Fourth Quarter of 2011 Highlights
- Net Earnings of $13.9 Million or $0.38 Per Diluted
Share
- Net Interest Margin of 5.00%
- Return on Average Assets and Equity of 1.00% and
10.22%
- Tangible Book Value Per Share Increases to
$13.14
- Credit Loss Reserve at 3.34% of Net Non-Covered Loans
and 161% of Non-Covered Nonaccrual Loans
- Noninterest-Bearing Deposits at 37% and Core at 79% of
Total Deposits
Fiscal 2011 Highlights
- Net Earnings of $50.7 Million or $1.37 Per Diluted
Share
- Return on Average Assets and Equity of 0.92% and
9.92%
- Core Deposit Growth of $191.7 Million
LOS ANGELES, Jan. 18, 2012 (GLOBE NEWSWIRE) -- PacWest
Bancorp (Nasdaq:PACW) today announced net earnings for the
fourth quarter of 2011 of $13.9 million, or $0.38 per diluted
share, compared to net earnings for the third quarter of 2011 of
$13.3 million, or $0.36 per diluted share, and net earnings of
$50.7 million for fiscal 2011, or $1.37 per diluted share, compared
to a $62.0 million net loss, or $1.77 per diluted share, for fiscal
2010.
This press release contains certain non-GAAP financial
disclosures for tangible common equity, pre-credit, pre-tax
earnings, and credit cost adjusted efficiency ratios. 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. Given the use of tangible common equity
amounts and ratios is prevalent among banking regulators, investors
and analysts, we disclose our tangible common equity ratios in
addition to equity-to-assets ratios. Also, as analysts and
investors view pre-credit, pre-tax earnings as an indicator of the
Company's ability to absorb credit losses, we disclose this amount
in addition to net earnings. We disclose the credit cost adjusted
efficiency ratio as it eliminates the volatility of FDIC loss
sharing income and OREO expenses from the base efficiency ratio and
shows the trend in overhead-related noninterest expense relative to
net revenues.
Please refer to the tables 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.
FOURTH QUARTER RESULTS
|
Three Months
Ended |
|
December 31, |
September 30, |
|
2011 |
2011 |
|
(Dollars in thousands,
except per share data) |
Financial Highlights: |
|
|
Net earnings |
$ 13,883 |
$ 13,304 |
Diluted earnings per share |
$ 0.38 |
$ 0.36 |
Annualized return on average
assets |
1.00% |
0.97% |
Annualized return on average
equity |
10.22% |
10.11% |
Net interest margin |
5.00% |
5.15% |
Efficiency ratio |
60.4% |
67.9% |
|
|
|
At Quarter End: |
|
|
Allowance for credit losses to
non-covered loans, |
|
|
net of unearned income (1) |
3.34% |
3.34% |
Allowance for credit losses to
non-covered |
|
|
nonaccrual loans (1) |
161.0% |
161.0% |
Equity to assets ratios: |
|
|
PacWest Bancorp
Consolidated |
9.88% |
9.82% |
Pacific Western Bank |
11.35% |
11.59% |
Tangible common equity
ratios: |
|
|
PacWest Bancorp
Consolidated |
8.95% |
8.85% |
Pacific Western Bank |
10.43% |
10.64% |
|
|
|
(1) Non-covered loans exclude
loans covered by loss sharing agreements with the FDIC. |
The $579,000 increase in net earnings for the linked quarters
was due to lower covered OREO costs of $4.6 million ($2.7 million
after tax) and higher FDIC loss sharing income of $1.7 million
($1.0 million after tax), offset by a higher provision for credit
losses on covered loans of $3.8 million ($2.2 million after tax)
and lower net interest income of $668,000 ($387,000 after
tax).
Covered OREO costs declined due to lower write-downs in the
current quarter. FDIC loss sharing income grew due to the
higher provision for credit losses on covered loans. Net
interest income declined due to lower average loans and lower
accelerated accretion of discounts on covered loan payoffs, offset
by lower interest expense on deposits.
Net credit costs on a pre-tax basis are shown in the following
table:
|
|
|
|
Three Months
Ended |
|
December 31, |
September 30, |
|
2011 |
2011 |
|
(In
thousands) |
Provision for credit losses on non-covered
loans |
$ -- |
$ -- |
Non-covered OREO expense, net |
1,714 |
2,293 |
Total non-covered credit
costs |
1,714 |
2,293 |
|
|
|
Provision for credit losses on covered
loans |
4,122 |
348 |
Covered OREO expense, net |
226 |
4,813 |
Total covered net credit
costs |
4,348 |
5,161 |
Less: FDIC loss sharing income, net |
2,667 |
963 |
Adjusted covered net credit
costs |
1,681 |
4,198 |
|
|
|
Total net credit costs |
$ 3,395 |
$ 6,491 |
The provision for credit losses for the fourth quarter had two
components: no provision for non-covered loans and $4.1 million for
covered loans. The lack of a fourth quarter non-covered credit
loss provision was based on our allowance methodology which
reflected (a) non-covered loan net charge-offs of $2.8 million, (b)
the levels and trends of nonaccrual and classified loans, (c) the
migration of loans into various risk classifications, and (d) a
decline in outstanding non-covered loans. During the fourth
quarter, nonaccrual loans declined by $1.7 million to $58.3
million, classified loans increased by $7.8 million to $185.6
million, and gross non-covered loans declined $85.7 million to $2.8
billion.
The covered loan credit loss provision was driven by decreases
in expected cash flows on covered loan pools compared to those
previously estimated. The covered loan credit loss provision
and covered OREO expense are offset by an increase in FDIC loss
sharing income, which represents the FDIC's share of these net
costs. FDIC loss sharing income also includes reductions of the
FDIC loss sharing asset when expected cash flows on covered loan
pools improve.
Matt Wagner, Chief Executive Officer, commented, "We are pleased
to post another profitable quarter, with net earnings reaching
$13.9 million for the fourth quarter and $50.7 million for the
year. Credit quality ratios remained stable as our legacy
credit loss reserve represented 3.34% of legacy loans and 161% of
legacy nonaccruals at the end of December. Although loan
portfolio growth remains tepid, we continue to retain many maturing
lending relationships that contribute positively to our
profitability and net interest margin."
Mr. Wagner continued, "We continue to generate significant core
earnings, which strengthens our balance sheet, gives us operating
flexibility, and enables us to take advantage of opportunities when
they arise. Our earnings and capital levels enabled us to pay
an $0.18 per share dividend last quarter and gives us dividend
flexibility going forward. Our strong balance sheet enabled
our acquisition of Marquette Equipment Finance, a leasing operation
with $166 million in earning assets, which we closed on January
3rd. This acquisition diversifies our loan portfolio, expands
our product line, and provides growth opportunities. It also
importantly deployed our excess liquidity into higher-yielding
assets."
Vic Santoro, Executive Vice President and Chief Financial
Officer, stated, "The fourth quarter repeated the solid performance
of our third quarter, with a strong net interest margin, lower
overhead, stable credit metrics, core deposit generation and a
strong capital base. Our fourth quarter net interest margin of
5.00% is one of the highest in the nation as our loan yield held
steady at 6.87% and all-in deposit cost dropped 8 basis points to
0.36%. Operating costs continue to be controlled, demonstrated
by a $1.4 million decline in noninterest expense when OREO costs,
severance costs and acquisition costs are excluded. Core
deposits were up $89 million, including a $57 million increase in
non-interest bearing demand deposits. The Company's and the
Bank's capital positions remain well in excess of the
well-capitalized regulatory minimums, and the Company's tangible
capital increased to $13.14 per share at December 31 compared to
$12.91 at the end of September."
YEAR TO DATE RESULTS
|
|
|
|
Year
Ended |
|
December
31, |
|
2011 |
2010 |
|
(Dollars in thousands,
except per share data) |
Financial Highlights: |
|
|
Net earnings (loss) |
$ 50,704 |
$ (62,016) |
Diluted earnings (loss) per
share |
$ 1.37 |
$ (1.77) |
Annualized return on average
assets |
0.92% |
(1.14%) |
Annualized return on average
equity |
9.92% |
(12.56%) |
Net interest margin |
5.26% |
5.02% |
Efficiency ratio |
61.2% |
64.5% |
The increase in net earnings for 2011 over 2010 was due mostly
to a lower provision for credit losses. The provision for 2010
included $85.7 million related to the sales of $398.5 million of
non-covered classified loans; there were no similar sales of
classified loans in the current year. When compared to 2010,
2011 shows higher net interest income of $13.3 million ($7.7
million after tax), lower provision for credit losses of $185.9
million ($107.8 million after tax), lower FDIC loss sharing income
of $15.0 million ($8.7 million after tax), and lower noninterest
expense of $8.8 million ($5.1 million after tax). The increase
in net interest income was due to higher interest income on
investment securities from purchases during 2011 and lower interest
expense on deposits from reduced interest rates, offset by lower
interest income on loans due mostly to a lower average
balance. The decline in FDIC loss sharing income is directly
related to lower net credit costs on covered loans and
OREO. The decline in noninterest expense reflects lower
non-covered OREO costs, insurance and assessment costs, and other
expense, offset partially by higher covered OREO costs and other
professional services expense.
The comparability of financial information is affected by our
acquisitions. Operating results include the operations of Los
Padres Bank, which was acquired in August 2010 and added $824
million in assets and nine branch offices.
BALANCE SHEET CHANGES
Asset growth of $34.3 million during the fourth quarter was due
to higher balances in interest-earning deposits in financial
institutions and investment securities, offset by lower loan
balances. During the fourth quarter, interest-earning deposits
in financial institutions increased $130.1 million from positive
cash flows and investment securities available-for-sale increased
$64.6 million from purchases. The loan portfolio continues to
decline generally due to repayments and resolution activities, as
the Bank continues to selectively generate loans and renew maturing
loans consistent with our portfolio goals and credit quality and
pricing standards. The non-covered loan portfolio declined
$85.7 million on a gross basis, attributable to decreases of $39.4
million and $49.4 million in construction and real estate mortgage
loans. The reduction in construction loans is due mostly to
the payoff of one loan for $30 million. The covered loan
portfolio declined $58.0 million. At December 31, 2011,
non-covered loans, net of unearned income, totaled $2.8 billion and
the covered loan portfolio was $703.0
million.
Total deposits grew $23.1 million during the fourth quarter to
$4.6 billion at December 31, 2011. Time deposits decreased
$66.4 million during the fourth quarter to $967.9 million at
December 31, 2011. Core deposits, which include
noninterest-bearing demand, interest checking, money market, and
savings accounts, grew $89.5 million during the fourth quarter with
increases of $57.5 million, $30.4 million, and $3.1 million in
noninterest-bearing, money market deposits, and interest checking
deposits, respectively. At December 31, 2011, core deposits
totaled $3.6 billion, or 79% of total deposits at that
date. Noninterest-bearing demand deposits were $1.7 billion at
December 31, 2011 and represented 37% of total deposits at that
date.
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 covered
loans and other real estate owned, and in the case of the Affinity
acquisition, certain investment securities.
A summary of covered assets is shown in the following
table as of the dates indicated:
|
December 31, |
September 30, |
December 31, |
Covered
Assets |
2011 |
2011 |
2010 |
|
(In
thousands) |
Loans, net |
$ 703,023 |
$ 761,059 |
$ 908,576 |
Investment securities |
45,149 |
47,213 |
50,437 |
Other real estate owned, net |
33,506 |
32,301 |
55,816 |
Total covered assets |
$ 781,678 |
$ 840,573 |
$ 1,014,829 |
NET INTEREST INCOME
Net interest income was $63.8 million for the fourth quarter of
2011 compared to $64.4 million for the third quarter of
2011. The $668,000 decline was due to a $1.7 million decrease
in loan interest income from lower average loans. Offsetting the
decline in interest income was a reduction in interest expense of
$937,000 due to lower rates on all interest-bearing deposits and a
decline in average time deposits.
Net interest income grew $13.3 million to $262.6 million during
2011. This change was due to a $5.0 million increase in
interest income and an $8.3 million decrease in interest
expense. The increase in interest income was due mainly to
purchases of investment securities, offset by lower average
loans. The decrease in interest expense was due to a lower
average rate on money market deposits, lower average time deposits
and lower average borrowings as $260 million of FHLB advances were
repaid in the first half of 2010 and another $50 million were
repaid in December 2010.
NET INTEREST MARGIN
Our net interest margin for the fourth quarter of 2011 was
5.00%, a decrease of 15 basis points from the 5.15% reported for
the third quarter of 2011. The decrease reflected a shift in
the mix of average interest-earning assets to lower yielding
investment securities from higher yielding loans and lower
accelerated accretion of discounts on covered loan
payoffs. Average interest-earning assets increased $91.1
million for the linked quarters including a $141.1 million increase
in average investment securities.
The net interest margin has been impacted by the accelerated
accretion of discounts on covered loan payoffs and loans being
placed on or removed from nonaccrual status. The effects of
such items on the net interest margin are shown in the following
table:
|
|
|
Year |
|
Three
Months Ended |
Ended |
|
December 31, |
September 30, |
December 31, |
|
2011 |
2011 |
2011 |
Net interest margin as reported |
5.00% |
5.15% |
5.26% |
Less: |
|
|
|
Accelerated accretion of
purchase |
|
|
|
discounts on covered loan
payoffs |
0.02% |
0.10% |
0.18% |
Nonaccrual loan interest |
0.01% |
0.03% |
0.01% |
Net interest margin as adjusted |
4.97% |
5.02% |
5.07% |
The yield on average loans was 6.87% for the fourth and third
quarters of 2011. The combination of accelerated
accretion of discounts on covered loan payoffs and nonaccrual loan
interest positively impacted the loan yield for the fourth quarter
by 4 basis points and the third quarter by 17 basis
points. The cost of interest-bearing deposits declined 12
basis points to 0.57% due to lower rates on interest-bearing
deposits and lower average time deposits, and all-in deposit cost
declined 8 basis points to 0.36%.
The net interest margin for the year ended December 31, 2011 was
5.26% compared to 5.02% for the same period last year. The
increase was due to a higher yield on loans, lower costs for money
market deposits and subordinated debentures, and a lower average
balance of FHLB advances. This was offset partially by a shift
in the mix of average interest-earning assets to lower yielding
investment securities from higher yielding loans. Average
interest-earning assets increased $21.8 million due mostly to a
$424.9 million increase in average investment securities while
average loans decreased $313.3 million.
NONINTEREST INCOME
Noninterest income for the fourth quarter of 2011 totaled $8.3
million compared to $7.1 million for the third quarter of
2011. The $1.1 million increase was due to higher FDIC loss
sharing income of $1.7 million stemming from a higher provision for
credit losses on covered loans. FDIC loss sharing income also
includes reductions of the FDIC loss sharing asset when the
estimated amount of losses collectible from the FDIC decreases;
this occurs when expected cash flows on covered loan pools improve
during a reporting period causing the carrying value of the FDIC
loss sharing asset to be reduced.
Noninterest income declined by $11.8 million to $31.4 million
during the year ended December 31, 2011 compared to the same period
last year. This reduction was attributable to a decrease in
FDIC loss sharing income.
NONINTEREST EXPENSE
Noninterest expense decreased $5.1 million to $43.5 million
during the fourth quarter of 2011 compared to $48.6 million for the
third quarter of 2011. This change was due mostly to lower
covered OREO costs. Covered OREO costs decreased by $4.6
million due to lower write-downs of $7.7 million and lower gains on
sales of $3.1 million. The fourth quarter included an $885,000
charge to compensation related to a staff reduction, which is
expected to result in annual savings of approximately $2.4 million,
and $600,000 in acquisition costs related to the Marquette
Equipment Finance transaction; there were no similar items in the
prior quarter. The decline of $293,000 in other professional
services was due mostly to internal audit transition costs
recognized in the third quarter and a recovery of $368,000 in legal
costs from an insurance claim in the fourth quarter. The
decline of $286,000 in occupancy costs was due mostly to third
quarter leasing commissions and a lease buyout.
Noninterest expense includes amortization of time-based
restricted stock, which is included in compensation, and intangible
asset amortization. Amortization of restricted stock totaled
$1.4 million and $2.1 million for the fourth and third quarters of
2011, respectively. Intangible asset amortization totaled $1.8
million and $2.0 million for the fourth and third quarters of 2011,
respectively.
Noninterest expense declined by $8.8 million to $180.0 million
during 2011. This reduction was attributable to decreases in
non-covered net OREO costs, insurance and assessments expense, and
other expense, offset partially by increases in covered OREO costs
and other professional services. Non-covered OREO costs
declined $5.3 million due to lower write-downs of $7.2 million,
offset by lower gains on sales of $1.8 million. Covered OREO costs
increased by $1.2 million due to higher write-downs, which were
offset by higher gains on sales. The increase in other
professional services was due to higher legal costs for ongoing
credit work-outs.
Amortization of restricted stock totaled $7.6 million and $8.5
million for the year ended December 31, 2011 and 2010,
respectively. Intangible asset amortization totaled $8.4
million for the year ended December 31, 2011 compared to $9.6
million for the same period last year.
CREDIT QUALITY
|
December 31, |
September 30, |
December 31, |
|
2011 |
2011 |
2010 |
|
(Dollars in
thousands) |
Non-Covered Credit Quality
Metrics: |
|
|
|
Allowance for credit losses to
loans, net of |
|
|
|
unearned income |
3.34% |
3.34% |
3.30% |
Allowance for credit losses to
nonaccrual loans |
161.0% |
161.0% |
110.8% |
Nonperforming assets to loans,
net of unearned |
|
|
|
income, and other real estate
owned |
3.73% |
3.68% |
3.76% |
Nonaccrual loans |
$ 58,260 |
$ 59,968 |
$ 94,183 |
Classified loans (1) |
$ 185,560 |
$ 177,745 |
$ 214,009 |
|
|
|
|
(1) Classified loans are those
with a credit risk rating of substandard or doutbtful. |
|
Credit Loss Provisions
The provision for credit losses for the fourth and third
quarters totaled $4.1 million and $348,000, respectively; such
provisions related only to the covered loan portfolio. The
provision level on the non-covered portfolio is generated by our
allowance methodology and reflects net charge-offs, the levels of
nonaccrual and classified loans, and the migration of loans into
various risk classifications. The provision for credit losses
on the covered loans increases the covered loan allowance for
credit losses and results from decreases in expected cash flows on
covered loans compared to those previously estimated.
Fourth quarter of 2011 net charge-offs on non-covered loans
totaled $2.8 million compared to third quarter net charge-offs of
$6.0 million. The allowance for credit losses on the non-covered
portfolio totaled $93.8 million and $96.5 million at December 31,
2011 and September 30, 2011, respectively, and represented 3.34% of
the non-covered loan balances at both those dates. The
allowance for credit losses as a percent of nonaccrual loans was
161% at December 31, 2011 and September 30, 2011.
Non-covered Nonaccrual Loans and Other Real Estate
Owned
Non-covered nonperforming assets include non-covered nonaccrual
loans and non-covered OREO and totaled $106.7 million at December
31, 2011 compared to $108.2 million at September 30, 2011. The
$1.5 million decline in non-covered nonperforming assets was due to
reductions of $1.7 million in nonaccrual loans and an increase of
$152,000 in OREO. The ratio of non-covered nonperforming
assets to non-covered loans and non-covered OREO increased to 3.73%
at December 31, 2011 from 3.68% at September 30, 2011 due to a
decline in outstanding non-covered loans.
The amount of new nonaccrual loans has slowed significantly in
2011 as shown in the following chart:
http://media.globenewswire.com/cache/13824/file/12287.pdf
The following table presents our non-covered nonaccrual loans
and accruing loans past due between 30 and 89 days by portfolio
segment and class as of the dates indicated:
|
Nonaccrual Loans
(1) |
Accruing
and |
|
December 31,
2011 |
September 30,
2011 |
30 - 89 Days Past
Due (1) |
|
|
% of |
|
% of |
December 31, |
September 30, |
|
|
Loan |
|
Loan |
2011 |
2011 |
|
Balance |
Category |
Balance |
Category |
Balance |
Balance |
|
(Dollars in
thousands) |
Real estate mortgage: |
|
|
|
|
|
|
Hospitality |
$ 7,251 |
5.0% |
$ 7,336 |
5.0% |
$ -- |
$ -- |
SBA 504 |
2,800 |
4.8% |
2,895 |
4.9% |
-- |
3,168 |
Other commercial |
19,060 |
1.2% |
19,378 |
1.2% |
13,055 |
14,664 |
Residential |
2,226 |
1.2% |
2,315 |
1.3% |
182 |
400 |
Total real estate |
|
|
|
|
|
|
mortgage |
31,337 |
1.6% |
31,924 |
1.6% |
13,237 |
18,232 |
Real estate construction |
|
|
|
|
|
|
and land: |
|
|
|
|
|
|
Residential |
1,086 |
6.1% |
1,091 |
5.4% |
-- |
-- |
Commercial |
6,194 |
6.5% |
9,399 |
7.1% |
2,290 |
-- |
Total real estate |
|
|
|
|
|
|
construction |
7,280 |
6.4% |
10,490 |
6.9% |
2,290 |
-- |
Commercial: |
|
|
|
|
|
|
Collateralized |
8,186 |
2.0% |
4,769 |
1.2% |
593 |
396 |
Unsecured |
3,057 |
3.9% |
4,887 |
6.9% |
4 |
73 |
Asset-based |
14 |
0.0% |
15 |
0.0% |
-- |
-- |
SBA 7(a) |
7,801 |
26.9% |
7,318 |
24.4% |
434 |
828 |
Total commercial |
19,058 |
2.8% |
16,989 |
2.5% |
1,031 |
1,297 |
Consumer |
585 |
2.5% |
565 |
2.7% |
31 |
53 |
Total non-covered |
|
|
|
|
|
|
loans |
$ 58,260 |
2.1% |
$ 59,968 |
2.1% |
$ 16,589 |
$ 19,582 |
|
|
|
|
|
|
|
(1) Excludes covered loans. |
|
|
|
|
|
The $1.7 million decline in non-covered nonaccrual loans during
the fourth quarter was attributable to (a) foreclosures of $1.3
million, (b) other reductions, payoffs and returns to accrual
status of $5.3 million, (c) charge-offs of $3.8 million, and (d)
additions of $8.7 million.
Below is a summary of the ten largest lending relationships on
nonaccrual status, excluding SBA-related loans, at December 31,
2011:
Nonaccrual |
|
Amount |
Description |
(In thousands) |
|
|
|
$ 10,226 |
This loan is secured by three airplane hangar
structures and two office buildings in Los Angeles County,
California. (1) |
|
|
7,251 |
This loan is secured by two hotels in San
Diego County, California. The borrower is paying according to
the restructured terms of the loan. (1) |
|
|
3,813 |
This loan is secured by four industrial
warehouse buildings in Riverside County, California. The
borrower is paying according to the |
|
restructured terms of the loan. (1) |
|
|
3,585 |
This loan is unsecured. The borrower is
paying according to the restructured terms of the loan. |
|
|
2,520 |
This loan is secured by a strip retail center
in Riverside County, California. The borrower is paying
according to the restructured terms of the loan. (1) |
|
|
2,306 |
This loan is unsecured and has a specific
reserve for 95% of the balance. The borrower is paying
according to the restructured terms of the loan. (1) |
|
|
1,963 |
This loan is secured by a multi-tenant
industrial building in Riverside County, California. The
borrower is paying according to the |
|
restructured terms of the loan. |
|
|
1,701 |
Two unsecured loans that are fully reserved
for. (1) |
|
|
1,553 |
Loan secured by unimproved land in Imperial
County, California. (1) |
|
|
1,492 |
This loan is secured by a medical-related
office building in Los Angeles County, California. The
borrower is paying according to the |
|
restructured terms of the loan. (1) |
|
|
$ 36,410 |
Total |
|
|
(1) On nonaccrual status at
September 30, 2011 |
The following table presents the details of non-covered and
covered OREO as of the dates indicated:
|
December 31,
2011 |
September 30,
2011 |
|
Non-Covered |
Covered |
Non-Covered |
Covered |
Property
Type |
OREO |
OREO |
OREO |
OREO |
|
(In
thousands) |
Commercial real estate |
$ 23,003 |
$ 15,053 |
$ 21,431 |
$ 14,151 |
Construction and land development |
24,788 |
15,461 |
26,093 |
14,676 |
Multi-family |
-- |
-- |
-- |
1,656 |
Single family residences |
621 |
2,992 |
736 |
1,818 |
Total OREO |
$ 48,412 |
$ 33,506 |
$ 48,260 |
$ 32,301 |
While the overall OREO values changed little quarter-to-quarter,
there continues to be ongoing foreclosure and sales activity with
offsetting effects on the total carrying value. The fourth
quarter included 11 foreclosures totaling $11.7 million, 10 sales
removing $8.3 million in OREO, and $2.0 million in valuation
adjustments. The majority of foreclosure activity relates to
covered OREO, with the largest foreclosure totaling $2.8 million on
a self-storage facility. The sales velocity remained
relatively consistent during the quarter with the 10 sales, and
there are two legacy OREO sales expected to close in January
2012 which will reduce legacy OREO by $3.0 million. The
non-covered construction and land development category above
includes foreclosed undeveloped land located in Ventura County
having a carrying value of $22 million.
The following table presents non-covered and covered OREO
activity for the fourth quarter:
|
Three Months
Ended |
|
December 31,
2011 |
|
Non-Covered |
Covered |
Total |
|
OREO |
OREO |
OREO |
|
(In
thousands) |
Beginning of period |
$ 48,260 |
$ 32,301 |
$ 80,561 |
Foreclosures |
1,296 |
10,120 |
11,416 |
Payments to third parties
(1) |
238 |
10 |
248 |
Provision for losses |
(1,071) |
(912) |
(1,983) |
Reductions related to
sales |
(311) |
(8,013) |
(8,324) |
End of period |
$ 48,412 |
$ 33,506 |
$ 81,918 |
Net gain on sale |
$ 22 |
$ 784 |
$ 806 |
|
|
|
|
(1) Represent amounts due to
participants and for guarantees, property taxes or any other prior
lien positions. |
REGULATORY CAPITAL MEASURES ARE ABOVE THE
WELL-CAPITALIZED MINIMUMS
PacWest and its wholly-owned banking subsidiary, Pacific Western
Bank, each remained well capitalized at December 31, 2011 as shown
in the following table:
|
December 31,
2011 |
|
Well |
Pacific |
PacWest |
|
Capitalized |
Western |
Bancorp |
|
Requirement |
Bank |
Consolidated |
Tier 1 leverage capital ratio |
5.00% |
9.73% |
10.42% |
Tier 1 risk-based capital ratio |
6.00% |
14.95% |
15.94% |
Total risk-based capital ratio |
10.00% |
16.22% |
17.22% |
Tangible common equity ratio |
N/A |
10.43% |
8.95% |
MARQUETTE EQUIPMENT FINANCE ACQUISITION
On January 3, 2012, Pacific Western Bank completed the
acquisition of Marquette Equipment Finance, or MEF, a specialty
equipment leasing company located in Midvale, Utah. MEF
focuses on business-essential equipment leases throughout the
United States with transactions primarily in the mid-ticket
segment.
Pacific Western Bank acquired all of the capital stock of MEF
from Meridian Bank, N.A. for $35 million in cash. MEF's
tangible net assets after our fair value adjustments were $18
million at December 31, 2011.
At December 31, 2011, MEF had approximately $166 million in
gross leases outstanding, with no leases on nonaccrual
status. MEF's leases are spread across 18 industries, with the
top three being financial services/insurance, manufacturing, and
health care and representing 68% of the lease portfolio
balance. The weighted average yield on the lease portfolio at
year end 2011 was approximately 9% and its weighted average
remaining maturity was 34 months. In addition, Pacific Western
Bank assumed $154 million in outstanding debt and other
liabilities, which included $129 million payable to MEF's former
parent. Pacific Western Bank repaid this amount on the closing
date from its excess liquidity on deposit at the Federal Reserve
Bank. This resulted in MEF's interest-earning assets being
funded with our low-cost deposit base.
MEF will continue operating under the name Marquette Equipment
Finance as a subsidiary of Pacific Western Bank on a temporary
basis. Pacific Western Bank has committed to changing MEF's
name within one year and Pacific Western Bank is in the process of
integrating MEF into the Bank, after which MEF will operate as a
division of the Bank instead of a standalone subsidiary The
integration of MEF into the Bank is expected to occur during the
first quarter of 2012.
ABOUT PACWEST BANCORP
PacWest Bancorp ("PacWest") is a bank holding company with $5.5
billion in assets as of December 31, 2011, with one wholly-owned
banking subsidiary, Pacific Western Bank ("Pacific Western").
Through 76 full-service community banking branches, 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 throughout
California in Los Angeles, Orange, Riverside, San Bernardino, Santa
Barbara, San Diego, San Francisco, San Luis Obispo, San Mateo and
Ventura Counties. Through its subsidiaries, BFI Business
Finance and Marquette Equipment Finance, and its division First
Community Financial, Pacific Western also provides working capital
financing and equipment leasing to growing companies located
throughout the United States, with a focus on the Southwestern
U.S., primarily in Arizona, California, Utah 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 net 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 conflicts
in the Middle East; legislative or regulatory requirements or
changes adversely affecting the Company's business; 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) |
|
|
|
|
|
|
|
|
December 31, |
September 30, |
December 31, |
|
2011 |
2011 |
2010 |
|
(In thousands, except
per share and share data) |
ASSETS |
|
|
|
Cash and due from banks |
$ 92,342 |
$ 94,112 |
$ 82,170 |
Interest-earning deposits in
financial institutions |
203,275 |
73,209 |
26,382 |
Total cash and cash
equivalents |
295,617 |
167,321 |
108,552 |
|
|
|
|
Non-covered securities
available-for-sale |
1,281,209 |
1,214,563 |
823,579 |
Covered securities
available-for-sale |
45,149 |
47,213 |
50,437 |
Total securities
available-for-sale, at estimated fair value |
1,326,358 |
1,261,776 |
874,016 |
Federal Home Loan Bank stock,
at cost |
46,106 |
48,342 |
55,040 |
Total investment
securities |
1,372,464 |
1,310,118 |
929,056 |
|
|
|
|
Non-covered loans, net of
unearned income |
2,807,713 |
2,893,637 |
3,161,055 |
Allowance for loan losses |
(85,313) |
(90,110) |
(98,653) |
Total non-covered
loans, net |
2,722,400 |
2,803,527 |
3,062,402 |
Covered loans, net |
703,023 |
761,059 |
908,576 |
Total
loans |
3,425,423 |
3,564,586 |
3,970,978 |
|
|
|
|
Non-covered other real estate
owned, net |
48,412 |
48,260 |
25,598 |
Covered other real estate
owned, net |
33,506 |
32,301 |
55,816 |
Total other real estate
owned |
81,918 |
80,561 |
81,414 |
|
|
|
|
Premises and equipment,
net |
23,068 |
22,919 |
22,578 |
Goodwill |
39,141 |
39,141 |
47,301 |
Core deposit and customer
relationship intangibles |
17,415 |
19,251 |
25,843 |
Cash surrender value of life
insurance |
67,469 |
67,004 |
66,182 |
FDIC loss sharing asset |
95,187 |
89,197 |
116,352 |
Other assets |
110,535 |
133,793 |
160,765 |
Total
assets |
$ 5,528,237 |
$ 5,493,891 |
$ 5,529,021 |
|
|
|
|
LIABILITIES |
|
|
|
Noninterest-bearing demand
deposits |
$ 1,685,799 |
$ 1,628,253 |
$ 1,465,562 |
Interest-bearing deposits |
2,891,654 |
2,926,143 |
3,184,136 |
Total
deposits |
4,577,453 |
4,554,396 |
4,649,698 |
Borrowings |
225,000 |
225,000 |
225,000 |
Subordinated debentures |
129,271 |
129,347 |
129,572 |
Accrued interest payable and
other liabilities |
50,310 |
45,680 |
45,954 |
Total
liabilities |
4,982,034 |
4,954,423 |
5,050,224 |
STOCKHOLDERS' EQUITY
(1) |
546,203 |
539,468 |
478,797 |
Total liabilities and
stockholders' equity |
$ 5,528,237 |
$ 5,493,891 |
$ 5,529,021 |
|
|
|
|
(1) Includes net unrealized gain on
securities |
|
|
|
available-for-sale, net |
$ 22,803 |
$ 23,324 |
$ 3,969 |
|
|
|
|
Tangible book value per share |
$ 13.14 |
$ 12.91 |
$ 11.06 |
Book value per share |
$ 14.66 |
$ 14.48 |
$ 13.06 |
|
|
|
|
Shares outstanding (includes unvested
restricted shares of |
|
|
|
1,675,730 at December 31, 2011;
1,762,870 at September 30, 2011; |
|
|
|
and 1,230,582 at December 31,
2010) |
37,254,318 |
37,258,832 |
36,672,429 |
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
|
(In thousands, except
per share data) |
Interest income: |
|
|
|
|
|
Loans |
$ 61,684 |
$ 63,347 |
$ 70,597 |
$ 260,143 |
$ 265,136 |
Investment
securities |
9,107 |
9,077 |
7,222 |
34,785 |
24,564 |
Deposits in financial
institutions |
122 |
94 |
79 |
356 |
584 |
Total interest
income |
70,913 |
72,518 |
77,898 |
295,284 |
290,284 |
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
Deposits |
4,103 |
5,072 |
6,028 |
20,649 |
26,237 |
Borrowings |
1,782 |
1,782 |
2,113 |
7,071 |
9,126 |
Subordinated
debentures |
1,255 |
1,223 |
1,237 |
4,923 |
5,594 |
Total interest
expense |
7,140 |
8,077 |
9,378 |
32,643 |
40,957 |
|
|
|
|
|
|
Net interest income |
63,773 |
64,441 |
68,520 |
262,641 |
249,327 |
|
|
|
|
|
|
Provision for credit
losses: |
|
|
|
|
|
Non-covered loans |
-- |
-- |
35,315 |
13,300 |
178,992 |
Covered loans |
4,122 |
348 |
(1,100) |
13,270 |
33,500 |
Total provision for
credit losses |
4,122 |
348 |
34,215 |
26,570 |
212,492 |
|
|
|
|
|
|
Net interest income
after |
|
|
|
|
|
provision for credit
losses |
59,651 |
64,093 |
34,305 |
236,071 |
36,835 |
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
Service charges on deposit
accounts |
3,326 |
3,545 |
3,305 |
13,829 |
11,561 |
Other commissions and
fees |
1,864 |
2,052 |
1,896 |
7,616 |
7,291 |
Other-than-temporary
impairment |
|
|
|
|
|
loss on securities |
-- |
-- |
-- |
-- |
(874) |
Increase in cash surrender
value |
|
|
|
|
|
of life insurance |
337 |
359 |
320 |
1,443 |
1,440 |
FDIC loss sharing income
(expense), net |
2,667 |
963 |
(4,473) |
7,776 |
22,784 |
Other income |
60 |
224 |
404 |
762 |
1,036 |
Total noninterest
income |
8,254 |
7,143 |
1,452 |
31,426 |
43,238 |
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
Compensation |
21,597 |
21,557 |
23,944 |
86,800 |
87,483 |
Occupancy |
7,137 |
7,423 |
7,233 |
28,685 |
27,639 |
Data processing |
2,132 |
2,228 |
2,556 |
8,964 |
8,538 |
Other professional
services |
1,946 |
2,239 |
1,560 |
8,986 |
7,835 |
Business development |
609 |
548 |
570 |
2,321 |
2,463 |
Communications |
640 |
678 |
919 |
3,011 |
3,329 |
Insurance and
assessments |
1,590 |
1,641 |
2,369 |
7,171 |
9,685 |
Non-covered other real estate
owned, net |
1,714 |
2,293 |
1,093 |
7,010 |
12,310 |
Covered other real estate
owned, net |
226 |
4,813 |
699 |
3,666 |
2,460 |
Intangible asset
amortization |
1,836 |
1,977 |
2,360 |
8,428 |
9,642 |
Acquisition costs |
600 |
-- |
273 |
600 |
732 |
Other expense |
3,442 |
3,190 |
5,710 |
14,351 |
16,687 |
Total noninterest
expense |
43,469 |
48,587 |
49,286 |
179,993 |
188,803 |
|
|
|
|
|
|
Earnings (loss) before income
taxes |
24,436 |
22,649 |
(13,529) |
87,504 |
(108,730) |
Income tax (expense) benefit |
(10,553) |
(9,345) |
5,841 |
(36,800) |
46,714 |
Net earnings
(loss) |
$ 13,883 |
$ 13,304 |
$ (7,688) |
$ 50,704 |
$ (62,016) |
|
|
|
|
|
|
Earnings per share
information: |
|
|
|
|
|
Basic earnings (loss) per
share |
$ 0.38 |
$ 0.36 |
$ (0.22) |
$ 1.37 |
$ (1.77) |
Diluted earnings (loss) per
share |
$ 0.38 |
$ 0.36 |
$ (0.22) |
$ 1.37 |
$ (1.77) |
Basic weighted average
shares |
35,548.0 |
35,488.5 |
35,406.5 |
$ 35,490.8 |
$ 35,108.1 |
Diluted weighted average
shares |
35,548.0 |
35,488.5 |
35,406.5 |
$ 35,490.8 |
$ 35,108.1 |
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
AVERAGE BALANCE SHEETS
AND YIELD ANALYSIS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
|
(Dollars in
Thousands) |
Average Assets: |
|
|
|
|
|
Loans, net of unearned
income |
$ 3,562,766 |
$ 3,656,184 |
$ 4,216,088 |
$ 3,755,190 |
$ 4,068,450 |
Investment securities |
1,309,931 |
1,168,822 |
886,392 |
1,100,869 |
675,979 |
Interest-earning deposits
in |
|
|
|
|
|
financial institutions |
186,147 |
142,691 |
116,721 |
136,447 |
226,276 |
Average
interest-earning assets |
5,058,844 |
4,967,697 |
5,219,201 |
4,992,506 |
4,970,705 |
Other assets |
463,328 |
486,276 |
531,829 |
492,577 |
455,005 |
Average total assets |
$ 5,522,172 |
$ 5,453,973 |
$ 5,751,030 |
$ 5,485,083 |
$ 5,425,710 |
|
|
|
|
|
|
Average liabilities: |
|
|
|
|
|
Interest checking deposits |
$ 488,783 |
$ 489,988 |
$ 494,313 |
$ 491,145 |
$ 458,703 |
Money market deposits |
1,229,387 |
1,222,787 |
1,305,199 |
1,227,482 |
1,230,924 |
Savings deposits |
157,617 |
154,922 |
139,228 |
150,837 |
121,793 |
Time deposits |
1,003,939 |
1,049,805 |
1,327,869 |
1,077,930 |
1,181,735 |
Average
interest-bearing deposits |
2,879,726 |
2,917,502 |
3,266,609 |
2,947,394 |
2,993,155 |
Borrowings |
225,011 |
225,022 |
272,848 |
225,542 |
324,150 |
Subordinated debentures |
129,319 |
129,395 |
129,621 |
129,432 |
129,703 |
Average
interest-bearing liabilities |
3,234,056 |
3,271,919 |
3,669,078 |
3,302,368 |
3,447,008 |
Noninterest-bearing demand
deposits |
1,702,543 |
1,616,012 |
1,538,748 |
1,627,729 |
1,437,493 |
Other liabilities |
46,777 |
43,983 |
47,002 |
43,996 |
47,586 |
Average total liabilities |
4,983,376 |
4,931,914 |
5,254,828 |
4,974,093 |
4,932,087 |
Average stockholders'
equity |
538,796 |
522,059 |
496,202 |
510,990 |
493,623 |
Average liabilities and
stockholders' |
|
|
|
|
|
equity |
$ 5,522,172 |
$ 5,453,973 |
$ 5,751,030 |
$ 5,485,083 |
$ 5,425,710 |
|
|
|
|
|
|
Average deposits |
$ 4,582,269 |
$ 4,533,514 |
$ 4,805,357 |
$ 4,575,123 |
$ 4,430,648 |
|
|
|
|
|
|
Yield on: |
|
|
|
|
|
Average loans |
6.87% |
6.87% |
6.64% |
6.93% |
6.52% |
Average investment
securities |
2.76% |
3.08% |
3.23% |
3.16% |
3.63% |
Average interest-earning
deposits |
0.26% |
0.26% |
0.27% |
0.26% |
0.26% |
Average
interest-earning assets |
5.56% |
5.79% |
5.92% |
5.91% |
5.84% |
|
|
|
|
|
|
Cost of: |
|
|
|
|
|
Average interest-bearing
deposits |
0.57% |
0.69% |
0.73% |
0.70% |
0.88% |
Average borrowings |
3.14% |
3.14% |
3.07% |
3.14% |
2.82% |
Average subordinated
debentures |
3.85% |
3.75% |
3.79% |
3.80% |
4.31% |
Average
interest-bearing liabilities |
0.88% |
0.98% |
1.01% |
0.99% |
1.19% |
|
|
|
|
|
|
Interest rate spread
(1) |
4.68% |
4.81% |
4.91% |
4.92% |
4.65% |
Net interest margin (2) |
5.00% |
5.15% |
5.21% |
5.26% |
5.02% |
|
|
|
|
|
|
Cost of average deposits/all-in
deposit |
|
|
|
|
|
cost (3) |
0.36% |
0.44% |
0.50% |
0.45% |
0.59% |
|
|
|
|
|
|
(1) Interest rate spread is
calculated as the yield on average interest-earning assets less the
cost of average interest-bearing liabilities. |
(2) Net interest margin is
calculated as annualized net interest income divided by average
interest-earning assets. |
|
(3) Cost of average
deposits/all-in deposit cost is calculated as annualized interest
expense on deposits divided by average deposits. |
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
NON-COVERED LOAN
CONCENTRATION |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
Loan
Segment |
2011 |
2011 |
2011 |
2011 |
2010 |
|
(In
thousands) |
Real estate mortgage |
$ 1,982,464 |
$ 2,031,893 |
$ 2,073,868 |
$ 2,172,923 |
$ 2,274,733 |
Commercial |
671,939 |
671,963 |
640,805 |
667,401 |
663,557 |
Real estate construction |
113,059 |
152,411 |
160,254 |
176,758 |
179,479 |
Consumer |
23,711 |
20,621 |
22,248 |
21,815 |
25,058 |
Foreign: |
|
|
|
|
|
Commercial |
19,531 |
19,532 |
18,633 |
21,808 |
21,057 |
Other, including real
estate |
1,401 |
1,400 |
1,442 |
1,488 |
1,551 |
Total gross non-covered
loans |
$ 2,812,105 |
$ 2,897,820 |
$ 2,917,250 |
$ 3,062,193 |
$ 3,165,435 |
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
COVERED LOAN
CONCENTRATION |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
December 31, |
September 30, |
December 31, |
Loan
Category |
2011 |
2011 |
2010 |
|
(In
thousands) |
Multi-family |
$ 258,470 |
$ 267,892 |
$ 321,650 |
Commercial real estate |
349,039 |
386,326 |
444,244 |
Single family |
124,546 |
129,692 |
157,424 |
Construction and land |
49,047 |
57,601 |
87,301 |
Commercial and industrial |
21,776 |
22,869 |
34,828 |
Home equity lines of credit |
6,161 |
6,287 |
5,916 |
Consumer |
582 |
603 |
1,378 |
Total gross covered loans |
809,621 |
871,270 |
1,052,741 |
Less: discount |
(75,323) |
(80,920) |
(110,901) |
Covered loans, net of
discount |
734,298 |
790,350 |
941,840 |
Less: allowance for loan losses |
(31,275) |
(29,291) |
(33,264) |
Covered loans, net |
$ 703,023 |
$ 761,059 |
$ 908,576 |
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
NON-COVERED LOAN
CONCENTRATION |
|
|
|
|
|
REAL ESTATE MORTGAGE
LOANS |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2011 |
September 30,
2011 |
December 31,
2010 |
|
|
% of |
|
% of |
|
% of |
Loan
Category |
Balance |
Total |
Balance |
Total |
Balance |
Total |
|
(Dollars in
thousands) |
Commercial real estate mortgage: |
|
|
|
|
|
|
Industrial/warehouse |
$ 367,494 |
18.5% |
$ 362,049 |
17.8% |
$ 432,263 |
19.0% |
Retail |
286,691 |
14.5% |
299,100 |
14.7% |
374,027 |
16.4% |
Office buildings |
290,074 |
14.6% |
314,352 |
15.5% |
350,192 |
15.4% |
Owner-occupied |
226,307 |
11.4% |
250,772 |
12.3% |
263,603 |
11.6% |
Hotel |
144,402 |
7.3% |
145,783 |
7.2% |
156,614 |
6.9% |
Healthcare |
131,625 |
6.6% |
114,277 |
5.6% |
102,227 |
4.5% |
Mixed use |
53,855 |
2.7% |
56,507 |
2.8% |
57,230 |
2.5% |
Gas station |
33,715 |
1.7% |
35,743 |
1.8% |
38,502 |
1.7% |
Self storage |
23,148 |
1.2% |
23,260 |
1.1% |
26,432 |
1.2% |
Restaurant |
22,549 |
1.1% |
23,585 |
1.2% |
26,463 |
1.2% |
Land
acquisition/development |
14,015 |
0.7% |
9,514 |
0.5% |
9,649 |
0.4% |
Unimproved land |
1,369 |
0.1% |
1,415 |
0.1% |
1,494 |
0.1% |
Other |
206,504 |
10.4% |
216,206 |
10.6% |
250,068 |
11.0% |
Total commercial real
estate |
|
|
|
|
|
|
mortgage |
1,801,748 |
90.9% |
1,852,563 |
91.2% |
2,088,764 |
91.8% |
|
|
|
|
|
|
|
Residential real estate mortgage: |
|
|
|
|
|
|
Multi-family |
93,866 |
4.7% |
91,588 |
4.5% |
81,880 |
3.6% |
Single family
owner-occupied |
32,209 |
1.6% |
31,439 |
1.5% |
38,025 |
1.7% |
Single family
nonowner-occupied |
19,341 |
1.0% |
20,059 |
1.0% |
26,618 |
1.2% |
HELOCs |
35,300 |
1.8% |
36,244 |
1.8% |
38,823 |
1.7% |
Unimproved land |
-- |
0.0% |
-- |
0.0% |
623 |
0.0% |
Total residential real
estate |
|
|
|
|
|
|
mortgage |
180,716 |
9.1% |
179,330 |
8.8% |
185,969 |
8.2% |
|
|
|
|
|
|
|
Total gross non-covered
real |
|
|
|
|
|
|
estate mortgage loans |
$ 1,982,464 |
100.0% |
$ 2,031,893 |
100.0% |
$ 2,274,733 |
100.0% |
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
NON-COVERED LOAN
CONCENTRATION |
|
|
|
|
|
REAL ESTATE CONSTRUCTION
LOANS |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2011 |
September 30,
2011 |
December 31,
2010 |
|
|
% of |
|
% of |
|
% of |
Loan
Category |
Balance |
Total |
Balance |
Total |
Balance |
Total |
|
(Dollars in
thousands) |
Commercial real estate construction: |
|
|
|
|
|
|
Retail |
$ 19,468 |
17.2% |
$ 18,678 |
12.3% |
$ 20,378 |
11.4% |
Industrial/warehouse |
18,786 |
16.6% |
16,020 |
10.5% |
11,329 |
6.3% |
Office buildings |
5,223 |
4.6% |
6,313 |
4.1% |
3,805 |
2.1% |
Owner-occupied |
476 |
0.4% |
2,227 |
1.5% |
2,000 |
1.1% |
Healthcare |
-- |
0.0% |
-- |
0.0% |
4,305 |
2.4% |
Self storage |
13,037 |
11.5% |
19,148 |
12.6% |
13,191 |
7.3% |
Land
acquisition/development |
3,211 |
2.8% |
35,323 |
23.2% |
16,983 |
9.5% |
Unimproved land |
27,434 |
24.3% |
27,857 |
18.3% |
26,032 |
14.5% |
Other |
7,755 |
6.9% |
6,539 |
4.3% |
9,062 |
5.0% |
Total commercial real
estate |
|
|
|
|
|
|
construction |
95,390 |
84.4% |
132,105 |
86.7% |
107,085 |
59.7% |
|
|
|
|
|
|
|
Residential real estate construction: |
|
|
|
|
|
|
Multi-family |
2,993 |
2.6% |
4,475 |
2.9% |
26,474 |
14.8% |
Single family
owner-occupied |
427 |
0.4% |
90 |
0.1% |
-- |
0.0% |
Single family
nonowner-occupied |
890 |
0.8% |
1,165 |
0.8% |
1,026 |
0.6% |
Land
acquisition/development |
2,262 |
2.0% |
3,275 |
2.1% |
1,482 |
0.8% |
Unimproved land |
11,097 |
9.8% |
11,301 |
7.4% |
43,412 |
24.2% |
Total residential real
estate |
|
|
|
|
|
|
construction |
17,669 |
15.6% |
20,306 |
13.3% |
72,394 |
40.3% |
|
|
|
|
|
|
|
Total gross non-covered
real |
|
|
|
|
|
|
estate construction loans |
$ 113,059 |
100.0% |
$ 152,411 |
100.0% |
$ 179,479 |
100.0% |
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
NON-COVERED NONCLASSIFIED
AND CLASSIFIED LOANS |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
December 31,
2011 |
|
|
Nonclassified |
Classified |
Total |
|
|
(In
thousands) |
Real estate mortgage: |
|
|
|
|
Hospitality |
|
$ 123,071 |
$ 21,331 |
$ 144,402 |
SBA 504 |
|
51,522 |
6,855 |
58,377 |
Other |
|
1,690,830 |
88,855 |
1,779,685 |
Total real estate mortgage |
|
1,865,423 |
117,041 |
1,982,464 |
Real estate construction: |
|
|
|
|
Residential |
|
14,743 |
2,926 |
17,669 |
Commercial |
|
64,667 |
30,723 |
95,390 |
Total real estate
construction |
|
79,410 |
33,649 |
113,059 |
Commercial: |
|
|
|
|
Collateralized |
|
395,041 |
18,979 |
414,020 |
Unsecured |
|
75,017 |
3,920 |
78,937 |
Asset-based |
|
149,947 |
40 |
149,987 |
SBA 7(a) |
|
18,045 |
10,950 |
28,995 |
Total commercial |
|
638,050 |
33,889 |
671,939 |
Consumer |
|
22,730 |
981 |
23,711 |
Foreign |
|
20,932 |
-- |
20,932 |
Total non-covered loans |
|
$ 2,626,545 |
$ 185,560 |
$ 2,812,105 |
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2011 |
|
|
Nonclassified |
Classified |
Total |
|
|
(In
thousands) |
Real estate mortgage: |
|
|
|
|
Hospitality |
|
$ 124,346 |
$ 21,437 |
$ 145,783 |
SBA 504 |
|
51,838 |
7,386 |
59,224 |
Other |
|
1,749,840 |
77,046 |
1,826,886 |
Total real estate mortgage |
|
1,926,024 |
105,869 |
2,031,893 |
Real estate construction: |
|
|
|
|
Residential |
|
16,908 |
3,398 |
20,306 |
Commercial |
|
98,819 |
33,286 |
132,105 |
Total real estate
construction |
|
115,727 |
36,684 |
152,411 |
Commercial: |
|
|
|
|
Collateralized |
|
396,393 |
17,133 |
413,526 |
Unsecured |
|
65,214 |
5,967 |
71,181 |
Asset-based |
|
157,270 |
48 |
157,318 |
SBA 7(a) |
|
18,716 |
11,222 |
29,938 |
Total commercial |
|
637,593 |
34,370 |
671,963 |
Consumer |
|
19,799 |
822 |
20,621 |
Foreign |
|
20,932 |
-- |
20,932 |
Total non-covered loans |
|
$ 2,720,075 |
$ 177,745 |
$ 2,897,820 |
|
|
|
|
|
Note: Nonclassified loans are
those with a credit risk rating of either pass or special mention,
while classified loans are those |
with a credit risk rating of
either substandard or doubtful. |
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
ALLOWANCE FOR CREDIT
LOSSES ROLLFORWARD |
|
|
|
AND NET CHARGE-OFF RATIOS
FOR |
|
|
|
|
NON-COVERED LOANS
(1) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
|
December 31, |
September 30, |
December 31, |
December
31, |
|
|
2011 |
2011 |
2010 |
2011 |
2010 |
|
|
(Dollars in
thousands) |
Allowance for credit losses,
beginning of |
|
|
|
|
|
period |
|
$ 96,535 |
$ 102,552 |
$ 101,244 |
$ 104,328 |
$ 124,278 |
Loans charged-off: |
|
|
|
|
|
|
Real estate mortgage |
|
(321) |
(4,293) |
(22,591) |
(10,180) |
(117,029) |
Real estate
construction |
(1,048) |
-- |
(1,476) |
(6,886) |
(63,590) |
Commercial |
|
(2,105) |
(2,237) |
(7,311) |
(10,072) |
(18,548) |
Consumer |
|
(43) |
(54) |
(1,469) |
(1,422) |
(3,749) |
Foreign |
|
-- |
-- |
(193) |
-- |
(306) |
Total loans charged
off |
(3,517) |
(6,584) |
(33,040) |
(28,560) |
(203,222) |
Recoveries on loans
charged-off: |
|
|
|
|
|
Real estate mortgage |
|
164 |
225 |
25 |
513 |
1,222 |
Real estate
construction |
4 |
33 |
-- |
1,025 |
708 |
Commercial |
|
508 |
235 |
591 |
1,668 |
1,652 |
Consumer |
|
19 |
74 |
193 |
1,394 |
565 |
Foreign |
|
70 |
-- |
-- |
115 |
133 |
Total recoveries on
loans charged off |
765 |
567 |
809 |
4,715 |
4,280 |
Net charge-offs |
|
(2,752) |
(6,017) |
(32,231) |
(23,845) |
(198,942) |
Provision for
credit losses |
-- |
-- |
35,315 |
13,300 |
178,992 |
Allowance for credit losses, end
of |
|
|
|
|
|
period |
|
$ 93,783 |
$ 96,535 |
$ 104,328 |
$ 93,783 |
$ 104,328 |
|
|
|
|
|
|
|
Charge-offs on loans sold
included in |
|
|
|
|
|
"Loans charged-off"
section of table above |
$ -- |
$ -- |
$ 20,942 |
$ -- |
$ 144,647 |
|
|
|
|
|
|
|
Annualized net charge-off
ratios: |
|
|
|
|
|
Net charge-offs to
average loans |
0.39% |
0.83% |
3.90% |
0.81% |
5.94% |
Net charge-offs,
excluding charge-offs |
|
|
|
|
|
on loans sold, to
average loans |
0.39% |
0.83% |
1.37% |
0.81% |
1.62% |
|
|
|
|
|
|
|
(1) Applies only to non-covered
loans. |
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
ALLOWANCE FOR CREDIT
LOSSES, NONPERFORMING |
|
ASSETS AND CREDIT QUALITY
RATIOS FOR |
|
|
NON-COVERED LOANS |
|
|
|
(Unaudited) |
|
|
|
|
December 31, |
September 30, |
December 31, |
|
2011 |
2011 |
2010 |
|
(Dollars in
thousands) |
Allowance for loan losses (1) |
$ 85,313 |
$ 90,110 |
$ 98,653 |
Reserve for unfunded loan commitments
(1) |
8,470 |
6,425 |
5,675 |
Total allowance for credit
losses |
$ 93,783 |
$ 96,535 |
$ 104,328 |
|
|
|
|
Nonaccrual loans (2) |
$ 58,260 |
$ 59,968 |
$ 94,183 |
Other real estate owned (2) |
48,412 |
48,260 |
25,598 |
Total nonperforming assets |
$ 106,672 |
$ 108,228 |
$ 119,781 |
|
|
|
|
Performing restructured loans (1) |
$ 116,791 |
$ 86,406 |
$ 89,272 |
|
|
|
|
Allowance for credit losses to loans, net of
unearned income |
3.34% |
3.34% |
3.30% |
Allowance for credit losses to nonaccrual
loans |
161.0% |
161.0% |
110.8% |
Nonperforming assets to loans,
net of unearned income, |
|
|
and other real estate
owned |
3.73% |
3.68% |
3.76% |
Nonaccrual loans to loans, net of unearned
income |
2.07% |
2.07% |
2.98% |
|
|
|
|
(1) Applies to non-covered loans. |
|
|
|
(2) Excludes covered nonperforming
assets. |
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
DEPOSITS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
December 31, |
September 30, |
December 31, |
Deposit
Category |
2011 |
2011 |
2010 |
|
(Dollars in
thousands) |
Noninterest-bearing demand deposits |
$ 1,685,799 |
$ 1,628,253 |
$ 1,465,562 |
Interest checking deposits |
500,998 |
497,987 |
494,617 |
Money market deposits |
1,265,282 |
1,234,900 |
1,321,780 |
Savings deposits |
157,480 |
158,921 |
135,876 |
Total core deposits |
3,609,559 |
3,520,061 |
3,417,835 |
Time deposits under $100,000 |
324,521 |
345,380 |
436,838 |
Time deposits $100,000 and over |
643,373 |
688,955 |
795,025 |
Total time deposits |
967,894 |
1,034,335 |
1,231,863 |
Total deposits |
$ 4,577,453 |
$ 4,554,396 |
$ 4,649,698 |
|
|
|
|
Noninterest-bearing demand deposits as a
percentage |
|
|
|
of total deposits |
37% |
36% |
32% |
Core deposits as a percentage of total
deposits |
79% |
77% |
74% |
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
GAAP TO NON-GAAP
RECONCILIATIONS |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
Pre-Credit, Pre-Tax
Earnings |
2011 |
2011 |
2010 |
2011 |
2010 |
|
(In
thousands) |
Net earnings (loss) |
$ 13,883 |
$ 13,304 |
$ (7,688) |
$ 50,704 |
$ (62,016) |
Plus: Total provision for credit losses |
4,122 |
348 |
34,215 |
26,570 |
212,492 |
Other real estate owned
expense, net |
|
|
|
|
|
Non-covered |
1,714 |
2,293 |
1,093 |
7,010 |
12,310 |
Covered |
226 |
4,813 |
699 |
3,666 |
2,460 |
Income tax expense
(benefit) |
10,553 |
9,345 |
(5,841) |
36,800 |
(46,714) |
Less: FDIC loss sharing income, net |
2,667 |
963 |
(4,473) |
7,776 |
22,784 |
Pre-credit, pre-tax
earnings |
$ 27,831 |
$ 29,140 |
$ 26,951 |
$ 116,974 |
$ 95,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
Credit Cost Adjusted
Efficiency Ratio |
2011 |
2011 |
2010 |
2011 |
2010 |
|
(Dollars in
thousands) |
Noninterest expense |
$ 43,469 |
$ 48,587 |
$ 49,286 |
$ 179,993 |
$ 188,803 |
Less: Non-covered OREO expense |
1,714 |
2,293 |
1,093 |
7,010 |
12,310 |
Covered OREO expense |
226 |
4,813 |
699 |
3,666 |
2,460 |
Credit adjusted
noninterest |
|
|
|
|
|
expense |
$ 41,529 |
$ 41,481 |
$ 47,494 |
$ 169,317 |
$ 174,033 |
|
|
|
|
|
|
Net interest income |
$ 63,773 |
$ 64,441 |
$ 68,520 |
$ 262,641 |
$ 249,327 |
Noninterest income |
8,254 |
7,143 |
1,452 |
31,426 |
43,238 |
Net revenues |
72,027 |
71,584 |
69,972 |
294,067 |
292,565 |
Less: FDIC loss sharing income |
|
|
|
|
|
(expense), net |
2,667 |
963 |
(4,473) |
7,776 |
22,784 |
Credit adjusted net
revenues |
$ 69,360 |
$ 70,621 |
$ 74,445 |
$ 286,291 |
$ 269,781 |
|
|
|
|
|
|
Base efficiency ratio (1) |
60.4% |
67.9% |
70.4% |
61.2% |
64.5% |
Credit cost adjusted efficiency ratio
(2) |
59.9% |
58.7% |
63.8% |
59.1% |
64.5% |
|
|
|
|
|
|
(1) Noninterest expense
divided by net revenues. |
|
|
|
|
(2) Credit adjusted
noninterest expense divided by credit adjusted net revenues. |
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
GAAP TO NON-GAAP
RECONCILIATIONS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
December 31, |
September 30, |
December 31, |
Tangible Common
Equity |
2011 |
2011 |
2010 |
|
(Dollars in
thousands) |
PacWest Bancorp
Consolidated: |
|
|
|
Stockholders' equity |
$ 546,203 |
$ 539,468 |
$ 478,797 |
Less: Intangible assets |
56,556 |
58,392 |
73,144 |
Tangible common equity |
$ 489,647 |
$ 481,076 |
$ 405,653 |
|
|
|
|
Total assets |
$ 5,528,237 |
$ 5,493,891 |
$ 5,529,021 |
Less: Intangible assets |
56,556 |
58,392 |
73,144 |
Tangible assets |
$ 5,471,681 |
$ 5,435,499 |
$ 5,455,877 |
|
|
|
|
Equity to assets ratio |
9.88% |
9.82% |
8.66% |
Tangible common equity ratio
(1) |
8.95% |
8.85% |
7.44% |
|
|
|
|
Pacific Western Bank: |
|
|
|
Stockholders' equity |
$ 625,494 |
$ 635,026 |
$ 570,118 |
Less: Intangible assets |
56,556 |
58,392 |
73,144 |
Tangible common equity |
$ 568,938 |
$ 576,634 |
$ 496,974 |
|
|
|
|
Total assets |
$ 5,512,025 |
$ 5,479,173 |
$ 5,513,601 |
Less: Intangible assets |
56,556 |
58,392 |
73,144 |
Tangible assets |
$ 5,455,469 |
$ 5,420,781 |
$ 5,440,457 |
|
|
|
|
Equity to assets ratio |
11.35% |
11.59% |
10.34% |
Tangible common equity ratio
(1) |
10.43% |
10.64% |
9.13% |
|
|
|
|
(1) Calculated as tangible common
equity divided by tangible assets. |
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
EARNINGS PER SHARE
CALCULATIONS |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Year
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
|
2011 |
2011 |
2010 |
2011 |
2010 |
|
(In thousands, except
per share data) |
Basic Earnings (Loss) Per
Share: |
|
|
|
|
|
Net earnings (loss) |
$ 13,883 |
$ 13,304 |
$ (7,688) |
$ 50,704 |
$ (62,016) |
Less: earnings allocated to
unvested |
|
|
|
|
|
restricted stock (1) |
(470) |
(622) |
(7) |
(2,072) |
(31) |
Net earnings (loss) allocated
to |
|
|
|
|
|
common shares |
$ 13,413 |
$ 12,682 |
$ (7,695) |
$ 48,632 |
$ (62,047) |
|
|
|
|
|
|
Weighted-average basic shares
and |
|
|
|
|
|
unvested restricted
stock |
|
|
|
|
|
outstanding |
37,260.8 |
37,257.4 |
36,686.7 |
37,141.5 |
36,438.7 |
Less: weighted-average
unvested |
|
|
|
|
|
restricted stock
outstanding |
(1,712.8) |
(1,768.9) |
(1,280.2) |
(1,650.7) |
(1,330.6) |
Weighted-average basic
shares |
|
|
|
|
|
outstanding |
35,548.0 |
35,488.5 |
35,406.5 |
35,490.8 |
35,108.1 |
|
|
|
|
|
|
Basic earnings (loss) per
share |
$ 0.38 |
$ 0.36 |
$ (0.22) |
$ 1.37 |
$ (1.77) |
|
|
|
|
|
|
Diluted Earnings (Loss) Per
Share: |
|
|
|
|
|
Net earnings (loss) allocated
to |
|
|
|
|
|
common shares |
$ 13,413 |
$ 12,682 |
$ (7,695) |
$ 48,632 |
$ (62,047) |
|
|
|
|
|
|
Weighted-average basic
shares |
|
|
|
|
|
outstanding |
35,548.0 |
35,488.5 |
35,406.5 |
35,490.8 |
35,108.1 |
Add: warrants outstanding |
-- |
-- |
-- |
-- |
-- |
Weighted-average diluted
shares |
|
|
|
|
|
outstanding |
35,548.0 |
35,488.5 |
35,406.5 |
35,490.8 |
35,108.1 |
|
|
|
|
|
|
Diluted earnings
(loss) per share |
$ 0.38 |
$ 0.36 |
$ (0.22) |
$ 1.37 |
$ (1.77) |
|
|
|
|
|
|
(1) Represents cash dividends
paid to holders of unvested restricted stock, net of estimated
forfeitures, |
|
plus undistributed earnings
amounts available to holders of unvested restricted stock, if
any. |
|
|
CONTACT: Matthew P. Wagner
Chief Executive Officer
10250 Constellation Boulevard
Suite 1640
Los Angeles, CA 90067
Phone: 310-728-1020
Fax: 310-201-0498
Victor R. Santoro
Executive Vice President and CFO
10250 Constellation Boulevard
Suite 1640
Los Angeles, CA 90067
Phone: 310-728-1021
Fax: 310-201-0498
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