 2019. We re-positioned a portion of our securities portfolio in the second quarter to shorten the duration of the portfolio and to enhance liquidity.
Noninterest Expense
The following table presents details of noninterest expense for the periods indicated:
| Three Months Ended | |||||||||||
| June 30, | March 31, | Increase | |||||||||
| Noninterest Expense | 2019 | 2019 | (Decrease) | ||||||||
| (In thousands) | |||||||||||
| Compensation | $ | 68,956 | $ | 70,845 | $ | (1,889 | ) | ||||
| Occupancy | 14,457 | 14,320 | 137 | ||||||||
| Data processing | 6,817 | 6,925 | (108 | ) | |||||||
| Other professional services | 4,629 | 4,513 | 116 | ||||||||
| Insurance and assessments | 4,098 | 4,038 | 60 | ||||||||
| Intangible asset amortization | 4,870 | 4,870 | - | ||||||||
| Leased equipment depreciation | 5,558 | 5,651 | (93 | ) | |||||||
| Foreclosed assets (income) expense, net | (146 | ) | 29 | (175 | ) | ||||||
| Acquisition, integration and reorganization costs | - | 618 | (618 | ) | |||||||
| Loan expense | 3,451 | 2,885 | 566 | ||||||||
| Other | 12,737 | 11,593 | 1,144 | ||||||||
| Total noninterest expense | $ | 125,427 | $ | 126,287 | $ | (860 | ) | ||||
Noninterest expense decreased by $0.9 million to $125.4 million for the second quarter of 2019 compared to $126.3 million for the first quarter of 2019 attributable primarily to a $1.9 million decrease in compensation expense, offset partially by a $1.1 million increase in other expense. Compensation expense decreased due mainly to lower payroll taxes and bonus expense. Other expense increased primarily due to a loss on the early termination of a lease.
Income Taxes
The overall effective income tax rate was 28.2% for the second quarter of 2019 and 27.7% for the first quarter of 2019. The effective tax rate for the full year 2019 is estimated to be in the range of 27-28%.
BALANCE SHEET HIGHLIGHTS
Loans and Leases
The following table presents roll forwards of loans and leases held for investment, net of deferred fees, for the periods indicated:
| Three Months Ended | Six Months Ended | ||||||||||
| Roll Forward of Loans and Leases Held | June 30, | March 31, | June 30, | ||||||||
| for Investment, Net of Deferred Fees (1) | 2019 | 2019 | 2019 | ||||||||
| (Dollars in thousands) | |||||||||||
| Balance, beginning of period | $ | 18,307,697 | $ | 17,957,713 | $ | 17,957,713 | |||||
| Additions: | |||||||||||
| Production | 1,436,299 | 1,174,838 | 2,611,137 | ||||||||
| Disbursements | 1,293,747 | 1,192,972 | 2,486,719 | ||||||||
| Total production and disbursements | 2,730,046 | 2,367,810 | 5,097,856 | ||||||||
| Reductions: | |||||||||||
| Payoffs | (1,529,213 | ) | (933,300 | ) | (2,462,513 | ) | |||||
| Paydowns | (979,987 | ) | (1,038,964 | ) | (2,018,951 | ) | |||||
| Total payoffs and paydowns | (2,509,200 | ) | (1,972,264 | ) | (4,481,464 | ) | |||||
| Sales | (38,054 | ) | (16,936 | ) | (54,990 | ) | |||||
| Transfers to foreclosed assets | - | (37 | ) | (37 | ) | ||||||
| Charge-offs | (17,637 | ) | (3,465 | ) | (21,102 | ) | |||||
| Transfers to loans held for sale | - | (25,124 | ) | (25,124 | ) | ||||||
| Total reductions | (2,564,891 | ) | (2,017,826 | ) | (4,582,717 | ) | |||||
| Balance, end of period | $ | 18,472,852 | $ | 18,307,697 | $ | 18,472,852 | |||||
| Weighted average rate on production (2) | 5.15 | % | 5.11 | % | 5.13 | % | |||||
| (1) Includes direct financing leases but excludes equipment leased to others under operating leases. | |||||||||||
| (2) The weighted average rate on production presents contractual rates on a tax equivalent basis | |||||||||||
| and excludes amortized fees. Amortized fees added approximately 32 basis points to loan | |||||||||||
| yields in 2019 and 31 basis points to loan yields in 2018. | |||||||||||
Loans and leases held for investment, net of deferred fees, increased by $165.2 million, or 4% annualized, in the second quarter of 2019 to $18.5 billion at June 30, 2019. The net loan growth in the second quarter was primarily from the income producing and other residential loan class, which included $177 million of multi-family loan pool purchases, and the asset-based loan class.
The following table presents the composition of loans and leases held for investment, net of deferred fees, as of the dates indicated:
| June 30, 2019 | March 31, 2019 | June 30, 2018 | ||||||||||||
| % of | % of | % of | ||||||||||||
| Loan and Lease Portfolio (1) | Amount | Total | Amount | Total | Amount | Total | ||||||||
| (In thousands) | ||||||||||||||
| Real estate mortgage: | ||||||||||||||
| Commercial | $ | 4,435,274 | 24% | $ | 4,640,510 | 25% | $ | 5,010,680 | 30% | |||||
| Income producing and other | ||||||||||||||
| residential | 3,640,752 | 20% | 3,518,948 | 19% | 2,555,695 | 15% | ||||||||
| Total real estate mortgage | 8,076,026 | 44% | 8,159,458 | 44% | 7,566,375 | 45% | ||||||||
| Real estate construction and land: | ||||||||||||||
| Commercial | 972,891 | 5% | 943,596 | 5% | 831,462 | 5% | ||||||||
| Residential | 1,403,239 | 8% | 1,408,128 | 8% | 1,042,564 | 6% | ||||||||
| Total real estate construction | ||||||||||||||
| and land | 2,376,130 | 13% | 2,351,724 | 13% | 1,874,026 | 11% | ||||||||
| Total real estate | 10,452,156 | 57% | 10,511,182 | 57% | 9,440,401 | 56% | ||||||||
| Commercial: | ||||||||||||||
| Asset-based | 3,606,007 | 19% | 3,422,202 | 19% | 3,184,300 | 19% | ||||||||
| Venture capital | 2,194,743 | 12% | 2,027,450 | 11% | 2,008,205 | 12% | ||||||||
| Other commercial | 1,773,564 | 10% | 1,974,702 | 11% | 1,873,607 | 11% | ||||||||
| Total commercial | 7,574,314 | 41% | 7,424,354 | 41% | 7,066,112 | 42% | ||||||||
| Consumer | 446,382 | 2% | 372,161 | 2% | 378,679 | 2% | ||||||||
| Total loans and leases held for | ||||||||||||||
| investment, net of deferred fees | $ | 18,472,852 | 100% | $ | 18,307,697 | 100% | $ | 16,885,192 | 100% | |||||
| Total unfunded loan commitments | $ | 7,610,899 | $ | 7,465,392 | $ | 6,429,587 | ||||||||
| (1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019. | ||||||||||||||
Allowance for Credit Losses
The following tables present roll forwards of the allowance for credit losses for the periods indicated:
| Three Months Ended June 30, 2019 | |||||||||||
| Allowance for | Reserve for | Total | |||||||||
| Allowance for Credit | Loan and | Unfunded Loan | Allowance for | ||||||||
| Losses Rollforward | Lease Losses | Commitments | Credit Losses | ||||||||
| (In thousands) | |||||||||||
| Beginning balance | $ | 136,281 | $ | 36,861 | $ | 173,142 | |||||
| Charge-offs | (17,637 | ) | - | (17,637 | ) | ||||||
| Recoveries | 6,393 | - | 6,393 | ||||||||
| Net charge-offs | (11,244 | ) | - | (11,244 | ) | ||||||
| Provision | 10,000 | (2,000 | ) | 8,000 | |||||||
| Ending balance | $ | 135,037 | $ | 34,861 | $ | 169,898 | |||||
| Three Months Ended March 31, 2019 | |||||||||||
| Allowance for | Reserve for | Total | |||||||||
| Allowance for Credit | Loan and | Unfunded Loan | Allowance for | ||||||||
| Losses Rollforward | Lease Losses | Commitments | Credit Losses | ||||||||
| (In thousands) | |||||||||||
| Beginning balance | $ | 132,472 | $ | 36,861 | $ | 169,333 | |||||
| Charge-offs | (3,465 | ) | - | (3,465 | ) | ||||||
| Recoveries | 3,274 | - | 3,274 | ||||||||
| Net charge-offs | (191 | ) | - | (191 | ) | ||||||
| Provision | 4,000 | - | 4,000 | ||||||||
| Ending balance | $ | 136,281 | $ | 36,861 | $ | 173,142 | |||||
The allowance for credit losses as a percentage of loans and leases held for investment decreased to 0.92% at June 30, 2019 from 0.95% at March 31, 2019.
Gross charge-offs for the second quarter of 2019 were $17.6 million and included $11.8 million for a single asset-based loan, $3.7 million for other commercial loans, and $1.5 million for venture capital loans compared to gross charge-offs for the first quarter of 2019 of $3.5 million which were primarily for other commercial loans. Recoveries for the second quarter of 2019 were $6.4 million and included $4.8 million for venture capital loans and $1.0 million for other commercial loans compared to recoveries for the first quarter of 2019 of $3.3 million which included $2.3 million for venture capital loans and $0.8 million for other commercial loans.
For the second quarter of 2019 and first quarter of 2019, annualized net charge-offs to average loans and leases were 0.25% and 0.00%.
Deposits and Client Investment Funds
The following table presents the composition of our deposit portfolio as of the dates indicated:
| June 30, 2019 | March 31, 2019 | June 30, 2018 | |||||||||||||||
| % of | % of | % of | |||||||||||||||
| Deposit Composition | Amount | Total | Amount | Total | Amount | Total | |||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Noninterest-bearing demand | $ | 7,299,213 | 39% | $ | 7,712,409 | 40% | $ | 8,126,153 | 45% | ||||||||
| Interest checking | 3,220,353 | 17% | 3,163,228 | 16% | 2,184,785 | 12% | |||||||||||
| Money market | 4,578,083 | 24% | 4,714,078 | 25% | 4,631,658 | 26% | |||||||||||
| Savings | 519,839 | 3% | 537,923 | 3% | 643,642 | 4% | |||||||||||
| Total core deposits | 15,617,488 | 83% | 16,127,638 | 84% | 15,586,238 | 87% | |||||||||||
| Non-core non-maturity deposits | 436,833 | 2% | 454,277 | 2% | 607,388 | 3% | |||||||||||
| Total non-maturity deposits | 16,054,321 | 85% | 16,581,915 | 86% | 16,193,626 | 90% | |||||||||||
| Time deposits $250,000 and under | 2,284,023 | 12% | 2,258,989 | 12% | 1,394,117 | 8% | |||||||||||
| Time deposits over $250,000 | 467,412 | 3% | 445,023 | 2% | 341,449 | 2% | |||||||||||
| Total time deposits | 2,751,435 | 15% | 2,704,012 | 14% | 1,735,566 | 10% | |||||||||||
| Total deposits | $ | 18,805,756 | 100% | $ | 19,285,927 | 100% | $ | 17,929,192 | 100% | ||||||||
At June 30, 2019, core deposits totaled $15.6 billion, or 83% of total deposits, including $7.3 billion of noninterest-bearing demand deposits, or 39% of total deposits. The decrease in core deposits is primarily due to decreases in noninterest-bearing demand deposits across each of our business groups as customers seek out interest-earning accounts in the competitive market environment.
In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Pacific Western Asset Management Inc. ("PWAM"), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds at June 30, 2019 were $2.0 billion, of which $1.6 billion was managed by PWAM.
CREDIT QUALITY
The following table presents loan and lease credit quality metrics as of the dates indicated:
| June 30, | March 31, | Increase | |||||||||
| Credit Quality Metrics | 2019 | 2019 | (Decrease) | ||||||||
| (Dollars in thousands) | |||||||||||
| NPAs and Performing TDRs: | |||||||||||
| Nonaccrual loans and leases held for investment (1)(2) | $ | 81,265 | $ | 88,527 | $ | (7,262 | ) | ||||
| Accruing loans contractually past due 90 days or more | - | - | - | ||||||||
| Foreclosed assets, net | 1,472 | 3,291 | (1,819 | ) | |||||||
| Total nonperforming assets ("NPAs") | $ | 82,737 | $ | 91,818 | $ | (9,081 | ) | ||||
| Nonaccrual loans and leases held for investment | |||||||||||
| to loans and leases held for investment | 0.44 | % | 0.48 | % | |||||||
| Nonperforming assets to loans and leases | |||||||||||
| held for investment and foreclosed assets | 0.45 | % | 0.50 | % | |||||||
| Nonaccrual loans and leases held for investment (1)(2) | $ | 81,265 | $ | 88,527 | $ | (7,262 | ) | ||||
| Performing TDRs held for investment | 16,464 | 17,027 | (563 | ) | |||||||
| Total impaired loans and leases | $ | 97,729 | $ | 105,554 | $ | (7,825 | ) | ||||
| Loan and Lease Credit Risk Ratings: | |||||||||||
| Pass | $ | 18,042,569 | $ | 17,824,612 | $ | 217,957 | |||||
| Special mention | 239,304 | 292,780 | (53,476 | ) | |||||||
| Classified (1) | 190,979 | 190,305 | 674 | ||||||||
| Total loans and leases held for investment, | |||||||||||
| net of deferred fees | $ | 18,472,852 | $ | 18,307,697 | $ | 165,155 | |||||
| Classified loans and leases held for investment | |||||||||||
| to loans and leases held for investment | 1.03 | % | 1.04 | % | |||||||
| Allowance for Credit Losses: | |||||||||||
| Allowance for credit losses | $ | 169,898 | $ | 173,142 | $ | (3,244 | ) | ||||
| Provision for credit losses (for the quarter) | $ | 8,000 | $ | 4,000 | $ | 4,000 | |||||
| Net charge-offs (for the quarter) | $ | 11,244 | $ | 191 | $ | 11,053 | |||||
| Net charge-offs to average loans and leases | |||||||||||
| (for the quarter) | 0.25 | % | 0.00 | % | |||||||
| Allowance for credit losses to loans and leases | |||||||||||
| held for investment | 0.92 | % | 0.95 | % | |||||||
| Allowance for credit losses to nonaccrual loans | |||||||||||
| and leases held for investment | 209.1 | % | 195.6 | % | |||||||
| (1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019. | |||||||||||
| (2) Nonaccrual loans include guaranteed amounts of $13.0 million at June 30, 2019 and $10.2 million | |||||||||||
| at March 31, 2019. | |||||||||||
Nonaccrual, classified, and special mention loans and leases fluctuate from period to period as a result of loan repayments and our ongoing active portfolio monitoring.
During the second quarter of 2019, nonaccrual loans and leases decreased $7.3 million, while classified loans and leases increased by $0.7 million and special mention loans and leases decreased by $53.5 million.
The following table presents nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated:
| Nonaccrual Loans and Leases (1) | Accruing and | |||||||||||||||
| June 30, 2019 | March 31, 2019 | 30-89 Days Past Due | ||||||||||||||
| % of | % of | June 30, | March 31, | |||||||||||||
| Loan | Loan | 2019 | 2019 | |||||||||||||
| Amount | Category | Amount | Category | Amount | Amount | |||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Real estate mortgage: | ||||||||||||||||
| Commercial | $ | 17,012 | 0.4% | $ | 12,750 | 0.3% | $ | 3,948 | $ | 6,863 | ||||||
| Income producing and other | ||||||||||||||||
| residential | 2,883 | 0.1% | 2,444 | 0.1% | 3,262 | 1,853 | ||||||||||
| Total real estate mortgage | 19,895 | 0.2% | 15,194 | 0.2% | 7,210 | 8,716 | ||||||||||
| Real estate construction and land: | ||||||||||||||||
| Commercial | 390 | 0.0% | 430 | 0.0% | - | - | ||||||||||
| Residential | - | 0.0% | - | 0.0% | 4,672 | 8,949 | ||||||||||
| Total real estate | ||||||||||||||||
| construction and land | 390 | 0.0% | 430 | 0.0% | 4,672 | 8,949 | ||||||||||
| Commercial: | ||||||||||||||||
| Asset-based | 32,236 | 0.9% | 43,406 | 1.3% | 12,382 | 3,750 | ||||||||||
| Venture capital | 22,501 | 1.0% | 20,437 | 1.0% | - | 4,500 | ||||||||||
| Other commercial | 5,799 | 0.3% | 8,633 | 0.4% | 439 | 1,694 | ||||||||||
| Total commercial | 60,536 | 0.8% | 72,476 | 1.0% | 12,821 | 9,944 | ||||||||||
| Consumer | 444 | 0.1% | 427 | 0.1% | 964 | 614 | ||||||||||
| Total held for investment | $ | 81,265 | 0.4% | $ | 88,527 | 0.5% | $ | 25,667 | $ | 28,223 | ||||||
| (1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019. | ||||||||||||||||
STOCK REPURCHASE PROGRAM
During the second quarter of 2019, we repurchased 917,269 shares at an average price of $38.08 and a total cost of $34.9 million. At June 30, 2019, the remaining amount that could be used to repurchase shares under the $225 million Stock Repurchase Program was $124.7 million.
ABOUT PACWEST BANCORP
PacWest Bancorp ("PacWest") is a bank holding company with over $26 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the "Bank"). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Our Community Banking group provides lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices. We offer additional products and services through our National Lending and Venture Banking groups. National Lending provides asset-based, equipment, real estate and security cash flow loans and treasury management services to established middle-market businesses on a national basis. Venture Banking offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.
FORWARD-LOOKING STATEMENTS
This communication contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on information available at the time of this communication and are based on current beliefs and expectations of the Company's management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by the Company with the Securities and Exchange Commission.
We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||||
| June 30, | March 31, | December 31, | |||||||||
| 2019 | 2019 | 2018 | |||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| ASSETS: | |||||||||||
| Cash and due from banks | $ | 185,075 | $ | 224,758 | $ | 175,830 | |||||
| Interest-earning deposits in financial institutions | 422,663 | 332,124 | 209,937 | ||||||||
| Total cash and cash equivalents | 607,738 | 556,882 | 385,767 | ||||||||
| Securities available-for-sale, at estimated fair value | 3,807,244 | 3,994,708 | 4,009,431 | ||||||||
| Federal Home Loan Bank stock, at cost | 43,146 | 29,430 | 32,103 | ||||||||
| Total investment securities | 3,850,390 | 4,024,138 | 4,041,534 | ||||||||
| Loans held for sale | - | 25,124 | - | ||||||||
| Gross loans and leases held for investment | 18,532,740 | 18,371,295 | 18,026,365 | ||||||||
| Deferred fees, net | (59,888 | ) | (63,598 | ) | (68,652 | ) | |||||
| Total loans and leases held for investment, | |||||||||||
| net of deferred fees | 18,472,852 | 18,307,697 | 17,957,713 | ||||||||
| Allowance for loan and lease losses | (135,037 | ) | (136,281 | ) | (132,472 | ) | |||||
| Total loans and leases held for investment, net | 18,337,815 | 18,171,416 | 17,825,241 | ||||||||
| Equipment leased to others under operating leases | 300,668 | 293,853 | 292,677 | ||||||||
| Premises and equipment, net | 38,162 | 37,783 | 34,661 | ||||||||
| Foreclosed assets, net | 1,472 | 3,291 | 5,299 | ||||||||
| Deferred tax asset, net | - | - | 17,489 | ||||||||
| Goodwill | 2,548,670 | 2,548,670 | 2,548,670 | ||||||||
| Core deposit and customer relationship intangibles, net | 47,380 | 52,250 | 57,120 | ||||||||
| Other assets | 612,119 | 610,731 | 522,896 | ||||||||
| Total assets | $ | 26,344,414 | $ | 26,324,138 | $ | 25,731,354 | |||||
| LIABILITIES: | |||||||||||
| Noninterest-bearing deposits | $ | 7,299,213 | $ | 7,712,409 | $ | 7,888,915 | |||||
| Interest-bearing deposits | 11,506,543 | 11,573,518 | 10,981,586 | ||||||||
| Total deposits | 18,805,756 | 19,285,927 | 18,870,501 | ||||||||
| Borrowings | 1,913,059 | 1,481,087 | 1,371,114 | ||||||||
| Subordinated debentures | 456,112 | 454,458 | 453,846 | ||||||||
| Accrued interest payable and other liabilities | 317,477 | 311,684 | 210,305 | ||||||||
| Total liabilities | 21,492,404 | 21,533,156 | 20,905,766 | ||||||||
| STOCKHOLDERS' EQUITY (1) | 4,852,010 | 4,790,982 | 4,825,588 | ||||||||
| Total liabilities and stockholders' equity | $ | 26,344,414 | $ | 26,324,138 | $ | 25,731,354 | |||||
| Book value per share | $ | 40.49 | $ | 39.86 | $ | 39.17 | |||||
| Tangible book value per share (2) | $ | 18.83 | $ | 18.22 | $ | 18.02 | |||||
| Shares outstanding | 119,829,104 | 120,201,149 | 123,189,833 | ||||||||
| (1) Includes net unrealized gain (loss) on securities | |||||||||||
| available-for-sale, net | $ | 73,066 | $ | 37,258 | $ | (6,075 | ) | ||||
| (2) Non-GAAP measure. | |||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF EARNINGS | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Interest income: | |||||||||||||||||||
| Loans and leases | $ | 284,236 | $ | 274,229 | $ | 260,300 | $ | 558,465 | $ | 511,385 | |||||||||
| Investment securities | 28,948 | 29,680 | 27,730 | 58,628 | 53,868 | ||||||||||||||
| Deposits in financial institutions | 1,349 | 650 | 484 | 1,999 | 1,036 | ||||||||||||||
| Total interest income | 314,533 | 304,559 | 288,514 | 619,092 | 566,289 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Deposits | 38,720 | 34,235 | 16,367 | 72,955 | 30,185 | ||||||||||||||
| Borrowings | 7,210 | 7,710 | 2,649 | 14,920 | 3,569 | ||||||||||||||
| Subordinated debentures | 7,705 | 7,738 | 7,166 | 15,443 | 13,703 | ||||||||||||||
| Total interest expense | 53,635 | 49,683 | 26,182 | 103,318 | 47,457 | ||||||||||||||
| Net interest income | 260,898 | 254,876 | 262,332 | 515,774 | 518,832 | ||||||||||||||
| Provision for credit losses | 8,000 | 4,000 | 17,500 | 12,000 | 21,500 | ||||||||||||||
| Net interest income after | |||||||||||||||||||
| provision for credit losses | 252,898 | 250,876 | 244,832 | 503,774 | 497,332 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Service charges on deposit accounts | 3,771 | 3,730 | 4,265 | 7,501 | 8,439 | ||||||||||||||
| Other commissions and fees | 11,590 | 11,008 | 11,767 | 22,598 | 22,032 | ||||||||||||||
| Leased equipment income | 9,182 | 9,282 | 9,790 | 18,464 | 19,377 | ||||||||||||||
| Gain on sale of loans and leases | 326 | - | 106 | 326 | 4,675 | ||||||||||||||
| Gain on sale of securities | 22,192 | 2,161 | 253 | 24,353 | 6,564 | ||||||||||||||
| Other income | 3,832 | 4,883 | 13,457 | 8,715 | 17,110 | ||||||||||||||
| Total noninterest income | 50,893 | 31,064 | 39,638 | 81,957 | 78,197 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||
| Compensation | 68,956 | 70,845 | 69,913 | 139,801 | 140,936 | ||||||||||||||
| Occupancy | 14,457 | 14,320 | 13,575 | 28,777 | 26,798 | ||||||||||||||
| Data processing | 6,817 | 6,925 | 6,896 | 13,742 | 13,555 | ||||||||||||||
| Other professional services | 4,629 | 4,513 | 5,257 | 9,142 | 9,696 | ||||||||||||||
| Insurance and assessments | 4,098 | 4,038 | 5,330 | 8,136 | 11,057 | ||||||||||||||
| Intangible asset amortization | 4,870 | 4,870 | 5,587 | 9,740 | 11,933 | ||||||||||||||
| Leased equipment depreciation | 5,558 | 5,651 | 5,237 | 11,209 | 10,612 | ||||||||||||||
| Foreclosed assets (income) expense, net | (146 | ) | 29 | (61 | ) | (117 | ) | (183 | ) | ||||||||||
| Acquisition, integration and | |||||||||||||||||||
| reorganization costs | - | 618 | - | 618 | - | ||||||||||||||
| Loan expense | 3,451 | 2,885 | 3,058 | 6,336 | 5,329 | ||||||||||||||
| Other expense | 12,737 | 11,593 | 11,657 | 24,330 | 24,111 | ||||||||||||||
| Total noninterest expense | 125,427 | 126,287 | 126,449 | 251,714 | 253,844 | ||||||||||||||
| Earnings before income taxes | 178,364 | 155,653 | 158,021 | 334,017 | 321,685 | ||||||||||||||
| Income tax expense | 50,239 | 43,049 | 42,286 | 93,288 | 87,674 | ||||||||||||||
| Net earnings | $ | 128,125 | $ | 112,604 | $ | 115,735 | $ | 240,729 | $ | 234,011 | |||||||||
| Basic and diluted earnings per share | $ | 1.07 | $ | 0.92 | $ | 0.92 | $ | 1.99 | $ | 1.85 | |||||||||
| Dividends declared and paid per share | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 1.20 | $ | 1.10 | |||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| NET EARNINGS PER SHARE CALCULATIONS | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||
| Basic Earnings Per Share: | |||||||||||||||||||
| Net earnings | $ | 128,125 | $ | 112,604 | $ | 115,735 | $ | 240,729 | $ | 234,011 | |||||||||
| Less: earnings allocated to unvested | |||||||||||||||||||
| restricted stock (1) | (1,190 | ) | (1,163 | ) | (1,348 | ) | (2,343 | ) | (2,469 | ) | |||||||||
| Net earnings allocated to common | |||||||||||||||||||
| shares | $ | 126,935 | $ | 111,441 | $ | 114,387 | $ | 238,386 | $ | 231,542 | |||||||||
| Weighted-average basic shares and | |||||||||||||||||||
| unvested restricted stock outstanding | 120,042 | 122,227 | 126,082 | 121,128 | 126,780 | ||||||||||||||
| Less: weighted-average unvested | |||||||||||||||||||
| restricted stock outstanding | (1,462 | ) | (1,352 | ) | (1,466 | ) | (1,407 | ) | (1,439 | ) | |||||||||
| Weighted-average basic shares | |||||||||||||||||||
| outstanding | 118,580 | 120,875 | 124,616 | 119,721 | 125,341 | ||||||||||||||
| Basic earnings per share | $ | 1.07 | $ | 0.92 | $ | 0.92 | $ | 1.99 | $ | 1.85 | |||||||||
| Diluted Earnings Per Share: | |||||||||||||||||||
| Net earnings allocated to common | |||||||||||||||||||
| shares | $ | 126,935 | $ | 111,441 | $ | 114,387 | $ | 238,386 | $ | 231,542 | |||||||||
| Weighted-average basic shares | |||||||||||||||||||
| outstanding | 118,580 | 120,875 | 124,616 | 119,721 | 125,341 | ||||||||||||||
| Diluted earnings per share | $ | 1.07 | $ | 0.92 | $ | 0.92 | $ | 1.99 | $ | 1.85 | |||||||||
| (1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus | |||||||||||||||||||
| undistributed earnings amounts available to holders of unvested restricted stock, if any. | |||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||||||||
| AVERAGE BALANCE SHEET AND YIELD ANALYSIS | |||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||
| June 30, 2019 | March 31, 2019 | June 30, 2018 | |||||||||||||||||||||||
| Interest | Average | Interest | Average | Interest | Average | ||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||
| Balance | Expense | Cost | Balance | Expense | Cost | Balance | Expense | Cost | |||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||
| Loans and leases (1)(2) | $ | 18,239,690 | $ | 284,513 | 6.26% | $ | 18,064,230 | $ | 274,513 | 6.16% | $ | 16,576,361 | $ | 260,529 | 6.30% | ||||||||||
| Investment securities (3) | 3,790,436 | 29,462 | 3.12% | 3,968,531 | 30,572 | 3.12% | 3,803,590 | 29,967 | 3.16% | ||||||||||||||||
| Deposits in financial | |||||||||||||||||||||||||
| institutions | 228,702 | 1,349 | 2.37% | 111,950 | 650 | 2.35% | 112,170 | 484 | 1.73% | ||||||||||||||||
| Total interest-earning | |||||||||||||||||||||||||
| assets (1) | 22,258,828 | 315,324 | 5.68% | 22,144,711 | 305,735 | 5.60% | 20,492,121 | 290,980 | 5.70% | ||||||||||||||||
| Other assets | 3,590,361 | 3,631,238 | 3,507,516 | ||||||||||||||||||||||
| Total assets | $ | 25,849,189 | $ | 25,775,949 | $ | 23,999,637 | |||||||||||||||||||
| Liabilities and | |||||||||||||||||||||||||
| Stockholders' Equity: | |||||||||||||||||||||||||
| Interest checking | $ | 3,242,960 | 10,644 | 1.32% | $ | 3,041,822 | 9,321 | 1.24% | $ | 2,243,767 | 3,932 | 0.70% | |||||||||||||
| Money market | 5,046,021 | 14,604 | 1.16% | 5,274,987 | 14,908 | 1.15% | 5,013,119 | 8,072 | 0.65% | ||||||||||||||||
| Savings | 525,648 | 227 | 0.17% | 553,032 | 242 | 0.18% | 656,310 | 245 | 0.15% | ||||||||||||||||
| Time | 2,731,156 | 13,245 | 1.95% | 2,286,932 | 9,764 | 1.73% | 1,790,415 | 4,118 | 0.92% | ||||||||||||||||
| Total interest-bearing | |||||||||||||||||||||||||
| deposits | 11,545,785 | 38,720 | 1.35% | 11,156,773 | 34,235 | 1.24% | 9,703,611 | 16,367 | 0.68% | ||||||||||||||||
| Borrowings | 1,142,223 | 7,210 | 2.53% | 1,218,319 | 7,710 | 2.57% | 549,665 | 2,649 | 1.93% | ||||||||||||||||
| Subordinated debentures | 454,901 | 7,705 | 6.79% | 454,203 | 7,738 | 6.91% | 451,973 | 7,166 | 6.36% | ||||||||||||||||
| Total interest-bearing | |||||||||||||||||||||||||
| liabilities | 13,142,909 | 53,635 | 1.64% | 12,829,295 | 49,683 | 1.57% | 10,705,249 | 26,182 | 0.98% | ||||||||||||||||
| Noninterest-bearing | |||||||||||||||||||||||||
| demand deposits | 7,544,027 | 7,783,652 | 8,253,413 | ||||||||||||||||||||||
| Other liabilities | 343,364 | 347,037 | 208,495 | ||||||||||||||||||||||
| Total liabilities | 21,030,300 | 20,959,984 | 19,167,157 | ||||||||||||||||||||||
| Stockholders' equity | 4,818,889 | 4,815,965 | 4,832,480 | ||||||||||||||||||||||
| Total liabilities and | |||||||||||||||||||||||||
| stockholders' equity | $ | 25,849,189 | $ | 25,775,949 | $ | 23,999,637 | |||||||||||||||||||
| Net interest income (1) | $ | 261,689 | $ | 256,052 | $ | 264,798 | |||||||||||||||||||
| Net interest spread (1) | 4.04% | 4.03% | 4.72% | ||||||||||||||||||||||
| Net interest margin (1) | 4.72% | 4.69% | 5.18% | ||||||||||||||||||||||
| Total deposits (4) | $ | 19,089,812 | $ | 38,720 | 0.81% | $ | 18,940,425 | $ | 34,235 | 0.73% | $ | 17,957,024 | $ | 16,367 | 0.37% | ||||||||||
| (1) Tax equivalent. | |||||||||||||||||||||||||
| (2) Includes discount accretion on acquired loans of $3.1 million, $3.0 million, and $8.7 million for the three months ended June 30, 2019, | |||||||||||||||||||||||||
| March 31, 2019, and June 30, 2018, respectively. | |||||||||||||||||||||||||
| (3) Includes tax-equivalent adjustments of $0.5 million, $0.9 million, and $2.2 million for the three months ended June 30, 2019, | |||||||||||||||||||||||||
| March 31, 2019, and June 30, 2018 related to tax-exempt income on investment securities. | |||||||||||||||||||||||||
| The federal statutory tax rate utilized was 21%. | |||||||||||||||||||||||||
| (4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated | |||||||||||||||||||||||||
| as annualized interest expense on total deposits divided by average total deposits. | |||||||||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER BALANCE SHEET | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| ASSETS: | |||||||||||||||||||
| Cash and due from banks | $ | 185,075 | $ | 224,758 | $ | 175,830 | $ | 196,502 | $ | 245,998 | |||||||||
| Interest-earning deposits in financial | |||||||||||||||||||
| institutions | 422,663 | 332,124 | 209,937 | 185,284 | 205,567 | ||||||||||||||
| Total cash and cash equivalents | 607,738 | 556,882 | 385,767 | 381,786 | 451,565 | ||||||||||||||
| Securities available-for-sale | 3,807,244 | 3,994,708 | 4,009,431 | 3,820,333 | 3,857,788 | ||||||||||||||
| Federal Home Loan Bank stock | 43,146 | 29,430 | 32,103 | 31,077 | 26,271 | ||||||||||||||
| Total investment securities | 3,850,390 | 4,024,138 | 4,041,534 | 3,851,410 | 3,884,059 | ||||||||||||||
| Loans held for sale | - | 25,124 | - | - | - | ||||||||||||||
| Gross loans and leases held for investment | 18,532,740 | 18,371,295 | 18,026,365 | 17,295,589 | 16,947,502 | ||||||||||||||
| Deferred fees, net | (59,888 | ) | (63,598 | ) | (68,652 | ) | (65,443 | ) | (62,310 | ) | |||||||||
| Total loans and leases held for | |||||||||||||||||||
| investment, net of deferred fees | 18,472,852 | 18,307,697 | 17,957,713 | 17,230,146 | 16,885,192 | ||||||||||||||
| Allowance for loan and lease losses | (135,037 | ) | (136,281 | ) | (132,472 | ) | (141,920 | ) | (132,139 | ) | |||||||||
| Total loans and leases held for | |||||||||||||||||||
| investment, net | 18,337,815 | 18,171,416 | 17,825,241 | 17,088,226 | 16,753,053 | ||||||||||||||
| Equipment leased to others under | |||||||||||||||||||
| operating leases | 300,668 | 293,853 | 292,677 | 275,707 | 266,576 | ||||||||||||||
| Premises and equipment, net | 38,162 | 37,783 | 34,661 | 34,012 | 34,513 | ||||||||||||||
| Foreclosed assets, net | 1,472 | 3,291 | 5,299 | 4,407 | 2,231 | ||||||||||||||
| Deferred tax asset, net | - | - | 17,489 | 41,280 | 25,551 | ||||||||||||||
| Goodwill | 2,548,670 | 2,548,670 | 2,548,670 | 2,548,670 | 2,548,670 | ||||||||||||||
| Core deposit and customer relationship | |||||||||||||||||||
| intangibles, net | 47,380 | 52,250 | 57,120 | 62,106 | 67,693 | ||||||||||||||
| Other assets | 612,119 | 610,731 | 522,896 | 494,522 | 495,646 | ||||||||||||||
| Total assets | $ | 26,344,414 | $ | 26,324,138 | $ | 25,731,354 | $ | 24,782,126 | $ | 24,529,557 | |||||||||
| LIABILITIES: | |||||||||||||||||||
| Noninterest-bearing deposits | $ | 7,299,213 | $ | 7,712,409 | $ | 7,888,915 | $ | 7,834,480 | $ | 8,126,153 | |||||||||
| Interest-bearing deposits | 11,506,543 | 11,573,518 | 10,981,586 | 10,045,063 | 9,803,039 | ||||||||||||||
| Total deposits | 18,805,756 | 19,285,927 | 18,870,501 | 17,879,543 | 17,929,192 | ||||||||||||||
| Borrowings | 1,913,059 | 1,481,087 | 1,371,114 | 1,513,166 | 1,187,226 | ||||||||||||||
| Subordinated debentures | 456,112 | 454,458 | 453,846 | 452,944 | 451,878 | ||||||||||||||
| Accrued interest payable and other | |||||||||||||||||||
| liabilities | 317,477 | 311,684 | 210,305 | 194,788 | 183,302 | ||||||||||||||
| Total liabilities | 21,492,404 | 21,533,156 | 20,905,766 | 20,040,441 | 19,751,598 | ||||||||||||||
| STOCKHOLDERS' EQUITY (1) | 4,852,010 | 4,790,982 | 4,825,588 | 4,741,685 | 4,777,959 | ||||||||||||||
| Total liabilities and stockholders' | |||||||||||||||||||
| equity | $ | 26,344,414 | $ | 26,324,138 | $ | 25,731,354 | $ | 24,782,126 | $ | 24,529,557 | |||||||||
| Book value per share | $ | 40.49 | $ | 39.86 | $ | 39.17 | $ | 38.46 | $ | 38.36 | |||||||||
| Tangible book value per share (2) | $ | 18.83 | $ | 18.22 | $ | 18.02 | $ | 17.28 | $ | 17.35 | |||||||||
| Shares outstanding | 119,829,104 | 120,201,149 | 123,189,833 | 123,283,450 | 124,567,950 | ||||||||||||||
| (1) Includes net unrealized gain (loss) on | |||||||||||||||||||
| securities available-for-sale, net | $ | 73,066 | $ | 37,258 | $ | (6,075 | ) | $ | (43,854 | ) | $ | (22,340 | ) | ||||||
| (2) Non-GAAP measure. | |||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER STATEMENT OF EARNINGS | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Interest income: | |||||||||||||||||||
| Loans and leases | $ | 284,236 | $ | 274,229 | $ | 272,522 | $ | 264,062 | $ | 260,300 | |||||||||
| Investment securities | 28,948 | 29,680 | 29,690 | 28,061 | 27,730 | ||||||||||||||
| Deposits in financial institutions | 1,349 | 650 | 527 | 519 | 484 | ||||||||||||||
| Total interest income | 314,533 | 304,559 | 302,739 | 292,642 | 288,514 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Deposits | 38,720 | 34,235 | 28,834 | 21,121 | 16,367 | ||||||||||||||
| Borrowings | 7,210 | 7,710 | 4,602 | 3,814 | 2,649 | ||||||||||||||
| Subordinated debentures | 7,705 | 7,738 | 7,538 | 7,390 | 7,166 | ||||||||||||||
| Total interest expense | 53,635 | 49,683 | 40,974 | 32,325 | 26,182 | ||||||||||||||
| Net interest income | 260,898 | 254,876 | 261,765 | 260,317 | 262,332 | ||||||||||||||
| Provision for credit losses | 8,000 | 4,000 | 12,000 | 11,500 | 17,500 | ||||||||||||||
| Net interest income after | |||||||||||||||||||
| provision for credit losses | 252,898 | 250,876 | 249,765 | 248,817 | 244,832 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Service charges on deposit accounts | 3,771 | 3,730 | 4,091 | 3,979 | 4,265 | ||||||||||||||
| Other commissions and fees | 11,590 | 11,008 | 11,114 | 12,397 | 11,767 | ||||||||||||||
| Leased equipment income | 9,182 | 9,282 | 9,384 | 9,120 | 9,790 | ||||||||||||||
| Gain on sale of loans and leases | 326 | - | - | - | 106 | ||||||||||||||
| Gain on sale of securities | 22,192 | 2,161 | 786 | 826 | 253 | ||||||||||||||
| Other income | 3,832 | 4,883 | 8,151 | 10,590 | 13,457 | ||||||||||||||
| Total noninterest income | 50,893 | 31,064 | 33,526 | 36,912 | 39,638 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||
| Compensation | 68,956 | 70,845 | 69,299 | 72,333 | 69,913 | ||||||||||||||
| Occupancy | 14,457 | 14,320 | 13,356 | 13,069 | 13,575 | ||||||||||||||
| Data processing | 6,817 | 6,925 | 6,930 | 6,740 | 6,896 | ||||||||||||||
| Other professional services | 4,629 | 4,513 | 6,198 | 6,058 | 5,257 | ||||||||||||||
| Insurance and assessments | 4,098 | 4,038 | 4,202 | 5,446 | 5,330 | ||||||||||||||
| Intangible asset amortization | 4,870 | 4,870 | 4,986 | 5,587 | 5,587 | ||||||||||||||
| Leased equipment depreciation | 5,558 | 5,651 | 5,758 | 5,001 | 5,237 | ||||||||||||||
| Foreclosed assets (income) expense, net | (146 | ) | 29 | (311 | ) | (257 | ) | (61 | ) | ||||||||||
| Acquisition, integration and | |||||||||||||||||||
| reorganization costs | - | 618 | 970 | 800 | - | ||||||||||||||
| Loan expense | 3,451 | 2,885 | 2,991 | 2,249 | 3,058 | ||||||||||||||
| Other expense | 12,737 | 11,593 | 14,856 | 11,127 | 11,657 | ||||||||||||||
| Total noninterest expense | 125,427 | 126,287 | 129,235 | 128,153 | 126,449 | ||||||||||||||
| Earnings before income taxes | 178,364 | 155,653 | 154,056 | 157,576 | 158,021 | ||||||||||||||
| Income tax expense | 50,239 | 43,049 | 39,015 | 41,289 | 42,286 | ||||||||||||||
| Net earnings | $ | 128,125 | $ | 112,604 | $ | 115,041 | $ | 116,287 | $ | 115,735 | |||||||||
| Basic and diluted earnings per share | $ | 1.07 | $ | 0.92 | $ | 0.93 | $ | 0.94 | $ | 0.92 | |||||||||
| Dividends declared and paid per share | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 0.60 | |||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER SELECTED FINANCIAL DATA | |||||||||||||||||||
| At or For the Three Months Ended | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Performance Ratios: | |||||||||||||||||||
| Return on average assets (1) | 1.99 | % | 1.77 | % | 1.84 | % | 1.89 | % | 1.93 | % | |||||||||
| Return on average equity (1) | 10.66 | % | 9.48 | % | 9.59 | % | 9.72 | % | 9.61 | % | |||||||||
| Return on average tangible equity (1)(2) | 23.15 | % | 20.64 | % | 21.23 | % | 21.61 | % | 20.98 | % | |||||||||
| Efficiency ratio | 41.6 | % | 42.4 | % | 41.7 | % | 40.9 | % | 39.8 | % | |||||||||
| Noninterest expense as a percentage | |||||||||||||||||||
| of average assets (1) | 1.95 | % | 1.99 | % | 2.07 | % | 2.09 | % | 2.11 | % | |||||||||
| Average Yields/Costs (1): | |||||||||||||||||||
| Yield on: | |||||||||||||||||||
| Average loans and leases (3) | 6.26 | % | 6.16 | % | 6.27 | % | 6.20 | % | 6.30 | % | |||||||||
| Average interest-earning assets (3) | 5.68 | % | 5.60 | % | 5.68 | % | 5.60 | % | 5.70 | % | |||||||||
| Cost of: | |||||||||||||||||||
| Average interest-bearing deposits | 1.35 | % | 1.24 | % | 1.10 | % | 0.83 | % | 0.68 | % | |||||||||
| Average total deposits | 0.81 | % | 0.73 | % | 0.62 | % | 0.46 | % | 0.37 | % | |||||||||
| Average interest-bearing liabilities | 1.64 | % | 1.57 | % | 1.40 | % | 1.14 | % | 0.98 | % | |||||||||
| Net interest spread (3) | 4.04 | % | 4.03 | % | 4.28 | % | 4.46 | % | 4.72 | % | |||||||||
| Net interest margin (3) | 4.72 | % | 4.69 | % | 4.91 | % | 4.99 | % | 5.18 | % | |||||||||
| Average Balances: | |||||||||||||||||||
| Assets: | |||||||||||||||||||
| Loans and leases, net of deferred fees | $ | 18,239,690 | $ | 18,064,230 | $ | 17,275,343 | $ | 16,913,792 | $ | 16,576,361 | |||||||||
| Interest-earning assets | 22,258,828 | 22,144,711 | 21,269,363 | 20,866,478 | 20,492,121 | ||||||||||||||
| Total assets | 25,849,189 | 25,775,949 | 24,784,462 | 24,357,771 | 23,999,637 | ||||||||||||||
| Liabilities: | |||||||||||||||||||
| Noninterest-bearing deposits | 7,544,027 | 7,783,652 | 8,163,699 | 8,120,306 | 8,253,413 | ||||||||||||||
| Interest-bearing deposits | 11,545,785 | 11,156,773 | 10,422,761 | 10,111,927 | 9,703,611 | ||||||||||||||
| Total deposits | 19,089,812 | 18,940,425 | 18,586,460 | 18,232,233 | 17,957,024 | ||||||||||||||
| Borrowings | 1,142,223 | 1,218,319 | 764,039 | 720,449 | 549,665 | ||||||||||||||
| Subordinated debentures | 454,901 | 454,203 | 452,998 | 452,312 | 451,973 | ||||||||||||||
| Interest-bearing liabilities | 13,142,909 | 12,829,295 | 11,639,798 | 11,284,688 | 10,705,249 | ||||||||||||||
| Stockholders' equity | 4,818,889 | 4,815,965 | 4,758,401 | 4,748,819 | 4,832,480 | ||||||||||||||
| (1) Annualized. | |||||||||||||||||||
| (2) Non-GAAP measure. | |||||||||||||||||||
| (3) Tax equivalent. | |||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER SELECTED FINANCIAL DATA | |||||||||||||||||||
| At or For the Three Months Ended | |||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| 2019 | 2019 | 2018 | 2018 | 2018 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Credit Quality Ratios: | |||||||||||||||||||
| Nonaccrual loans and leases held for | |||||||||||||||||||
| investment to loans and leases held | |||||||||||||||||||
| for investment | 0.44 | % | 0.48 | % | 0.44 | % | 0.66 | % | 0.67 | % | |||||||||
| Nonperforming assets to loans and | |||||||||||||||||||
| leases held for investment and | |||||||||||||||||||
| foreclosed assets | 0.45 | % | 0.50 | % | 0.47 | % | 0.68 | % | 0.69 | % | |||||||||
| Classified loans and leases held for | |||||||||||||||||||
| investment to loans and leases held | |||||||||||||||||||
| for investment | 1.03 | % | 1.04 | % | 1.32 | % | 1.51 | % | 1.40 | % | |||||||||
| Trailing 12 months net charge-offs | |||||||||||||||||||
| to average loans and leases | |||||||||||||||||||
| held for investment | 0.18 | % | 0.22 | % | 0.26 | % | 0.28 | % | 0.28 | % | |||||||||
| Allowance for credit losses to loans | |||||||||||||||||||
| and leases held for investment | 0.92 | % | 0.95 | % | 0.94 | % | 1.03 | % | 0.99 | % | |||||||||
| Allowance for credit losses to | |||||||||||||||||||
| nonaccrual loans and leases held | |||||||||||||||||||
| for investment | 209.1 | % | 195.6 | % | 213.5 | % | 156.9 | % | 147.3 | % | |||||||||
| PacWest Bancorp Consolidated | |||||||||||||||||||
| Capital: | |||||||||||||||||||
| Tier 1 leverage ratio (1) | 9.49 | % | 9.38 | % | 10.13 | % | 10.10 | % | 10.33 | % | |||||||||
| Common equity tier 1 capital ratio (1) | 9.53 | % | 9.48 | % | 10.01 | % | 10.18 | % | 10.59 | % | |||||||||
| Tier 1 capital ratio (1) | 9.53 | % | 9.48 | % | 10.01 | % | 10.18 | % | 10.59 | % | |||||||||
| Total capital ratio (1) | 12.18 | % | 12.15 | % | 12.72 | % | 13.03 | % | 13.48 | % | |||||||||
| Risk-weighted assets (1) | $ | 23,117,367 | $ | 22,939,074 | $ | 22,525,096 | $ | 21,650,542 | $ | 20,929,325 | |||||||||
| Equity to assets ratio | 18.42 | % | 18.20 | % | 18.75 | % | 19.13 | % | 19.48 | % | |||||||||
| Tangible common equity ratio (2) | 9.50 | % | 9.23 | % | 9.60 | % | 9.61 | % | 9.86 | % | |||||||||
| Book value per share | $ | 40.49 | $ | 39.86 | $ | 39.17 | $ | 38.46 | $ | 38.36 | |||||||||
| Tangible book value per share (2) | $ | 18.83 | $ | 18.22 | $ | 18.02 | $ | 17.28 | $ | 17.35 | |||||||||
| Pacific Western Bank Capital: | |||||||||||||||||||
| Tier 1 leverage ratio (1) | 10.76 | % | 10.57 | % | 10.80 | % | 10.78 | % | 11.11 | % | |||||||||
| Common equity tier 1 capital ratio (1) | 10.80 | % | 10.69 | % | 10.68 | % | 10.87 | % | 11.40 | % | |||||||||
| Tier 1 capital ratio (1) | 10.80 | % | 10.69 | % | 10.68 | % | 10.87 | % | 11.40 | % | |||||||||
| Total capital ratio (1) | 11.53 | % | 11.45 | % | 11.44 | % | 11.69 | % | 12.21 | % | |||||||||
| (1) Capital information for June 30, 2019 is preliminary. | |||||||||||||||||||
| (2) Non-GAAP measure. | |||||||||||||||||||
GAAP TO NON-GAAP RECONCILIATIONS
This press release contains certain non-GAAP financial disclosures for: (1) return on average tangible equity, (2) tangible common equity ratio, and (3) tangible book value per share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. In particular, the use of return on average tangible equity, tangible common equity ratio, and tangible book value per share is prevalent among banking regulators, investors and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) return on average equity, (2) equity to assets ratio, and (3) book value per share.
The tables below present the reconciliations of these GAAP financial measures to the related non-GAAP financial measures:
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||||||
| Return on Average Tangible Equity | 2019 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Net earnings | $ | 128,125 | $ | 112,604 | $ | 115,735 | $ | 240,729 | $ | 234,011 | |||||||||
| Average stockholders' equity | $ | 4,818,889 | $ | 4,815,965 | $ | 4,832,480 | $ | 4,817,435 | $ | 4,866,654 | |||||||||
| Less: Average intangible assets | 2,598,762 | 2,603,842 | 2,619,351 | 2,601,288 | 2,622,455 | ||||||||||||||
| Average tangible common equity | $ | 2,220,127 | $ | 2,212,123 | $ | 2,213,129 | $ | 2,216,147 | $ | 2,244,199 | |||||||||
| Return on average equity (1) | 10.66 | % | 9.48 | % | 9.61 | % | 10.08 | % | 9.70 | % | |||||||||
| Return on average tangible equity (2) | 23.15 | % | 20.64 | % | 20.98 | % | 21.91 | % | 21.03 | % | |||||||||
| (1) Annualized net earnings divided by average stockholders' equity. | |||||||||||||||||||
| (2) Annualized net earnings divided by average tangible common equity. | |||||||||||||||||||
| Tangible Common Equity Ratio/ | June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||
| Tangible Book Value Per Share | 2019 | 2019 | 2018 | 2018 | 2018 | ||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Stockholders' equity | $ | 4,852,010 | $ | 4,790,982 | $ | 4,825,588 | $ | 4,741,685 | $ | 4,777,959 | |||||||||
| Less: Intangible assets | 2,596,050 | 2,600,920 | 2,605,790 | 2,610,776 | 2,616,363 | ||||||||||||||
| Tangible common equity | $ | 2,255,960 | $ | 2,190,062 | $ | 2,219,798 | $ | 2,130,909 | $ | 2,161,596 | |||||||||
| Total assets | $ | 26,344,414 | $ | 26,324,138 | $ | 25,731,354 | $ | 24,782,126 | $ | 24,529,557 | |||||||||
| Less: Intangible assets | 2,596,050 | 2,600,920 | 2,605,790 | 2,610,776 | 2,616,363 | ||||||||||||||
| Tangible assets | $ | 23,748,364 | $ | 23,723,218 | $ | 23,125,564 | $ | 22,171,350 | $ | 21,913,194 | |||||||||
| Equity to assets ratio | 18.42 | % | 18.20 | % | 18.75 | % | 19.13 | % | 19.48 | % | |||||||||
| Tangible common equity ratio (1) | 9.50 | % | 9.23 | % | 9.60 | % | 9.61 | % | 9.86 | % | |||||||||
| Book value per share | $ | 40.49 | $ | 39.86 | $ | 39.17 | $ | 38.46 | $ | 38.36 | |||||||||
| Tangible book value per share (2) | $ | 18.83 | $ | 18.22 | $ | 18.02 | $ | 17.28 | $ | 17.35 | |||||||||
| Shares outstanding | 119,829,104 | 120,201,149 | 123,189,833 | 123,283,450 | 124,567,950 | ||||||||||||||
| (1) Tangible common equity divided by tangible assets. | |||||||||||||||||||
| (2) Tangible common equity divided by shares outstanding. | |||||||||||||||||||
| Contact: | Matthew P. Wagner | Patrick J. Rusnak |
| President and CEO | Executive Vice President and CFO | |
| Phone: | 310-887-8520 | 714-989-4705 |
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