Net Earnings of $3.5 Million
Net Interest Margin of 5.08%
Credit Loss Reserve at 3.05% of Net
Non-Covered Loans
Los Padres Bank Acquisition Closed on
August 20, 2010
Core Deposits Grow $264.0
Million
PacWest Bancorp (Nasdaq:PACW) today announced net
earnings for the third quarter of 2010 of $3.5 million, or $0.10
per diluted share, compared to net earnings of $2.7 million, or
$0.07 per diluted share, for the second quarter of 2010. Third
quarter earnings include the operating results of Los Padres Bank
("Los Padres"), which was acquired in an FDIC-assisted transaction
on August 20, 2010 and added $420,000 in net earnings for the
period since the acquisition.
This press release contains non-GAAP financial disclosures for
tangible common equity. The Company uses certain non-GAAP financial
measures to provide meaningful supplemental information regarding
the Company's operational performance and to enhance investors'
overall understanding of such financial performance. Because the
use of tangible common equity amounts and ratios is becoming more
prevalent among banking regulators, investors and analysts, we
disclose our tangible common equity ratios in addition to
equity-to-assets ratios. Please refer to the table at the end of
this release for a presentation of performance ratios in accordance
with GAAP and a reconciliation of the non-GAAP financial measures
to the GAAP financial measures.
THIRD QUARTER RESULTS
|
Three
Months Ended |
|
September
30, |
June
30, |
|
2010 |
2010 |
|
(Dollars in
thousands, except per share data) |
Financial
Highlights: |
|
|
Net earnings |
$ 3,500 |
$ 2,705 |
Diluted earnings per share |
$ 0.10 |
$ 0.07 |
Annualized return on average
assets |
0.25% |
0.21% |
Annualized return on average
equity |
2.82% |
2.26% |
Net interest margin |
5.08% |
4.85% |
Efficiency ratio |
60.8% |
61.4% |
|
|
|
At Quarter End: |
|
|
Allowance for credit losses to
non-covered loans net of unearned income (1) |
3.05% |
2.93% |
Equity to assets ratios: |
|
|
PacWest Bancorp
Consolidated |
8.60% |
9.44% |
Pacific Western Bank |
10.17% |
11.15% |
Tangible common equity
ratios: |
|
|
PacWest Bancorp
Consolidated |
7.39% |
8.94% |
Pacific Western Bank |
8.98% |
10.66% |
|
|
|
(1) Non-covered loans exclude all
loans from the Los Padres and Affinity acquisitions. |
The $795,000 improvement in third quarter net earnings compared
to the prior quarter is due mostly to the combination of higher net
interest income offset by higher net credit-related costs and
higher noninterest expense. The increase in net interest income was
due primarily to the growth in loans from the Los Padres
acquisition and the July 1, 2010 purchase of $234.1 million in
performing real estate loans. The third quarter includes three
items which together reduced pre-tax earnings by $1.5 million: a
net impairment loss of $175,000 on an investment security; $900,000
in severance to terminated employees; and $430,000 in legal
settlements. There were no such items in the second quarter
other than employee severance of $120,000.
Net credit costs on a pre-tax basis are shown in the following
table:
|
Three Months
Ended |
|
September 30, |
June 30, |
|
2010 |
2010 |
|
(In
thousands) |
|
|
|
Provision for credit losses on non-covered
loans |
$ 17,050 |
$ 14,100 |
|
|
|
Provision for credit losses on covered
loans |
7,400 |
8,850 |
Less: increase in FDIC loss sharing
asset |
5,920 |
7,080 |
Net credit costs on covered
loans |
1,480 |
1,770 |
|
|
|
Non-covered OREO expense |
2,151 |
625 |
|
|
|
Covered OREO (income) expense |
(319) |
(89) |
Less: OREO-related decrease in FDIC loss
sharing asset |
(409) |
(52) |
Net covered OREO (income)
expense |
90 |
(37) |
|
|
|
Total credit-related costs, net |
$ 20,771 |
$ 16,458 |
|
|
|
Non-covered loan net charge-offs |
$ 9,240 |
$ 12,045 |
The credit loss provision for the third quarter has two
components: $17.1 million for non-covered loans and $7.4 million
for covered loans. The third quarter non-covered credit loss
provision was driven by (a) non-covered loan net charge-offs of
$9.2 million and (b) the level of nonaccrual and classified
loans. The covered loan credit loss provision was
driven by credit deterioration on covered loans since the Affinity
acquisition date. The covered loan credit loss provisions are
offset by the increase in the FDIC loss sharing asset, which
represents the FDIC's 80% share of the provisions.
The $3.4 million increase in noninterest expense in the third
quarter over the second quarter was due mostly to the Los Padres
acquisition, which added $2.1 million to this expense category in
the third quarter. OREO costs increased $1.3 million due to
write-downs from updated appraisals.
Matt Wagner, Chief Executive Officer, commented, "Our earnings
performance continued to improve in the third quarter due to loan
and core deposit growth and the Los Padres acquisition. The
Los Padres acquisition, which we closed on August 20, strategically
expands our footprint into California's Central Coast and allows
for further market expansion."
Mr. Wagner continued, "The credit picture in Southern California
continues to be stressed, and we are identifying and resolving
problem credits promptly. The reserve build we accomplished
in the third quarter improved our overall portfolio and non-accrual
coverage ratios to 3.05% and 96%. Although our new nonaccrual
loan volume is approximately the same as in the second quarter, we
remain cautious on the credit outlook in our portfolio and market
areas. Nevertheless, our core earnings, low cost deposit base
and strong capital position give us the ability to create operating
and strategic flexibility and to grow both organically and through
acquisitions. We continue to identify in-market acquisition
opportunities, both FDIC-assisted and otherwise, and expect to
pursue them when they make sense for us and when economic
conditions become more favorable."
Vic Santoro, Executive Vice President and Chief Financial
Officer, stated, "We had a positive third quarter, showing an
increase in profitability over the second quarter, net interest
margin expansion to 5.08%, continued deposit growth and strong
on-balance-sheet liquidity. Core deposit growth of $264
million combined with careful pricing contributed to driving our
cost of deposits down to 55 basis points. The staff reduction
completed at the end of the third quarter will result in annual
pre-tax savings of $3.6 million beginning October 1."
YEAR TO DATE RESULTS
|
Nine Months
Ended |
|
September
30, |
|
2010 |
2009 |
|
(Dollars in thousands,
except per share data) |
Financial Highlights: |
|
|
Net loss |
$ (54,328) |
$ (1,570) |
Diluted loss per share |
$ (1.55) |
$ (0.06) |
Net interest margin |
4.95% |
4.78% |
Efficiency ratio |
62.0% |
56.3% |
The higher net loss for the nine months ended September 30, 2010
compared to the same period last year was due mostly to two
factors: the 2009 gain recorded in connection with the Affinity
acquisition and the higher credit loss provisions in 2010 from the
Company's sale of $323.6 million of classified loans in the first
quarter and higher non-covered loan charge-offs. When compared
to the same period for 2009, the current 2010 period shows higher
net interest income ($15.7 million after-tax), higher provision for
credit losses ($42.7 million after-tax), higher FDIC loss sharing
income ($17.2 million after-tax) and higher noninterest expense
($3.2 million after-tax). The increases in these categories
reflect the inclusion of the operating results for Affinity Bank
since its August 2009 acquisition date, and to a lesser extent, the
operating results for Los Padres Bank since its acquisition in
August 2010.
BALANCE SHEET CHANGES
On August 20, 2010, we acquired Los Padres Bank in an
FDIC-assisted acquisition, which added $824.1 million in assets and
$752.2 million in deposits. Since the acquisition date and
through September 30, 2010, the deposits we acquired from Los
Padres have declined by $259.4 million to $492.8 million, and $70.0
million in FHLB advances were repaid. In addition, in a
separate transaction on July 1, 2010 we purchased $234.1 million of
performing Southern California real estate loans for $228.3 million
in cash.
During the third quarter total loans increased $546.6 million on
a net basis with the July 1st loan purchase and Los Padres Bank
acquisition adding $225 million and $436.5 million,
respectively. The loan portfolio continues to decline
generally due to repayments, resolution activities and low loan
demand. Non-covered loans, net of unearned income, were $3.3
billion at September 30, 2010 and the covered loan portfolio was
$966.1 million at September 30, 2010.
Investment securities available-for-sale grew $128.3 million
during the third quarter due primarily to the purchase of $144.6
million in government-sponsored entity pass through securities to
deploy excess cash. At September 30, 2010 overnight funds held
at the Federal Reserve Bank totaled $68.2 million, a decrease of
$247.8 million from the balance at June 30, 2010.
The balance of non-covered OREO was $24.6 million at September
30, 2010, relatively unchanged from the June 30, 2010 balance of
$24.5 million. Covered OREO increased $27.5 million during the
third quarter to $55.2 million at September 30, 2010 due mostly to
the Los Padres acquisition. We recorded net gains of $414,000
on the sales of non-covered OREO and $1.5 million on the sales of
covered OREO during the third quarter. The activity in
non-covered and covered OREO for the third quarter is shown in the
following table:
|
Three Months
Ended |
|
September 30,
2010 |
|
Non-Covered |
Covered |
|
OREO |
OREO |
|
(In
thousands) |
Balance - beginning of period |
$ 24,523 |
$ 27,787 |
Addition due to
acquisition |
-- |
33,394 |
Foreclosures |
10,554 |
2,156 |
Write-downs from updated
appraisals |
(2,064) |
(1,038) |
Reductions related to
sales |
(8,415) |
(7,055) |
Balance - end of period |
$ 24,598 |
$ 55,244 |
Total deposits increased $579.0 million during the third quarter
to $4.8 billion at September 30, 2010. When the Los Padres
deposits are excluded, legacy deposits increased $86 million,
continuing the trend we have experienced for the last several
quarters.
Core deposits, which include noninterest-bearing demand,
interest checking, money market, and savings accounts, increased
$264.0 million and totaled $3.4 billion at September 30, 2010 and
represented 71% of total deposits at that date. Time deposits
increased $315.0 million to $1.4 billion at September 30,
2010. Brokered deposits totaled $104.9 million at September
30, 2010, relatively unchanged since June 30,
2010. Noninterest-bearing demand deposits increased $72.4
million during the third quarter to $1.5 billion and represented
31% of total deposits at September 30, 2010.
Acquired Los Padres deposits totaled $492.8 million at September
30, 2010, a $259.4 million decline from the $752.2 million in
deposits acquired. The decline in the acquired deposits was
centered in time deposits after the rates on Los Padres time
deposits were reduced to market rates effective September 1,
2010.
COVERED ASSETS
As part of the Los Padres and Affinity acquisitions we entered
into loss sharing agreements with the FDIC that cover a substantial
portion of losses incurred after the acquisition dates on loans and
other real estate owned, and in the case of the Affinity
acquisition, certain investment securities. A summary of the
covered assets at September 30, 2010 and June 30, 2010 is shown in
the following table.
|
September 30, |
June 30, |
Covered
Assets |
2010 |
2010 |
|
(In
thousands) |
Loans, net |
$ 966,140 |
$ 552,912 |
Investment securities |
51,125 |
50,771 |
Other real estate owned |
55,244 |
27,787 |
Total covered assets |
$ 1,072,509 |
$ 631,470 |
NET INTEREST INCOME
Net interest income was $65.2 million for the third quarter of
2010 compared to $57.6 million for the second quarter of
2010. The $7.6 million net increase is due mostly to a $6.9
million increase in interest income attributable to higher average
loans from the Los Padres acquisition and the July 1 real estate
loan purchase. Contributing to the increase in net interest
income was a reduction in interest expense of $681,000 due mainly
to rate reductions on our deposit products implemented during the
third quarter.
Net interest income grew by $27.1 million to $180.8 million
during the nine months ended September 30, 2010 compared to the
same period last year. This growth was due to an $18.1 million
increase in interest income and a $9.0 million decline in interest
expense. The increase in interest income was due to higher
average balances of investment securities from the purchase of
$448.8 million of government-sponsored entity pass through
securities during 2010, the interest-earning assets from the Los
Padres and Affinity acquisitions, and a higher average yield
on loans. The decline in interest expense was due
mainly to lower rates paid on deposits and borrowings and lower
average borrowings.
NET INTEREST MARGIN
Our net interest margin for the third quarter of 2010 was 5.08%,
an increase of 23 basis points from the 4.85% posted for the second
quarter of 2010. Such improvement reflects higher average
loans during the third quarter as a result of the Los Padres
acquisition and the July 1, 2010 real estate loan
purchase. The yield on average loans was 6.59% for the third
quarter of 2010 compared to 6.56% for the prior quarter. The
loan yield, earning asset yield and net interest margin are all
affected by loans being placed on or removed from nonaccrual status
and the acceleration of purchase discounts on covered loan
pay-offs: the net interest margin for the third quarter was
positively impacted by 10 basis points from the combination of
these items. The cost of interest-bearing deposits and
all-in deposit cost decreased 18 basis points and 11 basis points
to 0.81% and 0.55%, respectively; such decreases resulted primarily
from lower rates on our deposit products, offset partially by an
increase in time deposit volume attributable mostly to the Los
Padres acquisition.
The net interest margin for the first nine months of 2010 was
4.95% compared to 4.78% for the first nine months of 2009. The
increase is due mostly to higher average investment securities, a
higher average rate on loans, lower funding costs, and lower
average borrowings.
NONINTEREST INCOME
Noninterest income for the third quarter of 2010 totaled $10.8
million compared to $12.1 million for the second quarter of
2010. The $1.3 million decline was due mostly to lower FDIC
loss sharing income stemming from lower credit-related costs on
covered loans and OREO. Noninterest income includes an
other-than-temporary impairment charge of $874,000 on one covered
investment security, which is offset partially by related FDIC loss
sharing income of $699,000.
Noninterest income declined for the nine months ended September
30, 2010 to $44.1 million from the $84.1 million earned during the
same period in 2009. The $40.0 million decrease in noninterest
income is due mainly to the $67.0 million gain on the Affinity
acquisition recorded in August 2009; there is no similar gain in
the 2010 period. The 2010 period includes $29.6 million of
FDIC loss sharing income; there is no similar income in the 2009
period.
NONINTEREST EXPENSE
Noninterest expense totaled $46.2 million for the third quarter
of 2010 compared to $42.8 million for the second quarter of
2010. The $3.4 million increase was due mostly to addition of
the Los Padres operations, employee termination severance costs,
and higher OREO expenses. Los Padres noninterest expense
totaled $2.1 million, including $1.0 million in compensation and
$447,000 in other professional services expense for integration,
audit and consulting fees. We reduced our workforce, excluding
the Los Padres employees, by approximately 5% and paid $900,000 in
severance at the end of September 2010; we expect annual pre-tax
savings from these departures to be $3.6 million. OREO costs
increased $1.3 million due mostly to write-downs from updated
appraisals, offset partially by higher net gains on
sales. Other expense decreased $826,000 as the second quarter
included a penalty of $726,000 for the early repayment of $125
million in FHLB advances; there was no similar expense in the
current period. Third quarter noninterest expense includes
$430,000 related to two legal settlements on customer actions.
Noninterest expense includes amortization of time-based
restricted stock, which is included in compensation, and intangible
asset amortization. Amortization of restricted stock totaled
$2.1 million for the third quarter of 2010 compared to $2.2 million
for the second quarter of 2010. Amortization expense for
restricted stock is estimated to be $8.4 million for
2010. Intangible asset amortization totaled $2.4 million for
both the third and second quarters of 2010, and is estimated to be
$9.7 million for 2010, which includes amortization of the Los
Padres core deposit intangible. The 2010 estimates of both
restricted stock award expense and intangible asset amortization
are subject to change.
Noninterest expense for the nine months ended September 30, 2010
increased $5.5 million to $139.5 million from $134.0 million for
the same period in 2009. The growth in most expense categories
was due primarily to higher overhead costs related to the Affinity
and Los Padres acquisitions. Compensation increased $5.7 million
due to the acquisitions and severance costs. Occupancy costs
increased $1.1 million due mostly to the 10 branches added in the
Affinity acquisition. Other professional services increased $1.9
million due mostly to higher legal costs related to loan workout
activity. Other expense increased $1.2 million due mostly to higher
loan-related costs from loan workouts and a $726,000 penalty for
early repayment of $125 million of FHLB advances; there were no
FHLB prepayment penalties in the first nine months of
2009. OREO costs declined $5.4 million due mostly to higher
net gains on sales of OREO recorded in 2010, offset partially by
higher OREO write-downs in 2010.
TAXES
The effective tax rate for the third quarter of 2010 was 34.3%
compared to 32.0% for the second quarter of 2010. Both
effective rates are lower than the Company's blended Federal and
California statutory rate of 42.0% due to resolution and/or lapse
of tax contingencies.
LOS PADRES ACQUISITION
On August 20, 2010, Pacific Western Bank acquired certain assets
and liabilities of Los Padres from the Federal Deposit Insurance
Corporation ("FDIC") in an FDIC-assisted transaction. The FDIC
assistance is embodied in a loss sharing agreement with the FDIC
that covers a substantial portion of any future losses on loans and
other real estate owned. Under the terms of such loss sharing
agreement, the FDIC will absorb 80% of losses and share in 80% of
loss recoveries. The loss sharing arrangement for single family and
commercial (non-single family) loans is in effect for 10 years and
5 years, respectively, from the acquisition date and the loss
recovery provisions are in effect for 10 years and 8 years,
respectively, from the acquisition date.
The acquisition has been accounted for under the acquisition
method of accounting. The assets and liabilities, both
tangible and intangible, were recorded at their estimated fair
values as of the August 20, 2010 acquisition date. Such fair
values are preliminary estimates and are subject to adjustment for
up to one-year after the acquisition date. The application of
the acquisition method of accounting resulted in goodwill of $46.2
million. Such goodwill includes $9.5 million related to the FDIC's
settlement accounting for a Los Padres Bank wholly-owned
subsidiary. We disagree with the FDIC's accounting for this
item and are in process of negotiating with the FDIC for resolution
of this matter. Should we be successful in our negotiations,
goodwill would be reduced by a cash payment to us from the FDIC of
$9.5 million. No assurance can be given, however, that we will
be successful in our efforts.
The statement of assets acquired and liabilities assumed in the
Los Padres acquisition at their estimated fair values as of the
August 20, 2010 acquisition date is shown below:
|
August 20, |
|
2010 |
Assets |
(In
thousands) |
Cash and cash equivalents |
$ 171,366 |
Investment
securities |
44,251 |
Loans |
440,219 |
Other real estate
owned |
33,394 |
Core deposit intangible |
2,427 |
Goodwill |
46,228 |
FDIC loss sharing asset |
69,244 |
Other assets |
16,954 |
Total assets acquired at fair
value |
$ 824,083 |
|
|
Liabilities |
|
Deposits |
$ 752,185 |
FHLB advances |
70,013 |
Other liabilities |
1,885 |
Total liabilities assumed at
fair value |
$ 824,083 |
Our results of operations for the quarter ended September 30,
2010, include the results from the Los Padres acquisition from its
August 20, 2010 acquisition date. The income and expense items
attributable to the Los Padres acquisition are summarized below;
such amounts and the resultant net earnings are not necessarily
indicative of future operating results.
|
August 20, 2010 |
|
Through |
|
September 30,
2010 |
|
(In thousands) |
Interest income |
$ 2,893 |
Interest expense |
275 |
Net interest income |
2,618 |
Noninterest income |
204 |
Noninterest expense: |
|
Compensation |
1,031 |
Occupancy |
248 |
Data processing |
155 |
Other professional
services |
447 |
Other expense |
216 |
Total noninterest expense |
2,097 |
Earnings before income taxes |
725 |
Income tax expense |
(305) |
Net earnings |
$ 420 |
A summary of loans acquired in the Los Padres acquisition as of
August 20, 2010 is as follows:
|
August 20, |
|
2010 |
|
(In thousands) |
Construction and land |
$ 55,217 |
Single family |
113,371 |
Multi-family |
65,835 |
Commercial real estate |
233,560 |
Commercial and industrial |
43,988 |
Consumer and equity lines |
27,580 |
Total gross loans |
539,551 |
Discount resulting from acquisition date |
|
fair value adjustment |
(99,332) |
Total net loans |
$ 440,219 |
CREDIT QUALITY
Although our credit risk profile improved through both the
classified loan sale and ongoing portfolio workout measures, our
loan portfolio, including both non-covered and covered loans,
continues to experience pressure from adverse economic conditions
in Southern California and other areas where our borrowers and
collateral are located. We expect such situation to continue
during the remainder of 2010.
Credit Loss Provisions
The third quarter provision for credit losses totaled $24.5
million and was composed of $17.1 million on the non-covered loan
portfolio and $7.4 million on the covered loan portfolio. The
second quarter provision for credit losses totaled $23.0 million
and was composed of $14.1 million on the non-covered loan portfolio
and $8.9 million on the covered loan portfolio. The provision
on the non-covered portfolio is generated by our allowance
methodology and reflects net charge-offs and the levels of
nonaccrual and classified loans and the migration of loans into
various risk classifications. The covered loan credit loss
provision increases the covered loan allowance for credit losses
and results from credit deterioration on covered loans since the
Affinity acquisition date.
Third quarter net charge-offs on non-covered loans totaled $9.2
million compared to second quarter net charge-offs of $12.0
million. The allowance for credit losses on the non-covered
portfolio totaled $101.2 million and $93.4 million at September 30,
2010 and June 30, 2010, respectively, and represented 3.05% and
2.93% of the non-covered loan balances at those respective
dates.
Non-covered Nonaccrual Loans and Other Real Estate
Owned
Non-covered nonperforming assets include non-covered nonaccrual
loans and non-covered OREO and totaled $130.1 million at September
30, 2010 compared to $132.8 million at June 30, 2010. The ratio of
non-covered nonperforming assets to non-covered loans and
non-covered OREO decreased to 3.89% at September 30, 2010 from
4.14% at June 30, 2010. The $2.7 million reduction in
non-covered nonperforming assets is due to lower nonaccrual
loans.
The types and balances of non-covered loans included in the
categories of nonaccrual and accruing loans past due between 30 and
89 days at September 30, 2010 and June 30, 2010
follow:
|
Nonaccrual Loans (1) |
Accruing and
Over |
|
September
30, 2010 |
June 30,
2010 |
30 days
Past Due (1) |
|
|
% of |
|
% of |
September
30, |
June
30, |
|
|
Loan |
|
Loan |
2010 |
2010 |
Loan
Category |
Balance |
Category |
Balance |
Category |
Balance |
Balance |
|
(Dollars in
thousands) |
SBA: |
|
|
|
|
|
|
SBA 504 |
24,480 |
26.5% |
21,359 |
22.6% |
500 |
3,041 |
SBA 7(a) and Express |
5,258 |
16.3% |
7,134 |
20.7% |
141 |
132 |
Total SBA |
29,738 |
|
28,493 |
|
641 |
3,173 |
Commercial real estate |
26,392 |
1.3% |
38,428 |
2.1% |
1,356 |
67 |
Residential land |
25,463 |
67.8% |
24,625 |
68.3% |
22 |
-- |
Commercial |
8,592 |
1.3% |
12,188 |
1.8% |
1,189 |
2,244 |
Commercial construction |
1,353 |
1.6% |
1,493 |
1.8% |
-- |
-- |
Residential multi-family |
848 |
0.6% |
879 |
0.5% |
-- |
-- |
Residential |
9,250 |
8.4% |
623 |
0.5% |
1,043 |
503 |
Residential construction |
814 |
3.0% |
470 |
1.6% |
-- |
-- |
Commercial land |
1,517 |
3.5% |
-- |
0.0% |
-- |
2,150 |
Other, including foreign |
1,572 |
3.0% |
1,084 |
1.9% |
335 |
64 |
|
$ 105,539 |
3.2% |
$ 108,283 |
3.4% |
$ 4,586 |
$ 8,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes covered loans
acquired from the Los Padres and Affinity acquisitions. |
The $2.7 million decline in non-covered nonaccrual loans during
the third quarter was composed of (a) additions of $26.5 million,
(b) reductions, payoffs and returns to accrual status of $10.3
million, (c) foreclosures of $10.7 million, and (d) charge-offs of
$8.2 million.
At September 30, 2010, approximately 73% of the nonaccrual loan
total was represented by:
- SBA-related loans of $29.7 million.
- Two loans collateralized by land in Ventura County, California
totaling $23.5 million. A charge-off of $3.0 million was taken
on these loans in the third quarter due to an updated
appraisal.
- One loan for $5.7 million secured by an out-of-state shopping
center. This loan has been written down to its underlying
collateral value based on the most recent appraisal. A
receiver is in place to manage the property and foreclosure
proceedings have commenced. Protracted collection efforts may
result in additional write-downs on this loan and resultant credit
loss provisions.
- Two unrelated hotel-secured loans totaling $5.6
million. One loan has been written down to its collateral
value based on the most recent appraisal, while a specific reserve
has been established on the other loan for the appraisal
shortfall.
- Four industrial warehouse loans to the same borrower totaling
$5.9 million. Collateral for all four
loans is located in Riverside County, California. Write-downs
and resultant credit loss provisions may be necessary if economic
conditions in this market do not improve in the near future.
- One residential loan for $6.4
million. The loan is collateralized by
2nd trust deeds on two single family residences in Beverly Hills,
California.
The details of non-covered OREO follow:
|
September 30, |
June 30, |
Property
Type |
2010 |
2010 |
|
(In
thousands) |
Commercial real estate |
$ 18,920 |
$ 17,285 |
Single family residences |
2,743 |
4,057 |
Construction and land development |
2,935 |
3,181 |
Total non-covered OREO |
$ 24,598 |
$ 24,523 |
Covered Loans and Other Real Estate Owned
As part of the Los Padres acquisition that occurred on August
20, 2010 and the Affinity acquisition that occurred on August 28,
2009, we entered into loss sharing agreements with the FDIC that
cover a substantial portion of losses incurred after the
acquisition dates on loans and other real estate owned. The
carrying value of loans that would normally be considered
nonaccrual except for the accounting requirements regarding
purchased impaired loans and other real estate owned covered by the
loss sharing agreement ("covered nonaccrual loans" and "covered
OREO"; collectively, "covered nonperforming assets") are as
follows.
|
September 30, |
June 30, |
|
2010 |
2010 |
|
(In
thousands) |
Covered nonaccrual loans |
$ 171,804 |
$ 129,188 |
Covered OREO |
55,244 |
27,787 |
Total covered
nonperforming assets |
$ 227,048 |
$ 156,975 |
REGULATORY CAPITAL MEASURES ARE ABOVE THE
WELL-CAPITALIZED MINIMUMS
PacWest and its wholly-owned banking subsidiary, Pacific Western
Bank, each remained well capitalized at September 30, 2010 as shown
in the following table.
|
September 30,
2010 |
|
Well |
Pacific |
PacWest |
|
Capitalized |
Western |
Bancorp |
|
Requirement |
Bank |
Consolidated |
Tier 1 leverage capital ratio |
5.00% |
9.04% |
9.17% |
Tier 1 risk-based capital ratio |
6.00% |
12.44% |
12.54% |
Total risk-based capital ratio |
10.00% |
13.72% |
13.82% |
Tangible common equity ratio |
N/A |
8.98% |
7.39% |
COMMON STOCK
On March 1, 2010 holders of 1,348,040 warrants to acquire
PacWest Bancorp common stock exercised such warrants for net
proceeds of $26.6 million. The warrants, which had a strike
price of $20.20 per share, represented 99% of the 1,361,656
six-month warrants issued in August 2009. The additional
1,361,657 million warrants that were issued in August 2009 with a
strike price of $20.20 expired unexercised during August 2010.
ABOUT PACWEST BANCORP
PacWest Bancorp ("PacWest") is a bank holding company with $5.7
billion in assets as of September 30, 2010, with one wholly-owned
banking subsidiary, Pacific Western Bank ("Pacific Western").
Through 82 full-service community banking branches, including 14
branches of the recently acquired Los Padres Bank, Pacific Western
provides commercial banking services, including real estate,
construction and commercial loans, to small and medium-sized
businesses. Pacific Western's branches are located in Los Angeles,
Orange, Riverside, San Bernardino, San Diego, San Francisco, San
Mateo and Ventura Counties. The branches of the recently
acquired Los Padres Bank are located in Santa Barbara and San Luis
Obispo counties in California and Maricopa County in
Arizona. Through its subsidiary BFI Business Finance and its
division First Community Financial, Pacific Western also provides
working capital financing to growing companies located throughout
the Southwest, primarily in the states of Arizona, California and
Texas. Additional information regarding PacWest Bancorp is
available on the Internet at www.pacwestbancorp.com.
Information regarding Pacific Western Bank is also available
on the Internet at www.pacificwesternbank.com.
FORWARD-LOOKING STATEMENTS
This press release 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. All statements other than statements
of historical fact are forward-looking statements. Such statements
involve inherent risks and uncertainties, many of which are
difficult to predict and are generally beyond the control of the
Company. We caution readers that a number of important factors
could cause actual results to differ materially from those
expressed in, implied or projected by, such forward-looking
statements. Risks and uncertainties include, but are not limited
to: lower than expected revenues; credit quality deterioration or a
reduction in real estate values could cause an increase in the
allowance for credit losses and a reduction in net earnings;
increased competitive pressure among depository institutions; the
Company's ability to complete future acquisitions, successfully
integrate such acquired entities, or achieve expected beneficial
synergies and/or operating efficiencies within expected time-frames
or at all; settlements with the FDIC related to our loss-sharing
arrangement and other adjustments related to the Los Padres Bank
and Affinity Bank acquisitions; the possibility that personnel
changes will not proceed as planned; the cost of additional capital
is more than expected; a change in the interest rate environment
reduces interest margins; asset/liability repricing risks and
liquidity risks; pending legal matters may take longer or cost more
to resolve or may be resolved adversely to the Company; general
economic conditions, either nationally or in the market areas in
which the Company does or anticipates doing business, are less
favorable than expected; environmental conditions, including
natural disasters, may disrupt our business, impede our operations,
negatively impact the values of collateral securing the Company's
loans or impair the ability of our borrowers to support their debt
obligations; the economic and regulatory effects of the continuing
war on terrorism and other events of war, including the war in Iraq
and Afghanistan; legislative or regulatory requirements or changes
adversely affecting the Company's business; and changes in the
securities markets; regulatory approvals for any capital activities
cannot be obtained on the terms expected or on the anticipated
schedule; and, other risks that are described in PacWest's public
filings with the U.S. Securities and Exchange Commission (the
"SEC"). If any of these risks or uncertainties materializes or if
any of the assumptions underlying such forward-looking statements
proves to be incorrect, PacWest's results could differ materially
from those expressed in, implied or projected by such
forward-looking statements. PacWest assumes no obligation to update
such forward-looking statements.
For a more complete discussion of risks and uncertainties,
investors and security holders are urged to read PacWest Bancorp's
annual report on Form 10-K, quarterly reports on Form 10-Q and
other reports filed by PacWest with the SEC. The documents
filed by PacWest with the SEC may be obtained at PacWest Bancorp's
website at www.pacwestbancorp.com or at the SEC's website at
www.sec.gov. These documents may also be obtained free of
charge from PacWest by directing a request to: PacWest Bancorp c/o
Pacific Western Bank, 275 North Brea Boulevard, Brea, CA
92821. Attention: Investor Relations. Telephone
714-671-6800.
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2010 |
2010 |
2009 |
|
(In thousands, except
per share and share data) |
ASSETS |
|
|
|
Cash and due from banks |
$ 91,615 |
$ 97,029 |
$ 93,915 |
Interest-earning deposits in financial
institutions |
68,470 |
316,357 |
117,133 |
Total cash and cash
equivalents |
160,085 |
413,386 |
211,048 |
|
|
|
|
Non-covered securities
available-for-sale |
737,642 |
609,656 |
371,575 |
Covered securities available-for-sale |
51,125 |
50,771 |
52,125 |
Total securities
available-for-sale, at estimated fair value |
788,767 |
660,427 |
423,700 |
Federal Home Loan Bank stock, at cost |
57,332 |
48,555 |
50,429 |
Total investment
securities |
846,099 |
708,982 |
474,129 |
|
|
|
|
Non-covered loans, net of unearned
income |
3,318,409 |
3,185,025 |
3,707,383 |
Allowance for loan losses |
(96,494) |
(88,463) |
(118,717) |
Total non-covered
loans, net |
3,221,915 |
3,096,562 |
3,588,666 |
Covered loans, net |
966,140 |
552,912 |
621,686 |
Total
loans |
4,188,055 |
3,649,474 |
4,210,352 |
|
|
|
|
Non-covered other real estate owned, net |
24,598 |
24,523 |
43,255 |
Covered other real estate owned, net |
55,244 |
27,787 |
27,688 |
Total other real estate
owned |
79,842 |
52,310 |
70,943 |
|
|
|
|
Premises and equipment |
21,138 |
21,677 |
22,546 |
Goodwill |
46,228 |
-- |
-- |
Core deposit and customer relationship
intangibles |
28,441 |
28,448 |
33,296 |
Cash surrender value of life insurance |
65,735 |
65,382 |
66,149 |
FDIC loss sharing asset |
141,591 |
66,068 |
112,817 |
Other assets |
165,708 |
147,955 |
122,799 |
Total
assets |
$ 5,742,922 |
$ 5,153,682 |
$ 5,324,079 |
|
|
|
|
LIABILITIES |
|
|
|
Noninterest-bearing deposits |
$ 1,467,862 |
$ 1,395,510 |
$ 1,302,974 |
Interest-bearing deposits |
3,333,052 |
2,826,429 |
2,791,595 |
Total
deposits |
4,800,914 |
4,221,939 |
4,094,569 |
Borrowings |
275,000 |
275,000 |
542,763 |
Subordinated debentures |
129,648 |
129,701 |
129,798 |
Accrued interest payable and other
liabilities |
43,598 |
40,457 |
50,176 |
Total
liabilities |
5,249,160 |
4,667,097 |
4,817,306 |
STOCKHOLDERS' EQUITY
(1) |
493,762 |
486,585 |
506,773 |
Total liabilities and
stockholders' equity |
$ 5,742,922 |
$ 5,153,682 |
$ 5,324,079 |
|
|
|
|
(1) Includes net unrealized gain (loss) on
securities available-for-sale, net |
$ 11,410 |
$ 8,541 |
$ (104) |
|
|
|
|
Tangible book value per share |
$ 11.42 |
$ 12.48 |
$ 13.52 |
Book value per share |
$ 13.45 |
$ 13.25 |
$ 14.47 |
|
|
|
|
Shares outstanding (includes unvested
restricted shares of 1,359,594 at September 30, 2010,
1,398,173 at June 30, 2010 and 1,095,417 at December 31, 2009) |
36,708,275 |
36,715,741 |
35,015,322 |
|
PACWEST BANCORP AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
|
2010 |
2010 |
2009 |
2010 |
2009 |
|
(In thousands, except
per share data) |
Interest income: |
|
|
|
|
|
Loans |
$ 68,480 |
$ 62,314 |
$ 64,658 |
$ 194,539 |
$ 188,168 |
Investment
securities |
6,519 |
5,702 |
2,741 |
17,342 |
5,928 |
Deposits in financial
institutions |
131 |
245 |
111 |
505 |
209 |
Total interest
income |
75,130 |
68,261 |
67,510 |
212,386 |
194,305 |
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
Deposits |
6,375 |
6,945 |
7,754 |
20,209 |
24,441 |
Borrowings |
2,129 |
2,216 |
3,989 |
7,013 |
11,197 |
Subordinated
debentures |
1,459 |
1,483 |
1,530 |
4,357 |
4,948 |
Total interest
expense |
9,963 |
10,644 |
13,273 |
31,579 |
40,586 |
|
|
|
|
|
|
Net interest income |
65,167 |
57,617 |
54,237 |
180,807 |
153,719 |
|
|
|
|
|
|
Provision for credit
losses: |
|
|
|
|
|
Non-covered loans |
17,050 |
14,100 |
75,000 |
143,677 |
107,000 |
Covered loans |
7,400 |
8,850 |
-- |
36,950 |
-- |
Total provision for
credit losses |
24,450 |
22,950 |
75,000 |
180,627 |
107,000 |
|
|
|
|
|
|
Net interest income (loss)
after provision for credit losses |
40,717 |
34,667 |
(20,763) |
180 |
46,719 |
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
Service charges on deposit
accounts |
2,861 |
2,666 |
2,960 |
8,256 |
9,118 |
Other commissions and
fees |
1,760 |
1,845 |
1,721 |
5,395 |
5,152 |
Other-than-temporary
impairment loss on securities |
(874) |
-- |
-- |
(874) |
-- |
Increase in cash surrender
value of life insurance |
353 |
369 |
371 |
1,120 |
1,204 |
FDIC loss sharing income,
net |
6,406 |
7,029 |
-- |
29,607 |
-- |
Other income |
279 |
173 |
584 |
632 |
1,616 |
Gain from Affinity
acquisition |
-- |
-- |
66,989 |
-- |
66,989 |
Total noninterest
income |
10,785 |
12,082 |
72,625 |
44,136 |
84,079 |
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
Compensation |
23,060 |
21,068 |
20,128 |
63,539 |
57,853 |
Occupancy |
6,872 |
6,576 |
6,435 |
20,406 |
19,283 |
Data processing |
2,121 |
1,892 |
1,810 |
5,982 |
5,115 |
Other professional
services |
2,694 |
2,042 |
1,857 |
6,734 |
4,867 |
Business development |
571 |
655 |
528 |
1,893 |
1,878 |
Communications |
811 |
795 |
762 |
2,410 |
2,143 |
Insurance and
assessments |
2,431 |
2,611 |
2,010 |
7,316 |
7,479 |
Other real estate owned,
net |
1,832 |
536 |
8,141 |
12,978 |
18,369 |
Intangible asset
amortization |
2,434 |
2,424 |
2,578 |
7,282 |
7,192 |
Other expense |
3,348 |
4,174 |
2,842 |
10,977 |
9,812 |
Total noninterest
expense |
46,174 |
42,773 |
47,091 |
139,517 |
133,991 |
|
|
|
|
|
|
Earnings (loss) before income
taxes |
5,328 |
3,976 |
4,771 |
(95,201) |
(3,193) |
Income tax (expense) benefit |
(1,828) |
(1,271) |
(2,046) |
40,873 |
1,623 |
Net earnings
(loss) |
$ 3,500 |
$ 2,705 |
$ 2,725 |
$ (54,328) |
$ (1,570) |
|
|
|
|
|
|
Per share information: |
|
|
|
|
|
Basic earning (loss) per
share |
$ 0.10 |
$ 0.07 |
$ 0.08 |
$ (1.55) |
$ (0.06) |
Diluted earnings (loss) per
share |
$ 0.10 |
$ 0.07 |
$ 0.08 |
$ (1.55) |
$ (0.06) |
|
PACWEST BANCORP AND
SUBSIDIARIES |
AVERAGE BALANCE SHEETS
AND YIELD ANALYSIS |
(Unaudited) |
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
|
2010 |
2010 |
2009 |
2010 |
2009 |
|
(Dollars in
Thousands) |
Average Assets: |
|
|
|
|
|
Loans, net of unearned
income |
$ 4,123,684 |
$ 3,809,546 |
$ 4,140,220 |
$ 4,018,697 |
$ 4,000,774 |
Investment securities |
757,945 |
584,368 |
262,816 |
605,071 |
203,065 |
Interest-earning deposits
in financial institutions |
208,074 |
374,613 |
150,358 |
263,196 |
92,367 |
Federal funds
sold |
-- |
-- |
4 |
-- |
87 |
Average
interest-earning assets |
5,089,703 |
4,768,527 |
4,553,398 |
4,886,964 |
4,296,293 |
Other assets |
455,323 |
413,103 |
304,817 |
429,116 |
288,345 |
Average total assets |
$ 5,545,026 |
$ 5,181,630 |
$ 4,858,215 |
$ 5,316,080 |
$ 4,584,638 |
|
|
|
|
|
|
Average liabilities: |
|
|
|
|
|
Interest checking accounts |
$ 466,366 |
$ 438,945 |
$ 402,503 |
$ 446,702 |
$ 374,551 |
Money market accounts |
1,246,585 |
1,203,527 |
1,001,609 |
1,205,893 |
912,130 |
Savings accounts |
124,132 |
112,909 |
111,184 |
115,918 |
116,133 |
Time deposits |
1,281,423 |
1,068,033 |
841,001 |
1,132,489 |
810,820 |
Average
interest-bearing deposits |
3,118,506 |
2,823,414 |
2,356,297 |
2,901,002 |
2,213,634 |
Borrowings |
276,543 |
303,877 |
567,320 |
341,438 |
498,611 |
Subordinated debentures |
129,683 |
129,732 |
129,876 |
129,731 |
129,925 |
Average
interest-bearing liabilities |
3,524,732 |
3,257,023 |
3,053,493 |
3,372,171 |
2,842,170 |
Noninterest-bearing demand
deposits |
1,472,366 |
1,403,348 |
1,274,968 |
1,403,370 |
1,220,809 |
Other liabilities |
55,450 |
41,053 |
44,117 |
47,786 |
49,098 |
Average total liabilities |
5,052,548 |
4,701,424 |
4,372,578 |
4,823,327 |
4,112,077 |
Average stockholders'
equity |
492,478 |
480,206 |
485,637 |
492,753 |
472,561 |
Average liabilities and
stockholders' equity |
$ 5,545,026 |
$ 5,181,630 |
$ 4,858,215 |
$ 5,316,080 |
$ 4,584,638 |
|
|
|
|
|
|
Average deposits |
$ 4,590,872 |
$ 4,226,762 |
$ 3,631,265 |
$ 4,304,372 |
$ 3,434,443 |
Average funding sources (1) |
$ 4,997,098 |
$ 4,660,371 |
$ 4,328,461 |
$ 4,775,541 |
$ 4,062,979 |
|
|
|
|
|
|
Yield on: |
|
|
|
|
|
Average loans |
6.59% |
6.56% |
6.20% |
6.47% |
6.29% |
Average investment
securities |
3.41% |
3.91% |
4.14% |
3.83% |
3.90% |
Average interest-earning
deposits |
0.25% |
0.26% |
0.29% |
0.26% |
0.30% |
Average
interest-earning assets |
5.86% |
5.74% |
5.88% |
5.81% |
6.05% |
|
|
|
|
|
|
Cost of: |
|
|
|
|
|
Average interest-bearing
deposits |
0.81% |
0.99% |
1.31% |
0.93% |
1.48% |
Average borrowings |
3.05% |
2.92% |
2.79% |
2.75% |
3.00% |
Average subordinated
debentures |
4.46% |
4.59% |
4.67% |
4.49% |
5.09% |
Average
interest-bearing liabilities |
1.12% |
1.31% |
1.72% |
1.25% |
1.91% |
|
|
|
|
|
|
Interest rate spread
(2) |
4.73% |
4.43% |
4.16% |
4.56% |
4.14% |
Net interest margin (3) |
5.08% |
4.85% |
4.73% |
4.95% |
4.78% |
|
|
|
|
|
|
Cost of average deposits (4) |
0.55% |
0.66% |
0.85% |
0.63% |
0.95% |
Cost of average funding sources (5) |
0.79% |
0.92% |
1.22% |
0.88% |
1.34% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Average funding sources is
the sum of average interest-bearing liabilities plus average
noninterest-bearing demand deposits. |
(2) Interest rate spread is
calculated as the yield on average interest-earning assets less the
cost of average interest-bearing liabilities. |
(3) Net interest rate margin is
calculated as annualized net interest income divided by average
interest-earning assets. |
(4) Cost of average deposits is
calculated as annualized interest expense on deposits divided by
average deposits. |
(5) Cost of average funding
sources is calculated as annualized total interest expense divided
by average funding sources. |
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
DEPOSITS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2010 |
2010 |
2009 |
|
(Dollars in
thousands) |
Noninterest-bearing deposits |
$ 1,467,862 |
$ 1,395,510 |
$ 1,302,974 |
Interest checking deposits |
487,022 |
440,853 |
439,694 |
Money market deposits |
1,303,522 |
1,178,606 |
1,171,386 |
Savings deposits |
135,245 |
114,674 |
108,569 |
Total core deposits |
3,393,651 |
3,129,643 |
3,022,623 |
Time deposits under $100,000 |
559,724 |
448,720 |
505,130 |
Time deposits over $100,000 |
847,539 |
643,576 |
566,816 |
Total time deposits |
1,407,263 |
1,092,296 |
1,071,946 |
Total deposits |
$ 4,800,914 |
$ 4,221,939 |
$ 4,094,569 |
|
|
|
|
Noninterest-demand deposits as a percentage
of total deposits |
31% |
33% |
32% |
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
NON-COVERED LOAN
CONCENTRATION |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
Loan
Category |
2010 |
2010 |
2010 |
2009 |
2009 |
|
(In
thousands) |
Domestic: |
|
|
|
|
|
Real estate mortgage |
$ 2,368,943 |
$ 2,229,331 |
$ 2,197,295 |
$ 2,423,712 |
$ 2,500,520 |
Commercial |
708,329 |
709,075 |
720,105 |
781,003 |
774,755 |
Real estate
construction |
192,595 |
194,181 |
284,274 |
440,286 |
480,119 |
Consumer |
28,328 |
30,323 |
28,804 |
32,138 |
33,011 |
Foreign: |
|
|
|
|
|
Commercial |
22,948 |
25,309 |
26,736 |
34,524 |
38,964 |
Other, including real
estate |
1,595 |
1,637 |
1,675 |
1,719 |
1,763 |
Total gross non-covered
loans |
$ 3,322,738 |
$ 3,189,856 |
$ 3,258,889 |
$ 3,713,382 |
$ 3,829,132 |
|
PACWEST BANCORP AND
SUBSIDIARIES |
NON-COVERED LOAN
CONCENTRATION |
REAL ESTATE MORTGAGE
LOANS |
(Unaudited) |
|
|
|
|
|
|
September 30,
2010 |
June 30,
2010 |
|
|
% of |
|
% of |
Loan
Category |
Balance |
Total |
Balance |
Total |
|
(Dollars in
thousands) |
Commercial real estate mortgage |
|
|
|
|
Retail |
$ 394,727 |
16.7% |
$ 386,132 |
17.3% |
Industrial/warehouse |
414,020 |
17.5% |
326,002 |
14.6% |
Office buildings |
358,858 |
15.1% |
305,843 |
13.7% |
Owner-occupied |
279,760 |
11.8% |
279,428 |
12.5% |
Hotel |
166,504 |
7.0% |
172,122 |
7.7% |
Healthcare |
95,311 |
4.0% |
90,298 |
4.1% |
Gas station |
40,008 |
1.7% |
40,051 |
1.8% |
Self storage |
32,235 |
1.4% |
29,721 |
1.3% |
Restaurant |
26,461 |
1.1% |
24,929 |
1.1% |
Land
acquisition/development |
9,693 |
0.4% |
9,734 |
0.4% |
Unimproved land |
1,524 |
0.1% |
1,067 |
0.0% |
Other |
300,144 |
12.7% |
286,386 |
12.8% |
Total commercial real estate
mortgage |
2,119,245 |
89.5% |
1,951,713 |
87.5% |
|
|
|
|
|
Residential real estate mortgage: |
|
|
|
|
Mixed use |
63,472 |
2.7% |
89,506 |
4.0% |
Multi-family |
78,109 |
3.3% |
72,434 |
3.2% |
Single family
owner-occupied |
40,903 |
1.7% |
42,921 |
1.9% |
Single family
nonowner-occupied |
27,872 |
1.2% |
35,698 |
1.6% |
HELOC's |
38,716 |
1.6% |
37,059 |
1.7% |
Unimproved land |
626 |
0.0% |
-- |
0.0% |
Total residential real estate
mortgage |
249,698 |
10.5% |
277,618 |
12.5% |
|
|
|
|
|
Total gross non-covered real
estate estate mortgage loans |
$ 2,368,943 |
100.0% |
$ 2,229,331 |
100.0% |
|
PACWEST BANCORP AND
SUBSIDIARIES |
NON-COVERED LOAN
CONCENTRATION |
REAL ESTATE CONSTRUCTION
LOANS |
(Unaudited) |
|
|
|
|
|
|
September 30,
2010 |
June 30,
2010 |
|
|
% of |
|
% of |
Loan Category |
Balance |
Total |
Balance |
Total |
|
(Dollars in
thousands) |
Commercial real estate construction |
|
|
|
|
Retail |
$ 21,817 |
11.3% |
$ 21,942 |
11.3% |
Industrial/warehouse |
9,154 |
4.8% |
12,293 |
6.3% |
Office buildings |
5,006 |
2.6% |
5,519 |
2.8% |
Owner-occupied |
3,548 |
1.8% |
3,548 |
1.8% |
Healthcare |
3,856 |
2.0% |
-- |
0.0% |
Self storage |
13,151 |
6.8% |
9,211 |
4.7% |
Land
acquisition/development |
17,872 |
9.3% |
9,439 |
4.9% |
Unimproved land |
25,310 |
13.1% |
31,952 |
16.5% |
Other |
16,413 |
8.5% |
21,635 |
11.1% |
Total commercial real estate
construction |
116,127 |
60.3% |
115,539 |
59.5% |
|
|
|
|
|
Residential real estate construction: |
|
|
|
|
Multi-family |
24,779 |
12.9% |
25,518 |
13.1% |
Single family
owner-occupied |
1,689 |
0.9% |
1,689 |
0.9% |
Single family
nonowner-occupied |
925 |
0.5% |
764 |
0.4% |
Land
acquisition/development |
1,498 |
0.8% |
3,228 |
1.7% |
Unimproved land |
47,577 |
24.7% |
47,443 |
24.4% |
Total residential real
estate construction |
76,468 |
39.7% |
78,642 |
40.5% |
|
|
|
|
|
Total gross non-covered real
estate construction loans |
$ 192,595 |
100.0% |
$ 194,181 |
100.0% |
|
PACWEST BANCORP AND
SUBSIDIARIES |
ALLOWANCE FOR CREDIT
LOSSES, NONPERFORMING |
ASSETS AND CREDIT QUALITY
RATIOS FOR |
NON-COVERED
LOANS |
(Unaudited) |
|
September 30, |
June 30, |
December 31, |
|
2010 |
2010 |
2009 |
|
(Dollars in
thousands) |
Allowance for loan losses (1) |
$ 96,494 |
$ 88,463 |
$ 118,717 |
Reserve for unfunded loan commitments
(1) |
4,750 |
4,971 |
5,561 |
Total allowance for credit
losses |
$ 101,244 |
$ 93,434 |
$ 124,278 |
|
|
|
|
|
|
|
|
Nonaccrual loans (2) |
$ 105,539 |
$ 108,283 |
$ 240,167 |
Other real estate owned (2) |
24,598 |
24,523 |
43,255 |
Total nonperforming assets |
$ 130,137 |
$ 132,806 |
$ 283,422 |
|
|
|
|
Restructured performing loans (1) |
$ 143,407 |
$ 76,367 |
$ 181,454 |
|
|
|
|
Allowance for credit losses to loans, net of
unearned income |
3.05% |
2.93% |
3.35% |
Allowance for credit losses to nonaccrual
loans |
95.93% |
86.29% |
51.75% |
Nonperforming assets to loans, net of
unearned income, and other real estate owned |
3.89% |
4.14% |
7.56% |
Nonaccrual loans to loans, net of unearned
income |
3.18% |
3.40% |
6.48% |
|
|
|
|
(1) Applies to non-covered
loans. |
(2) Excludes covered
nonperforming assets from the Los Padres and Affinity
acquisitions. |
|
PACWEST BANCORP AND
SUBSIDIARIES |
ALLOWANCE FOR CREDIT
LOSSES ROLLFORWARD |
AND NET CHARGE-OFF RATIOS
FOR |
NON-COVERED LOANS
(1) |
(Unaudited) |
|
|
|
Year |
|
|
|
Three Months
Ended |
Ended |
Three Months
Ended |
|
September 30, |
June 30, |
December 31, |
September 30, |
June 30, |
|
2010 |
2010 |
2009 |
2009 |
2009 |
|
(Dollars in
thousands) |
Allowance for credit losses - beginning of
period |
$ 93,434 |
$ 91,379 |
$ 68,790 |
$ 76,743 |
$ 76,632 |
Loans charged-off: |
|
|
|
|
|
Real estate mortgage |
(4,601) |
(6,988) |
(46,047) |
(19,908) |
(1,536) |
Real estate
construction |
(3,032) |
(3,341) |
(28,542) |
(8,224) |
(12,757) |
Commercial |
(2,074) |
(1,024) |
(11,982) |
(2,760) |
(3,405) |
Consumer |
(218) |
(2,004) |
(1,180) |
(387) |
(529) |
Foreign |
(113) |
-- |
(368) |
-- |
-- |
Total loans charged
off |
(10,038) |
(13,357) |
(88,119) |
(31,279) |
(18,227) |
Recoveries on loans charged-off: |
|
|
|
|
|
Real estate mortgage |
-- |
1,017 |
503 |
45 |
231 |
Real estate
construction |
-- |
27 |
461 |
6 |
2 |
Commercial |
319 |
254 |
548 |
55 |
64 |
Consumer |
348 |
12 |
151 |
16 |
11 |
Foreign |
131 |
2 |
44 |
-- |
30 |
Total recoveries on loans
charged off |
798 |
1,312 |
1,707 |
122 |
338 |
Net charge-offs |
(9,240) |
(12,045) |
(86,412) |
(31,157) |
(17,889) |
Provision for credit losses |
17,050 |
14,100 |
141,900 |
75,000 |
18,000 |
Allowance for credit losses - end of
period |
$ 101,244 |
$ 93,434 |
$ 124,278 |
$ 120,586 |
$ 76,743 |
|
|
|
|
|
|
Annualized net charge-offs to average
loans |
1.09% |
1.50% |
2.22% |
3.17% |
1.83% |
|
|
|
|
|
|
(1) Applies only to non-covered
loans. |
This press release contains certain non-GAAP financial
disclosures for tangible capital. The Company uses certain
non-GAAP financial measures to provide meaningful supplemental
information regarding the Company's operational performance and to
enhance investors' overall understanding of such financial
performance. Because the use of tangible capital amounts and
ratios is becoming more prevalent among banking regulators,
investors and analysts, we disclose our tangible capital ratios in
addition to equity-to-assets ratios.
These non-GAAP financial measures are presented for supplemental
informational purposes only for understanding the Company's
operating results and should not be considered a substitute for
financial information presented in accordance with United States
generally accepted accounting principles (GAAP). The following
table presents performance ratios in accordance with GAAP and a
reconciliation of the non-GAAP financial measurements to the GAAP
financial measurements.
PACWEST BANCORP AND
SUBSIDIARIES |
GAAP TO NON-GAAP
RECONCILIATIONS |
(Unaudited) |
|
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2010 |
2010 |
2009 |
|
(Dollars in
thousands) |
PacWest Bancorp
Consolidated: |
|
|
|
Stockholders' equity |
$ 493,762 |
$ 486,585 |
$ 506,773 |
Less: intangible assets |
74,669 |
28,448 |
33,296 |
Tangible common equity |
$ 419,093 |
$ 458,137 |
$ 473,477 |
|
|
|
|
Total assets |
$ 5,742,922 |
$ 5,153,682 |
$ 5,324,079 |
Less: intangible assets |
74,669 |
28,448 |
33,296 |
Tangible assets |
$ 5,668,253 |
$ 5,125,234 |
$ 5,290,783 |
|
|
|
|
Equity to assets ratio |
8.60% |
9.44% |
9.52% |
Tangible common equity ratio
(1) |
7.39% |
8.94% |
8.95% |
|
|
|
|
Pacific Western Bank: |
|
|
|
Stockholder's equity |
$ 582,335 |
$ 573,227 |
$ 585,940 |
Less: intangible assets |
74,669 |
28,448 |
33,296 |
Tangible common equity |
$ 507,666 |
$ 544,779 |
$ 552,644 |
|
|
|
|
Total assets |
$ 5,728,353 |
$ 5,141,150 |
$ 5,313,750 |
Less: intangible assets |
74,669 |
28,448 |
33,296 |
Tangible assets |
$ 5,653,684 |
$ 5,112,702 |
$ 5,280,454 |
|
|
|
|
Equity to assets ratio |
10.17% |
11.15% |
11.03% |
Tangible common equity ratio
(1) |
8.98% |
10.66% |
10.47% |
|
|
|
|
(1) Calculated as tangible common
equity divided by tangible assets. |
CONTACT: PacWest Bancorp
Matthew P. Wagner, Chief Executive Officer
310-728-1020
Victor R. Santoro, Executive Vice President and CFO
310-728-1021
Fax: 310-201-0498
10250 Constellation Boulevard
Suite 1640
Los Angeles, CA 90067
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