- Quarterly Report (10-Q)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2010
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 00-30747

PACWEST BANCORP
(Exact name of registrant as specified in its charter)


DELAWARE (State or other jurisdiction of incorporation or organization)		33-0885320 (I.R.S. Employer Identification Number)
401 West "A" Street San Diego, California (Address of principal executive offices)		92101 (Zip Code)

(619) 233-5588
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of April 29, 2010 there were 35,306,235 shares of the registrant's common stock outstanding, excluding 1,424,574 shares of unvested restricted stock.

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TABLE OF CONTENTS

			Page

PART I—FINANCIAL INFORMATION			3
	ITEM 1.	Unaudited Condensed Consolidated Financial Statements	3
		Unaudited Condensed Consolidated Balance Sheets	3
		Unaudited Condensed Consolidated Statements of Earnings (Loss)	4
		Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)	5
		Unaudited Condensed Consolidated Statement of Stockholders' Equity	6
		Unaudited Condensed Consolidated Statements of Cash Flows	7
		Notes to Unaudited Condensed Consolidated Financial Statements	8
	ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	55
	ITEM 4.	Controls and Procedures	55
PART II—OTHER INFORMATION			56
	ITEM 1.	Legal Proceedings	56
	ITEM 1A.	Risk Factors	56
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
	ITEM 5.	Other Information	56
	ITEM 6.	Exhibits	57
SIGNATURES			58

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PART I—FINANCIAL INFORMATION

ITEM 1. Unaudited Condensed Consolidated Financial Statements

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

			March 31, 2010			December 31, 2009

			(Dollars in thousands, except share data)
Assets:
Cash and due from banks			$	87,510		$	93,915
Due from banks—interest bearing				431,211			117,133

	Total cash and cash equivalents			518,721			211,048
Investments:
	Federal Home Loan Bank stock, at cost			50,429			50,429
	Non-covered securities available-for-sale (amortized cost of $385,743 at March 31, 2010 and $370,913 at December 31, 2009)			388,180			371,575
	Covered securities available-for-sale (amortized cost of $51,564 at March 31, 2010 and $52,967 at December 31, 2009)			51,061			52,125

		Securities available-available-for sale, at fair value		439,241			423,700

		Total investments		489,670			474,129
Non-covered loans, net of unearned income				3,253,834			3,707,383
Allowance for loan losses				(86,163	)		(118,717	)

		Non-covered loans, net		3,167,671			3,588,666
Covered loans				591,669			621,686

		Total loans		3,759,340			4,210,352
Premises and equipment, net				22,050			22,546
Non-covered other real estate owned, net				29,643			43,255
Covered other real estate owned, net				25,403			27,688

		Total other real estate owned		55,046			70,943
Accrued interest receivable				16,164			18,205
Core deposit and customer relationship intangibles				30,872			33,296
Cash surrender value of life insurance				66,547			66,149
FDIC loss sharing asset				87,140			112,817
Other assets				157,667			104,594

		Total assets	$	5,203,217		$	5,324,079

Liabilities and Stockholders' Equity:
Deposits:
	Noninterest-bearing		$	1,388,646		$	1,302,974
	Interest-bearing			2,765,591			2,791,595

		Total deposits		4,154,237			4,094,569
Accrued interest payable and other liabilities				37,836			50,176
Borrowings				406,550			542,763
Subordinated debentures				129,750			129,798

		Total liabilities		4,728,373			4,817,306

Stockholders' equity:
	Preferred stock, $0.01 par value. Authorized 5,000,000 shares; none issued and outstanding			—			—
	Common stock, $0.01 par value. Authorized 50,000,000 shares; 36,866,084 shares issued at March 31, 2010 and 35,128,452 shares issued at December 31, 2009 (includes 1,424,574 and 1,095,417 shares of unvested restricted stock, respectively)			369			351
	Capital surplus			1,081,382			1,053,584
	Accumulated deficit			(605,559	)		(545,026	)
	Less common stock repurchased: 135,275 shares at March 31, 2010 and 113,130 shares at December 31, 2009			(2,469	)		(2,032	)
	Accumulated other comprehensive income—unrealized gain (loss) on securities available-for-sale, net			1,121			(104	)

		Total stockholders' equity		474,844			506,773

		Total liabilities and stockholders' equity	$	5,203,217		$	5,324,079

See "Notes to Unaudited Condensed Consolidated Financial Statements."

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

			Quarter Ended

			03/31/10			12/31/09			03/31/09
			(Dollars in thousands, except per share data)
Interest income:
	Interest and fees on loans		$	63,745		$	70,331		$	61,847
	Interest on deposits in financial institutions			129			197			61
	Interest on investment securities			5,121			5,041			1,546

		Total interest income		68,995			75,569			63,454

Interest expense:
	Deposits			6,889			7,475			9,320
	Borrowings			2,668			4,300			3,582
	Subordinated debentures			1,415			1,467			1,779

		Total interest expense		10,972			13,242			14,681

		Net interest income before provision for credit losses		58,023			62,327			48,773
Provision for credit losses:
	Non-covered loans			112,527			34,900			14,000
	Covered loans			20,700			18,000			—

		Total provision for credit losses		133,227			52,900			14,000

		Net interest income (loss) after provision for credit losses		(75,204	)		9,427			34,773

Noninterest income:
	Service charges on deposit accounts			2,729			2,890			3,149
	Other commissions and fees			1,790			1,799			1,685
	Increase in cash surrender value of life insurance			398			375			439
	Increase in FDIC loss sharing asset			16,172			16,314			—
	Other income			180			450			808

		Total noninterest income		21,269			21,828			6,081

Noninterest expense:
	Compensation			19,411			20,320			19,331
	Occupancy			6,958			7,100			6,386
	Data processing			1,969			1,831			1,628
	Other professional services			1,998			2,047			1,524
	Business development			667			663			725
	Communications			804			789			693
	Insurance and assessments			2,274			1,826			1,598
	Other real estate owned, net			10,610			4,953			997
	Intangible asset amortization			2,424			2,355			2,247
	Reorganization and lease charges			—			—			1,215
	Other			3,455			3,329			2,625

		Total noninterest expense		50,570			45,213			38,969

Earnings (loss) before income taxes				(104,505	)		(13,958	)		1,885
Income taxes				(43,972	)		(6,178	)		440

	Net earnings (loss)		$	(60,533	)	$	(7,780	)	$	1,445

Earnings (loss) per share:
	Basic		$	(1.76	)	$	(0.23	)	$	0.04
	Diluted		$	(1.76	)	$	(0.23	)	$	0.04
Dividends declared per share			$	0.01		$	0.01		$	0.32

See "Notes to Unaudited Condensed Consolidated Financial Statements."

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)

		Quarter Ended March 31,

		2010			2009
		(Dollars in thousands)
Net earnings (loss)		$	(60,533	)	$	1,445
Other comprehensive income, net of related income taxes:
	Unrealized holding gains on securities available-for-sale arising during the period		1,225			622

Comprehensive net income (loss)		$	(59,308	)	$	2,067

See "Notes to Unaudited Condensed Consolidated Financial Statements."

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UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

	Common Stock

	Common Stock														Accumulated Other Comprehensive Income (loss)
	Shares			Par Value		Capital Surplus			(Accumulated Deficit)			Treasury Stock			Accumulated Other Comprehensive Income (loss)			Total
	(Dollars in thousands, except share data)
Balance as of January 1, 2010		35,015,322		$	351	$	1,053,584		$	(545,026	)	$	(2,032	)	$	(104	)	$	506,773
Net loss		—			—		—			(60,533	)		—			—			(60,533	)
Issuance of common stock		1,348,040			14		26,573			—			—			—			26,587
Tax effect from vesting of restricted stock		—			—		(664	)		—			—			—			(664	)
Restricted stock awarded and earned stock compensation, net of shares forfeited		389,592			4		2,250			—			—			—			2,254
Restricted stock surrendered		(22,145	)		—		—			—			(437	)		—			(437	)
Cash dividends paid ($0.01 per share)		—			—		(361	)		—			—			—			(361	)
Other comprehensive income—increase in net unrealized gain on securities available-for-sale, net of tax effect of $888 thousand		—			—		—			—			—			1,225			1,225

Balance as of March 31, 2010		36,730,809		$	369	$	1,081,382		$	(605,559	)	$	(2,469	)	$	1,121		$	474,844

See "Notes to Unaudited Condensed Consolidated Financial Statements."

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

				Quarter Ended March 31,

				2010			2009
				(Dollars in thousands)
Cash flows from operating activities:
	Net earnings (loss)			$	(60,533	)	$	1,445
		Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
			Depreciation and amortization		2,313			3,619
			Provision for credit losses		133,227			14,000
			Loss (gain) on sale of other real estate owned		(1,047	)		37
			Other real estate owned valuation adjustment		10,458			534
			Gain (loss) on sale of premises and equipment		4			(19	)
			Restricted stock amortization		2,254			2,199
			Tax effect included in stockholders' equity of restricted stock vesting		664			174
			(Increase) decrease in accrued and deferred income taxes, net		(43,983	)		814
			Decrease in other assets		21,682			7,066
			Partial settlement with FDIC on SPB deposit acquisition		—			(15,520	)
			Decrease in accrued interest payable and other liabilities		(11,513	)		(5,068	)

	Net cash provided by operating activities				53,526			9,281

Cash flows from investing activities:
	Net decrease in net loans outstanding				94,001			44,326
	Proceeds from sale of loans				200,609			—
	Securities available-for-sale:
		Maturities			53,465			15,323
		Purchases			(66,856	)		(33,786	)
	Proceeds from sale of other real estate owned				24,528			5,060
	Capitalized costs to complete other real estate owned				(545	)		—
	Purchases of premises and equipment, net				(850	)		(1,001	)
	Proceeds from sale of premises and equipment				2			79

	Net cash used by investing activities				304,354			30,001

Cash flows from financing activities:
	Net increase (decrease) in deposits:
		Noninterest-bearing			85,672			58,399
		Interest-bearing			(26,004	)		(132,798	)
	Net proceeds from issuance of common stock				26,587			100,000
	Restricted stock surrendered				(437	)		(646	)
	Tax effect included in stockholders' equity of restricted stock vesting				(664	)		(174	)
	Net decrease in borrowings				(135,000	)		—
	Cash dividends paid				(361	)		(10,166	)

	Net cash used in financing activities				(50,207	)		14,615

Net increase in cash and cash equivalents					307,673			53,897
Cash and cash equivalents at beginning of period					211,048			159,870

Cash and cash equivalents at end of period				$	518,721		$	213,767

Supplemental disclosure of cash flow information:
	Cash paid during period for interest			$	12,041		$	15,441
	Cash paid during period for income taxes				—			(393	)
	Transfer of loans to other real estate owned				17,826			11,700

See "Notes to Unaudited Condensed Consolidated Financial Statements."

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NOTE 1—BASIS OF PRESENTATION

PacWest Bancorp is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is to serve as a holding company for our banking subsidiary, Pacific Western Bank, which we refer to as Pacific Western or the Bank. When we say "we", "our" or the "Company", we mean the Company on a consolidated basis with the Bank. When we refer to "PacWest" or to the holding company, we are referring to the parent company on a stand-alone basis.

We have completed 21 acquisitions since May 2000. See Notes 2 and 3 for more information about our acquisitions.

(a) Basis of Presentation

The accounting and reporting policies of the Company are in accordance with U.S. generally accepted accounting principles, which we refer to as GAAP. All significant intercompany balances and transactions have been eliminated.

Our financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The interim operating results are not necessarily indicative of operating results for the full year.

(b) Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowances for credit losses, the carrying value of other real estate owned, the carrying value of intangible assets, the carrying value of the FDIC loss sharing asset and the realization of deferred tax assets.

As described in Note 2 below, Pacific Western acquired assets and assumed liabilities of the former Affinity Bank ("Affinity") in an FDIC-assisted transaction, which we refer to as the Affinity acquisition. The acquired assets and assumed liabilities were measured at estimated fair value. Management made significant estimates and exercised significant judgment in estimating fair values and accounting for the acquisition of Affinity.

(c) Reclassifications

Certain prior year amounts have been reclassified to conform to the current year's presentation.

NOTE 2—ACQUISITIONS

Business Combinations are accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations. Results of operations of an acquired business are included in the statement of earnings from the date of acquisition. Acquisition-related costs, including conversion and restructuring charges, are expensed as incurred. We adopted this guidance as of January 1, 2009 and applied it to the Affinity acquisition.

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NOTE 2—ACQUISITIONS (Continued)

For acquisitions completed prior to January 1, 2009, the estimated merger-related charges associated with each acquisition were recorded as a liability at closing when the related purchase price was allocated. For each acquisition, we developed an integration plan for the Company that addressed, among other things, requirements for staffing, systems platforms, branch locations and other facilities. The remaining merger-related liability totals $1.1 million at March 31, 2010 and represents the estimated lease payments, net of estimated sublease income, for the remaining life of leases for abandoned space.

Federally Assisted Acquisition of Affinity Bank

On August 28, 2009, Pacific Western Bank acquired certain assets and assumed certain liabilities of Affinity from the Federal Deposit Insurance Corporation ("FDIC") in an FDIC-assisted transaction. We entered into a loss sharing agreement with the FDIC, whereby the FDIC will cover a substantial portion of any future losses on loans, other real estate owned and certain investment securities. We refer to the acquired assets subject to the loss sharing agreement collectively as "covered assets." Under the terms of such loss sharing agreement, the FDIC will absorb 80% of losses and receive 80% of loss recoveries on the first $234 million of losses on covered assets and absorb 95% of losses and receive 95% of loss recoveries on covered assets exceeding $234 million. The loss sharing agreement is in effect for 5 years for commercial assets (non-residential loans, OREO and certain securities) and 10 years for residential loans from the August 28, 2009 acquisition date. The loss recovery provisions are in effect for 8 years for commercial assets and 10 years for residential loans from the acquisition date. Affinity was a full service commercial bank headquartered in Ventura, California that operated 10 branch locations in California. We made this acquisition to expand our presence in California.

The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting (formerly the purchase method). The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the August 28, 2009 acquisition date.

Unaudited Pro Forma Results of Operations

The following table presents our unaudited pro forma results of operations for the periods presented as if the Affinity acquisition had been completed on January 1, 2009. The unaudited pro forma results of operations include the historical accounts of the Company and Affinity and pro forma adjustments as may be required, including the amortization of intangibles with definite lives and the amortization or accretion of any premiums or discounts arising from fair value adjustments for assets acquired and liabilities assumed. The unaudited pro forma information is intended for informational purposes only and is not necessarily indicative of our future operating results or operating results that would have occurred had these acquisitions been completed at the beginning of 2009. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies or asset dispositions.

		For the Quarter Ended March 31, 2009

		(Dollars in thousands, except per share data)
Revenues (net interest income plus noninterest income)		$	135,245
Net earnings		$	42,449
Net income per share:
	Basic	$	1.38
	Diluted	$	1.38

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NOTE 3—OTHER INTANGIBLE ASSETS

Our intangible assets with definite lives are core deposit intangibles, or CDI, and customer relationship intangibles, or CRI. These intangible assets are amortized over their useful lives to their estimated residual values and reviewed for impairment at least quarterly. If the recoverable amount of the intangible asset is determined to be less than its carrying value, we would then measure the amount of impairment based on an estimate of the intangible asset's fair value at that time. If the fair value is below the carrying value, the intangible asset is reduced to such fair value and impairment is recognized as noninterest expense in the financial statements.

The following table presents the changes in CDI and CRI and the related accumulated amortization for the periods indicated:

			Quarters Ended

			3/31/10			12/31/09			3/31/09
			(Dollars in thousands)
Gross amount of CDI and CRI:
	Balance at the beginning and end of the period		$	75,911		$	75,911		$	72,990
Accumulated amortization:
	Balance at the beginning of the period			(42,615	)		(40,260	)		(33,068	)
	Amortization			(2,424	)		(2,355	)		(2,247	)

	Balance at the end of the period			(45,039	)		(42,615	)		(35,315	)

		Net CDI and CRI at the end of the period	$	30,872		$	33,296		$	37,675

The aggregate amortization expense related to the intangible assets is expected to be $9.5 million for 2010. The estimated aggregate amortization expense related to these intangible assets for each of the subsequent four years is $8.0 million, $5.7 million, $4.1 million, and $2.6 million.

NOTE 4—INVESTMENT SECURITIES AND FHLB STOCK

The amortized cost, gross unrealized gains and losses and fair value of securities available-for-sale as of March 31, 2010 are presented in the table below. Other securities include an investment in overnight money market funds at a financial institution. The private label collateralized mortgage obligations were acquired in the Affinity acquisition and are covered by the FDIC loss sharing agreement. See Note 9 for information on fair value measurements and methodology.

		March 31, 2010

		Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
		(Dollars in thousands)
Government-sponsored entity debt securities		$	16,150	$	53	$	109	$	16,094
Municipal securities			7,878		448		—		8,326
Residential mortgage-backed securities:
	Government and government-sponsored entity pass through		287,999		4,835		427		292,407
	Government and government-sponsored entity collateralized mortgage obligations		71,428		465		2,828		69,065
	Covered private label collateralized mortgage obligations		51,564		2,269		2,772		51,061
Other securities			2,288		—		—		2,288

Total		$	437,307	$	8,070	$	6,136	$	439,241

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NOTE 4—INVESTMENT SECURITIES AND FHLB STOCK (Continued)

Mortgage-backed securities have contractual terms to maturity and require periodic payments to reduce principal. In addition, expected maturities may differ from contractual maturities because obligors and/or issuers may have the right to call or prepay obligations with or without call or prepayment penalties. The contractual maturity distribution of our securities portfolio based on amortized cost and fair value as of March 31, 2010, is shown below.

At March 31, 2010, the fair value of debt securities and residential mortgage-backed debt securities issued by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) was approximately $288.7 million. We do not own any equity securities issued by Fannie Mae or Freddie Mac.

As of March 31, 2010 securities available-for-sale with a fair value of $156.3 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.

At March 31, 2010 none of the securities in our investment portfolio had been in a continuous unrealized loss position for 12 months or longer. The following table presents the fair value and unrealized losses on securities that are in an unrealized loss position for less than 12 months and considered temporarily impaired as of March 31, 2010.

FHLB Stock. The Company has a $50.4 million investment in Federal Home Loan Bank of San Francisco (FHLB) stock. The FHLB stock is carried at cost at March 31, 2010. In January 2009, the FHLB announced it suspended excess FHLB stock redemptions and dividend payments. Since then, the FHLB has paid two cash dividends, though at a rate less than that paid in the past. We evaluated the carrying value of our FHLB stock investment at March 31, 2010 and determined it was not impaired. Our evaluation considered the long-term nature of the investment, the liquidity position of

the FHLB, the actions being taken by the FHLB to address its regulatory situation, and our intent and ability to hold this investment for a period of time sufficient to recover our recorded investment.

NOTE 5—COVERED LOANS, ALLOWANCE FOR LOSS ON COVERED LOANS, AND COVERED OTHER REAL ESTATE OWNED

We refer to the loans acquired in the Affinity acquisition as "covered loans" as we will be reimbursed for a substantial portion of any future losses on them under the terms of the FDIC loss sharing agreement. At the August 28, 2009 acquisition date, we estimated the fair value of the Affinity loan portfolio at $675.6 million which represents the expected cash flows from the portfolio discounted at a market-based rate. The carrying values of the covered loans were as follows at March 31, 2010 and December 31, 2009.

The covered loans acquired in the Affinity transaction are subject to our internal and external credit review. If and when credit deterioration occurs a provision for credit losses for covered loans will be charged to earnings for the full amount without regard to the FDIC loss sharing agreement. The portion of the estimated loss reimbursable from the FDIC is recorded in noninterest income and increases the FDIC loss sharing asset. During the first quarter of 2010 we recorded a provision for credit losses of $20.7 million on the covered loan portfolio; such provision represents credit deterioration since the acquisition date based on decreases in expected cash flows on certain covered loans measured as of March 31, 2010 compared to acquisition date expected cash flows. We recorded $16.6 million in noninterest income to reflect the FDIC's share of this estimated loss.

At the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the "accretable yield". The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. The following table summarizes the changes therein for the three months ended March 31, 2010:

NOTE 5—COVERED LOANS, ALLOWANCE FOR LOSS ON COVERED LOANS, AND COVERED OTHER REAL ESTATE OWNED (Continued)

	Maturity distribution as of March 31, 2010

	Amortized cost		Fair value
	(Dollars in thousands)
Due in one year or less	$	2,289	$	2,289
Due after one year through five years		14,210		14,866
Due after five years through ten years		57,298		57,948
Due after ten years		363,510		364,138

Total	$	437,307	$	439,241

			March 31, 2010			December 31, 2009

			(In thousands)
Covered loans, gross			$	714,473		$	742,535
	Discount			(90,790	)		(102,849	)

		Covered loans, net of discount		623,683			639,686
		Less allowance for loan losses		32,014			18,000

		Covered loans, net	$	591,669		$	621,686

	Carrying Amount of Loans			Accretable Yield

	(In thousands)
Balance as of January 1, 2010	$	621,686		$	(226,446	)
Accretion		11,169			11,169
Payments received		(20,456	)
Decrease in expected cash flows		—			18,608
Provision for loan losses		(20,700	)		—

Balance as of March 31, 2010	$	591,699		$	(196,669	)

Property Type	As of March 31, 2010

	(Dollars in thousands)
Improved residential land	$	7,554
Commercial real estate		8,725
Multi-family		6,279
Single family residence		2,845

Total	$	25,403

	As of March 31, 2010

	(Dollars in thousands)
Balance as of January 1, 2010	$	27,688
Additions		1,776
Loss provisions and fair value adjustments		(2,144	)
Reductions related to sales		(1,917	)

Balance as of March 31, 2010	$	25,403

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		Impairment Period of Less than 12 months

Descriptions of securities		Fair Value		Unrealized Losses
		(Dollars in thousands)
Government-sponsored entity debt securities		$	9,891	$	109
Residential mortgage-backed securities:
	Government and government-sponsored entity pass through		79,771		427
	Government and government-sponsored entity collateralized mortgage obligations		39,324		2,828
	Covered private label collateralized mortgage obligations		7,258		2,772

Total		$	136,244	$	6,136

	As of March 31, 2010

	(Dollars in thousands)
Maintenance costs	$	125
Provision for losses		2,144
(Gain) loss on sale		(101	)

	$	2,168

	(In thousands)

Balance as of January 1, 2010	$	112,817
FDIC share of additional losses		18,278
Cash payments received from the FDIC		(41,848	)
Net accretion		(2,107	)

Balance as of March 31, 2010	$	87,140

Maturity Date	Amount

	(Dollars in thousands)
8/23/2010	$	20,000	4.90	%	N/A	^(b)
12/29/2010		25,000	4.23	%	N/A	^(a)(b)
9/8/2011		20,000	4.67	%	N/A	^(a)(b)
1/11/2013		50,000	2.71	%	7/11/2010	^(a)
9/9/2013		20,000	4.63	%	N/A	^(a)(b)
8/25/2014		20,000	4.26	%	N/A	^(a)(b)
9/23/2014		20,000	3.51	%	N/A	^(a)(b)
12/11/2017		200,000	3.16	%	6/11/2010	^(a)
1/11/2018		25,000	2.61	%	7/11/2010	^(a)
Unamortized premium ^(c)		6,550

Total	$	406,550

Series	Date issued		Amount

	(Dollars in thousands)
Trust CI		3/23/2000	$	10,310	3/8/2030	3/8/2020	Fixed		N/A	11.00	%	N/A
Trust I		9/7/2000		8,248	9/7/2030	9/7/2020	Fixed		N/A	10.60	%	N/A
Trust V		8/15/2003		10,310	9/17/2033	N/A	Variable		3 month LIBOR + 3.10	3.36	%	6/15/2010
Trust VI		9/3/2003		10,310	9/15/2033	N/A	Variable		3 month LIBOR + 3.05	3.31	%	6/11/2010
Trust CII		9/17/2003		5,155	9/17/2033	N/A	Variable		3 month LIBOR + 2.95	3.21	%	6/15/2010
Trust VII		2/5/2004		61,856	4/23/2034	N/A	Variable		3 month LIBOR + 2.75	3.09	%	7/28/2010
Trust CIII		8/15/2005		20,619	9/15/2035	9/15/2010	Fixed	⁽³⁾	N/A	5.85	%	9/15/2010
Unamortized premium ⁽⁴⁾				2,942

Total			$	129,750

				Fair Value Measurement Using

		Balance as of March 31, 2010		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
		(Dollars in thousands)
*Measured on a Recurring Basis*
Securities available-for-sale:
	Government-sponsored entity debt securities	$	16,094	$	—	$	16,094	$	—
	Municipal securities		8,326	$	—		8,326		—
	Government and government-sponsored entity mortgage-backed securities		361,472	$	—		361,472		—
	Other securities		2,288	$	—		2,288		—
	Covered private label CMOs		51,061		—		—		51,061

		$	439,241	$	—	$	388,180	$	51,061

*Measured on a Nonrecurring Basis*
	Impaired loans	$	65,465	$	—	$	20,364	$	45,101
	Other real estate owned		22,902		—		8,539		14,363
	SBA loan servicing asset		1,926		—		—		1,926

		$	90,293	$	—	$	28,903	$	61,390

	Three Months Ended March 31, 2010

	(Dollars in thousands)
Impaired loans	$	(7,338	)
Other real estate owned		(8,009	)
Servicing asset		140

	$	(15,207	)

	Covered Securities Available-for-sale

	(Dollars in thousands)
Beginning as of January 1, 2010	$	52,125
Total realized in interest on investment securities		501
Total unrealized in comprehensive income		339
Net settlements subsequent to acquisition		(1,904	)

Balance as of March 31, 2010	$	51,061

		March 31, 2010				December 31, 2009

		Carrying or Contract Amount		Fair Value Estimates		Carrying or Contract Amount		Fair Value Estimates
		(Dollars in thousands)
Financial Assets:
	Cash and due from banks	$	87,510	$	87,510	$	93,915	$	93,915
	Interest-bearing deposits in financial institutions		431,211		431,211		117,133		117,133
	Investment in Federal Home Loan Bank Stock		50,429		50,429		50,429		50,429
	Securities available-for-sale		439,241		439,241		423,700		423,700
	Loans, net		3,759,340		3,751,823		4,210,352		4,195,805
	FDIC loss sharing asset		87,140		87,140		112,817		112,817
Financial Liabilities:
	Deposits		4,154,237		4,161,477		4,094,569		4,102,467
	Borrowings		406,550		417,296		542,763		557,363
	Subordinated debentures		129,750		132,050		129,798		146,413

Quarterly Period

First quarter of 2010	63.8	%
Fourth quarter 2009	53.7	%
Third quarter 2009	37.1	%
Second quarter 2009	85.5	%
First quarter 2009	71.0	%

		As of the dates indicated:

Dollars in thousands		March 31, 2010			December 31, 2009			March 31, 2009
End of period assets		$	5,203,217		$	5,324,079		$	4,496,070
	Intangibles		30,872			33,296			37,675

End of period tangible assets		$	5,172,345		$	5,290,783		$	4,458,395

End of period equity		$	474,844		$	506,773		$	469,006
	Intangibles		30,872			33,296			37,675

End of period tangible equity		$	443,972		$	473,477		$	431,331

Equity to assets ratio			9.13	%		9.52	%		10.43	%

Tangible common equity ratio			8.58	%		8.95	%		9.67	%

Pacific Western Bank
End of period assets		$	5,192,003		$	5,313,750		$	4,486,793
	Intangibles		30,872			33,296			37,675

End of period tangible assets		$	5,161,131		$	5,280,454		$	4,449,118

End of period equity		$	559,909		$	585,940		$	506,694
	Intangibles		30,872			33,296			37,675

End of period tangible equity		$	529,037		$	552,644		$	469,019

Equity-to-assets			10.78	%		11.03	%		11.29	%

Tangible common equity ratio			10.25	%		10.47	%		10.54	%

		Quarter Ended

		March 31, 2010							December 31, 2009							March 31, 2009
		Average Balance		Interest Income/ Expense		Yields and Rates			Average Balance		Interest Income/ Expense		Yields and Rates			Average Balance		Interest Income/ Expense		Yields and Rates
		(Dollars in thousands)
ASSETS
Loans, net of deferred fees and costs ^(a)(b)		$	4,122,853	$	63,745		6.27	%	$	4,439,586	$	70,331		6.29	%	$	3,938,322	$	61,847		6.37	%
Investment securities ^(b)			469,732		5,121		4.42	%		421,647		5,041		4.74	%		165,333		1,546		3.79	%
Federal funds sold			—		—		0.00	%		279		—		—			260		—		0.00	%
Other earning assets			206,887		129		0.25	%		298,073		197		0.26	%		92,271		61		0.27	%

	Total interest-earning assets		4,799,472		68,995		5.83	%		5,159,585		75,569		5.81	%		4,196,186		63,454		6.13	%
Noninterest-earning assets:
Other assets			418,517							373,570							284,628

	Total assets	$	5,217,989						$	5,533,155						$	4,480,814

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest checking		$	434,446	$	393		0.37	%	$	438,242	$	486		0.44	%	$	349,908	$	454		0.53	%
Money market			1,166,688		2,868		1.00	%		1,188,939		3,418		1.14	%		841,410		2,611		1.26	%
Savings			110,564		58		0.21	%		111,374		67		0.24	%		123,005		107		0.35	%
Time certificates of deposit			1,045,417		3,570		1.38	%		1,064,596		3,504		1.31	%		899,666		6,148		2.77	%

	Total interest-bearing deposits		2,757,115		6,889		1.01	%		2,803,151		7,475		1.06	%		2,213,989		9,320		1.71	%
Other interest-bearing liabilities			575,534		4,083		2.88	%		835,842		5,767		2.74	%		581,583		5,361		3.74	%

	Total interest-bearing liabilities		3,332,649		10,972		1.34	%		3,638,993		13,242		1.44	%		2,795,572		14,681		2.13	%
Noninterest-bearing liabilities:
	Demand deposits		1,332,862							1,318,819							1,163,059
	Other liabilities		46,756							52,846							61,882

	Total liabilities		4,712,267							5,010,658							4,020,513
Stockholders' equity			505,722							522,497							460,301

Total liabilities and stockholders' equity		$	5,217,989						$	5,533,155						$	4,480,814

Net interest income				$	58,023						$	62,327						$	48,773

Net interest spread							4.49	%						4.37	%						4.00	%

Net interest margin							4.90	%						4.79	%						4.71	%

		At March 31, 2010						At December 31, 2009						At March 31, 2009

		Amount			% of total			Amount			% of total			Amount			% of total
		(Dollars in thousands)
Loan Category:
Domestic:
	Commercial	$	720,105			22	%	$	781,003			21	%	$	779,971			20	%
	Real estate, construction		284,274			9			440,286			12			583,709			15
	Real estate, mortgage		2,197,295			67			2,423,712			65			2,482,790			63
	Consumer		28,804			1			32,138			1			38,615			1
Foreign:
	Commercial		26,736			1			34,524			1			44,955			1
	Other, including real estate		1,675			—	^(a)		1,719			—	^(a)		2,126			—	^(a)

Gross loans			3,258,889			100	%		3,713,382			100	%		3,932,166			100	%
Less: unearned income			(5,055	)					(5,999	)					(7,881	)
Less: allowance for loan losses			(86,163	)					(118,717	)					(71,361	)

Total net loans		$	3,167,671					$	3,588,666					$	3,852,924

		At March 31, 2010

Loan Category		Balance		Number of Loans		Average Loan Balance
		(Dollars in thousands)
Commercial real estate mortgage:
	Owner-occupied	$	278,189		385	$	723
	Retail		396,721		227		1,748
	Office buildings		314,682		247		1,274
	Industrial/warehouse		322,122		339		950
	Hotels and other hospitality		176,295		53		3,326
	Other		449,464		246		1,827

Total commercial real estate mortgage			1,937,473		1,497		1,294

Residential real estate mortgage:
	Multi-family		73,416		81		906
	Mixed use		89,794		26		3,454
	Single family owner-occupied		73,539		382		193
	Single family nonowner-occupied		23,073		97		238

Total residential real estate mortgage			259,822		586		443

Total real estate mortgage		$	2,197,295		2,083	$	1,055

		Quarter Ended

		March 31, 2010		December 31, 2009		September 30, 2009		June 30, 2009		March 31, 2009
		(Dollars in thousands)
Service charges and fees on deposit accounts		$	2,729	$	2,890	$	2,960	$	3,009	$	3,149
Other commissions and fees			1,790		1,799		1,721		1,746		1,685
Increase in cash surrender value of life insurance			398		375		371		394		439
Increase in FDIC loss sharing asset			16,172		16,314		—		—		—
Gain from Affinity acquisition			—		—		66,989		—		—
Other income			180		450		584		224		808

	Total noninterest income	$	21,269	$	21,828	$	72,625	$	5,373	$	6,081

				March 31, 2010			December 31, 2009

				(In thousands)
Commercial and industrial				$	8,987		$	9,581
Healthcare related					52,854			57,263
Construction:
		Commercial			20,546			24,418
		Residential			79,644			84,565
Acquisition and development:
		Residential acquisition and development			10,032			10,032
		Multi-family acquisition and development			2,501			2,720
Commercial real estate					261,501			265,794
Multi-family					255,053			263,944
Residential, home equity credit lines and consumer					23,355			24,218

	Total gross loans				714,473			742,535
		Discount			(90,790	)		(102,849	)

			Loans, net of discount		623,683			639,686
			Less allowance for loan losses		32,014			18,000

			Covered loans, net	$	591,669		$	621,686

	As of or for the

	Quarter Ended March 31, 2010			Quarter Ended December 31, 2009			Year Ended December 31, 2009			Quarter Ended March 31, 2009
	(Dollars in thousands)
Balance at beginning of period	$	124,278		$	120,586		$	68,790		$	68,790
Provision for credit losses		112,527			34,900			141,900			14,000
Net charge-offs		(145,426	)		(31,208	)		(86,412	)		(6,158	)

Balance at end of period	$	91,379		$	124,278		$	124,278		$	76,632

Allowance for credit losses to non-covered loans, net of unearned income		2.81	%		3.35	%		3.35	%		1.95	%

	(Dollars in thousands)

Balance as of January 1, 2010	$	18,000
Provision		20,700
Charge-offs, net		(6,686	)

Balance as of March 31, 2010	$	32,014

		Covered Nonperforming Assets

		March 31, 2010
		(In thousands)
Covered nonaccrual loans		$	157,325
Covered OREO			25,403

	Total covered nonperforming assets	$	182,728

	As of March 31, 2010						As of December 31, 2009

			Number of loans		Average loan balance		As of December 31, 2009
Loan Category	Balance		Number of loans		Average loan balance		Balance
	(Dollars in thousands)
Residential land acquisition and development	$	2,558		4	$	640	$	33,502
Residential nonowner-occupied single family		20,121		13		1,548		32,209
Unimproved residential land		57,640		29		1,988		58,949
Residential multi-family		20,576		5		4,115		38,825

	$	100,895		51	$	1,978	$	163,485

	Minimum Regulatory Requirements			Actual

	Well Capitalized			Pacific Western			Company Consolidated
Tier 1 leverage capital ratio		5.00	%		9.97	%		10.47	%
Tier 1 risk-based capital ratio		6.00	%		13.70	%		14.33	%
Total risk-based capital		10.00	%		14.98	%		15.60	%
Tangible common equity ratio		N/A			10.25	%		8.58	%

		At March 31, 2010 and Due

		Within One Year		One to Three Years		Three to Five Years		After Five Years		Total Total
		(Dollars in thousands)
Short-term debt obligations		$	45,000	$	—	$	—	$	—	$	45,000
Time deposits			824,090		218,434		2,212		—		1,044,736
Long-term debt obligations			—		70,000		60,000		361,300		491,300
Operating lease obligations			15,683		26,690		19,179		18,931		80,483
Other contractual obligations			3,811		1,817		—		—		5,628

	Total	$	888,584	$	316,941	$	81,391	$	380,231	$	1,667,147

Interest rate scenario	Estimated Net Interest Income

	(Dollars in thousands)
Up 300 basis points	$	225,384	(2.21	)%	4.68	%	(0.11	)%
Up 200 basis points	$	221,786	(3.77	)%	4.61	%	(0.18	)%
Up 100 basis points	$	221,250	(4.00	)%	4.60	%	(0.19	)%
BASE CASE	$	230,475			4.79	%	—
Down 100 basis points	$	226,061	(1.92	)%	4.70	%	(0.09	)%
Down 200 basis points	$	225,385	(2.21	)%	4.68	%	(0.11	)%
Down 300 basis points	$	222,120	(3.63	)%	4.62	%	(0.17	)%

Interest rate scenario	Estimated Market Value

	(Dollars in thousands)
Up 300 basis points	$	620,932	1.93	%	11.9	%	130.8	%
Up 200 basis points	$	647,395	6.28	%	12.4	%	136.3	%
Up 100 basis points	$	644,389	5.78	%	12.4	%	135.7	%
BASE CASE	$	609,157	—		11.7	%	128.3	%
Down 100 basis points	$	566,124	(7.06	)%	10.9	%	119.2	%
Down 200 basis points	$	511,728	(15.99	)%	9.8	%	107.8	%
Down 300 basis points	$	468,376	(23.11	)%	9.0	%	98.6	%

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			3 Months Or Less			Over 3 Months to 12 Months			Over 1 Year to 5 Years			Over 5 Years			Non Interest Rate Sensitive			Total

			(Dollars in thousands)
ASSETS
	Cash and deposits in financial institutions		$	431,096		$	—		$	115		$	—		$	87,510		$	518,721
	Investment securities			12,527			2,015			14,865			460,263			—			489,670
	Loans, net of unearned income			1,552,020			301,114			1,007,926			1,016,457			—			3,877,517
	Other assets			—			—			—			—			317,309			317,309

	Total assets		$	1,995,643		$	303,129		$	1,022,906		$	1,476,720		$	404,819		$	5,203,217

LIABILITIES AND STOCKHOLDERS' EQUITY
	Noninterest-bearing demand deposits		$	—		$	—		$	—		$	—		$	1,388,646		$	1,388,646
	Interest-bearing demand, money market and savings			1,720,855			—			—			—			—			1,720,855
	Time deposits			349,154			474,936			220,646			—			—			1,044,736
	Borrowings			—			45,000			130,000			225,000			6,550			406,550
	Subordinated debentures			87,631			20,619			—			18,558			2,942			129,750
	Other liabilities			—			—			—			—			37,836			37,836
	Stockholders' equity			—			—			—			—			474,844			474,844

	Total liabilities and stockholders' equity		$	2,157,640		$	540,555		$	350,646		$	243,558		$	1,910,818		$	5,203,217

	Period gap		$	(161,997	)	$	(237,426	)	$	672,260		$	1,233,162		$	(1,505,999	)
	Cumulative interest-earning assets		$	1,995,643		$	2,298,772		$	3,321,678		$	4,798,398
	Cumulative interest-bearing liabilities		$	2,157,640		$	2,698,195		$	3,048,841		$	3,292,399
	Cumulative gap		$	(161,997	)	$	(399,423	)	$	272,837		$	1,505,999
	Cumulative interest-earning assets to cumulative interest-bearing liabilities			92.5	%		85.2	%		108.9	%		145.7	%
	Cumulative gap as a percent of:
		Total assets		(3.1	)%		(7.7	)%		5.2	%		28.9	%
		Interest earning assets		(3.7	)%		(9.1	)%		6.2	%		34.5	%

		Average Price Per Share

January 1 - January 31, 2010	—	$	—
February 1 - February 28, 2010	22,145		19.71
March 1 - March 31, 2010	—		—

Total	22,145	$	19.71

Exhibit Number			Description

	3.1		Certificate of Incorporation, as amended, of PacWest Bancorp, a Delaware corporation (Exhibit 3.1 to Form 8-K filed on May 14, 2008 and incorporated herein by this reference).
	3.2		Bylaws of PacWest Bancorp, a Delaware corporation, dated April 22, 2008 (Exhibit 3.2 to Form 8-K filed on May 14, 2008 and incorporated herein by this reference).
	10.1		Services Agreement, dated as of April 30, 2010, between PacWest Bancorp and Castle Creek Financial LLC.
	31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
	31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
	32.1		Section 1350 Certification of Chief Executive Officer.
	32.2		Section 1350 Certification of Chief Financial Officer.


		PACWEST BANCORP
Date: May 5, 2010		/s/ VICTOR R. SANTORO Victor R. Santoro Executive Vice President and Chief Financial Officer