PACW PacWest Bancorp

Highlights

• Net Earnings of $15.6 Million or $0.42 Per Diluted Share
• Net Interest Margin Increases to 5.60%
• Credit Loss Reserve at 2.74% of Net Non-Covered Loans and Leases and 148% of Non-Covered Nonaccrual Loans and Leases
• Noninterest-Bearing Deposits at 41% and Core Deposits at 81% of Total Deposits
• Celtic Capital Acquisition Closed on April 3, 2012

LOS ANGELES, July 18, 2012 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the second quarter of 2012 of $15.6 million, or $0.42 per diluted share, compared to net earnings for the first quarter of 2012 of $5.3 million, or $0.14 per diluted share. First quarter of 2012 includes after-tax debt termination expense of $13.1 million, or $0.37 per diluted share, related to the early repayment of $225.0 million of fixed-rate term FHLB advances and the early redemption of $18.6 million of fixed-rate trust preferred securities.

This press release contains certain non-GAAP financial disclosures for tangible common equity; earnings before net credit costs, an impairment loss on a covered security, debt termination expense, and tax expense, which we refer to as "adjusted earnings before income taxes"; and efficiency ratios adjusted to exclude OREO expenses, FDIC loss sharing income, an impairment loss on a covered security, and debt termination expenses. 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 ratio in addition to equity-to-assets ratio. Also, as analysts and investors view adjusted earnings before income taxes as an indicator of the Company's ability to absorb credit losses, we disclose this amount in addition to net earnings. We disclose the adjusted efficiency ratio as it eliminates (a) the volatile OREO expenses and FDIC loss sharing income, (b) an impairment loss on a covered security, and (c) debt termination expense 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.

The $10.3 million increase in net earnings for the linked quarters was due primarily to $22.6 million ($13.1 million after tax) of debt termination expense incurred in the first quarter of 2012 on the repayment of $225 million of fixed-rate term FHLB advances and the early redemption of $18.6 million of fixed-rate trust preferred securities; such debt termination expense was not repeated in the second quarter of 2012. Contributing to the increase in net earnings, the provision for credit losses on covered loans declined $4.2 million ($2.4 million after tax) and FDIC loss sharing income increased $3.5 million ($2.0 million after tax). Offsetting these factors were the zero provision for credit losses on non-covered loans and leases in the second quarter compared to the $10.0 million negative provision in the first quarter ($5.8 million after tax) and the other-than-temporary impairment ("OTTI") loss on a covered security of $1.1 million in the second quarter ($647,000 after tax). Our portion of the OTTI loss is $223,000 ($129,000 after tax) after the 80% loss coverage by the FDIC. The operations of Celtic Capital Corporation, or Celtic, which have been included since the April 3, 2012 acquisition date, contributed $226,000 to second quarter net earnings.

Net credit costs on a pre-tax basis are shown in the following table:

The provision for credit losses for the second quarter consisted of a $271,000 negative provision for covered loans; no provision for non-covered loans and leases was required for the period. The lack of a non-covered credit loss provision in the second quarter was based on our allowance methodology which reflected (a) historical net charge-off levels, (b) the levels and trends of nonaccrual and classified loans and leases, (c) the migration of loans and leases into various risk classifications, and (d) a decline in non-covered loans when acquisition activity is excluded. The covered loans negative credit loss provision was driven by increases in expected cash flows on covered loan pools compared to those previously estimated and cash recoveries. 

Matt Wagner, Chief Executive Officer, commented, "We had a good second quarter and moved forward with our strategic initiatives. The Celtic acquisition closed, we announced the pending acquisition of American Perspective Bank, and we entered into an agreement to sell ten branches. All of these actions, along with the benefit of our lower funding costs, will enhance our product offerings, expand our market presence in California's Central Coast, augment our net interest margin and lower overhead costs relative to revenues."

Mr. Wagner continued, "The economy remains uncertain and loan growth at this point would involve underpricing competitors, in many cases at margins that are not significantly above the securities portfolio yield. We prefer to selectively make quality loans to good customers at appropriate margins and build relationships rather than focus on attracting customers at low prices. As we have chosen to remain disciplined, we see loan growth as relatively flat for the time being. Our core earnings engine remains very strong, however, and we expect to continue generating solid core income while we evaluate the markets and choose the right time to expand lending more aggressively."

Vic Santoro, Executive Vice President and Chief Financial Officer, stated, "Our second quarter results were very good, with $29.2 million in adjusted pre-tax earnings, a return on average assets of 1.16% and a return on average equity of over 11%. Our net interest margin reached 5.60%, being positively impacted by the Celtic acquisition, last quarter's repayment of fixed-rate debt and increasing DDA balances. Credit quality trends remain positive and core deposit growth continues to be strong. The combination of these factors, along with our continued focus on noninterest expenses, strengthens our balance sheet and allows us to pursue attractive growth and acquisition opportunities as they arise."

The $2.7 million decline in net earnings for the six months ended June 30, 2012 compared to the same period last year was due primarily to the combination of the following:

• $22.6 million ($13.1 million after-tax) of debt termination expense incurred in the first quarter of 2012. There was no such item during the six months ended June 30, 2011.
• Lower FDIC loss sharing income of $7.8 million ($4.5 million after tax) and higher net covered OREO expense of $4.3 million ($2.5 million after tax). 
• Lower provision for credit losses on non-covered loans of $23.3 million ($13.5 million after tax) and lower provision for credit losses on covered loans of $5.1 million ($3.0 million after tax). 
• The operations of Celtic, which have been included since the April 3, 2012 acquisition date, and the operations of Pacific Western Equipment Finance ("Equipment Finance" or "EQF"), which have been included since its January 3, 2012 acquisition date added $3.3 million to 2012 net earnings.

BALANCE SHEET CHANGES

Total assets decreased $126.5 million during the second quarter due to lower balances in cash and cash equivalents, securities available-for-sale, loans and leases, and other assets.   During the second quarter, cash and cash equivalents declined due to the Celtic acquisition. Securities available-for-sale decreased $29.2 million due mostly to paydowns, net of purchases of $50.3 million. The non-covered gross loan and lease portfolio declined $21.3 million. However, excluding the loans gained in the Celtic acquisition, non-covered gross loans declined $81.9 million; such decline is centered in the real estate mortgage and other commercial loan portfolios. The covered loan portfolio declined $51.3 million due to repayments and resolution activities. At June 30, 2012, non-covered gross loans and leases totaled $2.8 billion and the covered loan portfolio was $608.9 million. 

Total liabilities declined $142.5 million during the second quarter due primarily to lower borrowings. Borrowings declined $177.6 million during the second quarter due to the payoff of overnight FHLB advances. As of June 30, 2012, there were no FHLB advances outstanding.  Total deposits increased $34.7 million during the second quarter to $4.6 billion at June 30, 2012. Core deposits increased $90.2 million during the second quarter due mostly to an increase of $86.8 million in noninterest-bearing demand deposits. Time deposits decreased $55.5 million during the second quarter to $865.0 million at June 30, 2012. At June 30, 2012, core deposits totaled $3.7 billion, or 81% of total deposits at that date. Noninterest-bearing demand deposits were $1.9 billion at June 30, 2012 and represented 41% of total deposits at that date. 

SECURITIES AVAILABLE-FOR-SALE

The following table presents the components, yields, and durations related to our securities available-for-sale portfolio as of June 30, 2012:

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:

NET INTEREST INCOME

Net interest income was $68.4 million for the second quarter of 2012 compared to $67.7 million for the first quarter of 2012. Interest income on loans and leases declined due mainly to lower average loans and leases attributable to repayments and resolution activities, offset in part by the additional interest income on the Celtic portfolio. Interest expense on deposits decreased $268,000 due to lower average time deposits and a lower rate on time deposits. Interest expense on borrowings declined $1.6 million due to lower average borrowings and a lower average rate on such borrowings; we repaid fixed-rate term FHLB advances at the end of the first quarter and replaced a portion of those advances with lower cost overnight FHLB advances.  Interest expense on subordinated debentures decreased $343,000 due to the March 2012 redemption of $18.6 million of fixed-rate trust preferred securities. 

Net interest income increased by $1.7 million to $136.1 million during the six months ended June 30, 2012 compared to $134.4 million for the same period last year. This change was due to a $6.2 million decrease in interest expense and a $2.5 million increase in interest on investment securities, offset by a $7.0 million decrease in loan and lease interest income. Interest expense on deposits decreased $4.5 million due to lower rates on all interest-bearing deposits and lower average time deposits. Interest expense on borrowings declined $1.3 million due to lower average borrowings and a lower average rate on such borrowings and interest expense on subordinated debentures decreased $406,000 due to the March 2012 redemption of the trust preferred securities. Interest income on investment securities increased $2.5 million due to purchases. Interest income on loans and leases declined due to lower average loans and leases from repayments and resolution activities, offset partially by a higher yield. The higher loan and lease yield is attributed to the relatively higher yields earned on the Celtic and EQF loan and lease portfolios which were added in 2012.

NET INTEREST MARGIN

Our net interest margin ("NIM") for the second quarter of 2012 was 5.60%, an increase of 19 basis points from the 5.41% reported for the first quarter of 2012.  This increase is due mostly to a $111.8 million decrease in average interest-earning assets and lower interest expense. During the second quarter, average loans and leases declined $63.7 million due to repayments and resolution activities and average interest-earning deposits in financial institutions decreased $75.1 million due to the March 2012 repayment of $225.0 million of fixed-rate term FHLB advances, the March 2012 redemption of $18.6 million of fixed-rate trust preferred securities and the April 2012 Celtic acquisition. 

The NIM is impacted by changes in interest income from nonaccrual loans and accelerated accretion on covered loans. Quarter-over-quarter, nonaccrual interest decreased the NIM by 2 basis points and accelerated accretion decreased the NIM by 1 basis point. Accelerated accretion had a 19 basis point positive impact on the second quarter NIM (20 basis points on the first quarter NIM) and nonaccrual interest had a negative impact of 2 basis points on second quarter NIM (no effect on the first quarter NIM). When the effects of nonaccrual loan interest and accelerated accretion are excluded, our core NIMs were 5.43% for the second quarter and 5.21% for the first quarter.

The yield on average loans and leases decreased 3 basis points to 7.28% for the second quarter of 2012 from 7.31% for the first quarter of 2012. Quarter-over-quarter, accelerated accretion decreased the loan and lease yield by 4 basis points and nonaccrual loans decreased the loan and lease yield by 2 basis points. Accelerated accretion had a 25 basis point positive impact on the second quarter loan and lease yield (29 basis points for the first quarter loan and lease yield) and nonaccrual interest had a negative impact of 2 basis points on the second quarter loan and lease yield (no effect on the first quarter). When the effects of nonaccrual loan interest and accelerated accretion are excluded, our core loan and lease yield was 7.05% for the second quarter and 7.02% for the first quarter.

All-in deposit cost declined three basis points to 0.29%. The cost of interest-bearing deposits declined two basis points to 0.49% due to the lower rate on average time deposits. The cost of total interest-bearing liabilities declined 24 basis points to 0.61% for the second quarter of 2012 due to the first quarter repayment of $225.0 million of fixed-rate term FHLB advances and the redemption of $18.6 million of fixed-rate trust preferred securities.

The NIM for the first six months of 2012 was 5.50%, an increase of five basis points from 5.45% for the same period last year. The increase was due to lower funding costs and a higher yield on loans and leases, offset by a lower return on the securities portfolio. The accelerated accretion decreased the NIM 17 basis points while the impact of nonaccrual loans decreased the NIM 2 basis points for six months ended June 30, 2012 compared to the same period last year. When the effects of nonaccrual loan interest and accelerated accretion are excluded, our core NIMs were 5.32% for the first half of 2012 and 5.08% for the first half of 2011. 

The yield on average loans and leases increased 31 basis points to 7.29% for the six months ended June 30, 2012 compared to 6.98% for the same period last year. The addition of Celtic's and Equipment Finance's loan and lease portfolios added 24 basis points to the loan and lease yield. All-in deposit cost declined 19 basis points to 0.31% for the first six months of 2012 compared to the same period last year. The cost of interest-bearing deposits declined 27 basis points to 0.50% due to lower rates on all interest-bearing deposits. The cost of total interest-bearing liabilities declined 32 basis points to 0.73% due to the reduction in the cost of interest-bearing deposits and the first quarter of 2012 repayment of FHLB advances and the early redemption of trust preferred securities.  

NONINTEREST INCOME

Noninterest income for the second quarter of 2012 totaled $4.9 million compared to $3.3 million for the first quarter of 2012. The $1.6 million increase was due to lower net FDIC loss sharing expense of $3.5 million, offset partially by a $1.1 million OTTI loss on one of our covered private label collateralized mortgage obligation ("CMO") securities and a $587,000 decline in gain on sale of leases. All of the OTTI loss was credit-related. The second quarter includes net FDIC loss sharing expense of $102,000 compared to first quarter net FDIC loss sharing expense of $3.6 million; such change was due mostly to higher covered OREO write-downs, a reduction in loan recoveries shared with the FDIC, and the OTTI loss on a covered private label CMO security. After the 80% loss share on the covered private label CMO, our share of the loss was $223,000. Other noninterest income includes a $160,000 loss on sale of a former branch office building in Arizona.

The following table presents the details of FDIC loss sharing income (expense), net for the periods indicated:

Noninterest income for the six months ended June 30, 2012 totaled $8.1 million compared to $16.0 million for the same period last year. This $7.9 million reduction was attributable primarily to a decrease in net FDIC loss sharing income of $7.8 million and a $1.1 million OTTI loss on one of our covered private label CMO's, offset partially by a $1.4 million gain on sale of leases attributable to Equipment Finance. FDIC loss sharing income, net, decreased due to lower net write-downs on covered assets and higher amortization of the FDIC loss sharing asset.

NONINTEREST EXPENSE

Noninterest expense decreased $21.3 million to $47.6 million during the second quarter of 2012 compared to $68.9 million for the first quarter of 2012. The decrease was due mostly to $22.6 million in debt termination expense incurred in the first quarter for the early repayments of FHLB advances and trust preferred securities; there was no such expense during the second quarter. Excluding the debt termination expense, noninterest expense increased $1.3 million, of which $1.6 million relates to the Celtic acquisition that closed on April 3, 2012. Covered OREO expense increased $1.3 million due mostly to lower gains on sales of $759,000 and higher write-downs of $475,000. Other expense includes a $595,000 lawsuit settlement charge; there is no similar expense in the other periods presented. Acquisition costs increased $846,000 and relate to due diligence costs, success fees and other professional fees for the Celtic and American Perspective Bank acquisitions. Other professional services increased $608,000 due primarily to higher legal costs on loan workouts. These increases were offset by a decline in non-covered OREO expense of $1.7 million due to lower maintenance costs of $670,000, lower write-downs of $651,000, and higher gains on sales of $370,000. 

Noninterest expense includes amortization of time-based restricted stock, which is included in compensation, and intangible asset amortization. Amortization of restricted stock totaled $1.3 million and $1.6 million for the second and first quarters of 2012, respectively. Intangible asset amortization totaled $1.7 million for each of the second and first quarters of 2012.

Noninterest expense increased $28.6 million to $116.5 million during the six months ended June 30, 2012 compared to $87.9 million for the same period last year. The increase was due mostly to $22.6 million in debt termination expense incurred in the first quarter of 2012 for the early repayments of FHLB advances and trust preferred securities. No such expense was incurred in the prior year period.  Excluding the debt termination expense, noninterest expense increased $6.0 million, of which $6.3 million related to the Celtic and EQF acquisitions in 2012. Excluding debt termination expense, the Celtic and EQF overhead costs and other acquisition costs, noninterest expense declined $858,000. Covered OREO expense increased $4.3 million due mostly to higher write-downs of $2.5 million and lower gains on sales of $2.0 million. The majority of the other expense categories declined. Insurance and assessments decreased $1.3 million, non-covered OREO expense decreased $1.1 million and CDI amortization decreased $1.1 million. The decrease in insurance and assessments resulted primarily from the revised deposit insurance assessment formula. The decrease in non-covered OREO expense was due to lower write-downs of $1.4 million, offset partially by higher maintenance costs of $511,000. The decrease in CDI amortization relates to certain intangibles being fully amortized. 

Amortization of restricted stock totaled $3.0 million and $4.1 million for the six months ended June 30, 2012 and 2011, respectively. Intangible asset amortization totaled $3.5 million and $4.6 million for the same year-to-date periods, respectively.

Credit Loss Provisions

The Company recorded a negative provision for credit losses of $271,000 in the second quarter of 2012 compared to a negative provision for credit losses of $6.1 million in the first quarter of 2012. The negative provision in the second quarter was composed of no provision for credit losses on non-covered loans and leases and a $271,000 negative provision for credit losses on covered loans. The negative provision in the first quarter was composed of a $10.0 million negative provision for credit losses on non-covered loans and leases and a $3.9 million provision for credit losses on covered loans. 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 leases, the migration of loans and leases into various risk classifications, and the level of outstanding loans and leases. The provision or negative provision for credit losses on the covered loans increases or decreases the covered loan allowance for credit losses and results from decreases or increases in expected cash flows on covered loans compared to those previously estimated.

Second quarter of 2012 net charge-offs on non-covered loans and leases totaled $3.7 million compared to first quarter of 2012 net charge-offs of $2.0 million. The allowance for credit losses on the non-covered portfolio totaled $78.0 million and $81.7 million at June 30, 2012 and March 31, 2012, respectively, and represented 2.74% and 2.85% of the non-covered loan and lease balances, respectively. The allowance for credit losses as a percent of nonaccrual loans and leases was 148% and 170% at June 30, 2012 and March 31, 2012, respectively.

Non-covered Nonaccrual Loans and Other Real Estate Owned

Non-covered nonperforming assets include non-covered nonaccrual loans and leases and non-covered OREO and totaled $94.5 million at June 30, 2012 compared to $94.4 million at March 31, 2012. The ratio of non-covered nonperforming assets to non-covered loans and leases and non-covered OREO increased to 3.27% at June 30, 2012 from 3.24% at March 31, 2012.

The following table presents our non-covered nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated:

The $4.6 million increase in non-covered nonaccrual loans and leases during the second quarter was attributable to (a) additions of $10.7 million, (b) foreclosures of $684,000, (c) other reductions, payoffs and returns to accrual status of $1.8 million, and (d) charge-offs of $3.6 million.  The additions include a $7.2 million loan secured by a hotel located in Riverside County of which $1.0 million was subsequently charged off.

Below is a summary of the ten largest lending relationships on nonaccrual status, excluding SBA-related loans, at June 30, 2012:

The following table presents the details of non-covered and covered OREO as of the dates indicated:

The following table presents the details of non-covered and covered OREO as of the dates indicated:

The following table presents non-covered and covered OREO activity for the second quarter:

The Bank entered into an agreement in July to sell an OREO asset having a carrying value of $4.4 million at June 30, 2012. The buyer made a $500,000 non-refundable deposit and the sale is scheduled to close during the third quarter of 2012. No material gain or loss is expected.

REGULATORY CAPITAL MEASURES ARE ABOVE THE WELL-CAPITALIZED MINIMUMS

PacWest and its wholly-owned banking subsidiary, Pacific Western Bank, each remained well capitalized at June 30, 2012 as shown in the following table:

CELTIC ACQUISITION

On April 3, 2012, Pacific Western Bank completed the acquisition of Celtic Capital Corporation, or Celtic, an asset-based lending company based in Santa Monica, California. Celtic focuses on providing asset-based loans to borrowers in the $5 million and under loan market in the United States. Pacific Western Bank acquired all of the capital stock of Celtic for $18 million in cash.  In addition, Pacific Western Bank assumed $47 million in outstanding debt, which was repaid on the closing date. At June 30, 2012, Celtic's loan portfolio totaled $60.6 million, and there were no nonaccrual loans.

AMERICAN PERSPECTIVE BANK ACQUISITION

On April 30, 2012, the Company announced that Pacific Western Bank had entered into a definitive agreement and plan of merger to acquire all of the outstanding common stock and restricted stock of American Perspective Bank ("American Perspective") for $58.1 million in cash, or $13.00 per share for each share of common stock of American Perspective.

At June 30, 2012, American Perspective had $271.0 million in assets, two operating branches located in San Luis Obispo and Santa Maria, California, and a loan production office located in Paso Robles, California. American Perspective serves small-to-medium sized businesses and professionals through those locations. The addition of the two branches strengthens the Company's presence in the Central Coast region and the loan production office provides opportunity for expansion and additional growth in that region.

The board of directors of each company has approved this transaction. The acquisition of American Perspective by Pacific Western Bank is subject to customary conditions, including the approval of American Perspective's shareholders and bank regulatory authorities, and is expected to close in the third quarter of 2012. Immediately following the completion of the acquisition, American Perspective will be merged with and into Pacific Western Bank.

SALE OF BRANCHES

On July 9, 2012, the Company announced that Pacific Western Bank and Opus Bank had entered into a definitive agreement whereby Pacific Western Bank will sell 10 branches to Opus Bank. The branches are located in Los Angeles, San Bernardino, Riverside, and San Diego Counties. 

The transaction will result in the transfer of deposits to Opus Bank in exchange for a blended deposit premium of 2.5% applied to the deposit balances transferred at closing. Currently, the deposits of the offices to be sold total approximately $145 million. Although certain other immaterial assets related to the branches will be included in the transaction, no loans will be transferred. The transaction is expected to be completed before the end of the year subject to regulatory approval and other customary terms. Although the sale of these branches will not result in any material gain, the annual cost savings, representing noninterest expense less noninterest income, are estimated to be $2.0 million after tax.

The deposits being transferred represent approximately 3% of PacWest Bank's total deposits at June 30, 2012. Following the transaction, Pacific Western Bank will continue to operate 66 branches throughout California.

ABOUT PACWEST BANCORP

PacWest Bancorp ("PacWest") is a bank holding company with $5.3 billion in assets as of June 30, 2012, 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 Celtic Capital Corporation, and its divisions First Community Financial and Pacific Western Equipment Finance, 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: failure to obtain regulatory or other required approvals; an inability to achieve expected cost savings in the amounts or timeframes discussed if at all, or the costs associated with the transaction or the time needed to complete the transaction being greater than expected;  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 arrangements from 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 and leases 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.

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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