Highlights
- Net Earnings of $16.1 Million or $0.43 Per Diluted
Share
- Net Interest Margin at 5.58%; Core Net Interest Margin
at 5.32%
- Credit Loss Reserve at 2.46% of Net Non-Covered Loans
and Leases and 203% of Non-Covered Nonaccrual Loans and
Leases
- Noninterest-Bearing Deposits at 42% and Core Deposits
at 82% of Total Deposits
- American Perspective Bank Acquisition Closed on August
1, 2012
- Branch Sale Closed on September 21, 2012
PacWest Bancorp (Nasdaq:PACW) today announced net
earnings for the third quarter of 2012 of $16.1 million, or $0.43
per diluted share, compared to net earnings for the second quarter
of 2012 of $15.6 million, or $0.42 per diluted share.
This press release contains certain non-GAAP financial
disclosures for tangible common equity; pre-tax earnings before net
credit costs, impairment loss on a covered security, debt
termination expense, and acquisition and integration costs, which
we refer to as "adjusted earnings before income taxes"; and
efficiency ratios adjusted to exclude OREO expenses, FDIC loss
sharing income, impairment loss on a covered security, acquisition
and integration costs, 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 pre-tax earnings. We disclose the adjusted
efficiency ratio as it shows the trend in recurring
overhead-related noninterest expense relative to recurring 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 comparability of financial information is affected by our
acquisitions. Operating results include the operations of acquired
entities from the dates of acquisition. The operations of American
Perspective Bank ("APB"), Celtic Capital Corporation ("Celtic") and
Pacific Western Equipment Finance ("EQF") have been included since
their respective acquisition dates of August 1, 2012, April 1,
2012, and January 3, 2012.
THIRD QUARTER RESULTS |
|
|
|
Three Months
Ended |
|
September 30, |
June 30, |
|
2012 |
2012 |
|
(Dollars in thousands,
except per share data) |
Financial Highlights: |
|
|
Net earnings |
$ 16,088 |
$ 15,557 |
Diluted earnings per share |
$ 0.43 |
$ 0.42 |
Adjusted earnings before income taxes
(1) |
$ 33,437 |
$ 30,047 |
Annualized return on average assets |
1.16% |
1.16% |
Annualized return on average equity |
11.16% |
11.23% |
Net interest margin |
5.58% |
5.60% |
Efficiency ratio |
67.6% |
64.9% |
Adjusted efficiency ratio (2) |
56.5% |
59.7% |
|
|
|
At Quarter End: |
|
|
Allowance for credit losses to
non-covered loans and leases, net of unearned income (3) |
2.46% |
2.74% |
Allowance for credit losses to
non-covered nonaccrual loans and leases (3) |
203% |
148% |
Equity to assets ratios: |
|
|
PacWest Bancorp Consolidated |
10.55% |
10.63% |
Pacific Western Bank |
11.97% |
12.11% |
Tangible common equity ratios: |
|
|
PacWest Bancorp Consolidated |
8.98% |
9.28% |
Pacific Western Bank |
10.42% |
10.78% |
|
|
|
(1) Represents pre-tax
earnings excluding net credit costs, impairment loss on a covered
security, debt termination expense, and acquisition and integration
costs. See GAAP to Non-GAAP Reconciliation table. |
(2) Excludes OREO expenses,
FDIC loss sharing income, impairment loss on a covered security,
acquisition and integration costs, and debt termination
expense. See GAAP to Non-GAAP Reconciliation table. |
(3) Non-covered loans exclude
loans covered by loss sharing agreements with the FDIC. |
The $531,000 increase in net earnings for the linked quarters
was due primarily to the combination of the following:
- Net interest income increased $2.4 million ($1.4 million after
tax), due to the additional interest on loans from the American
Perspective Bank ("APB") acquisition, offset by lower accelerated
accretion of purchase discount resulting from covered loan
payoffs.
- The provision for credit losses on non-covered loans was a
negative $2.0 million for the quarter ($1.2 million after tax)
compared to a zero provision in the second quarter.
- Noninterest income increased $811,000 ($470,000 after tax), due
mostly to an other-than-temporary impairment ("OTTI") loss on a
covered security of $1.1 million incurred in the second quarter and
not repeated in the third quarter; our portion of the OTTI loss was
$223,000 ($129,000 after tax) after the 80% loss coverage by the
FDIC. Contributing to the increase in noninterest income was a
net gain of $297,000 ($172,000 after tax) on the sale of 10
branches to Opus Bank. These items were offset by decreases in
gain on sales of leases, FDIC loss sharing income, and service
charges on deposit accounts.
- Noninterest expense increased $4.1 million ($2.4 million after
tax) due mostly to a $3.9 million ($2.3 million after tax) increase
in total OREO expense from higher write-downs based on updated
appraisals, a $1.2 million ($713,000 after tax) increase in
acquisition and integration costs relating to the acquisition of
APB, and $718,000 ($416,000 after tax) increase in overhead costs
from the APB operations. Partially offsetting these factors
was a decrease in other expense relating to a lawsuit settlement of
$595,000 ($345,000 after tax) incurred in the second quarter and
not repeated in the third quarter.
Net credit costs on a pre-tax basis are shown in the following
table:
|
Three Months
Ended |
|
September 30, |
June 30, |
|
2012 |
2012 |
|
(In
thousands) |
|
|
|
Negative provision for credit losses on
non-covered loans and leases |
$ (2,000) |
$ -- |
Non-covered OREO expense, net |
1,883 |
130 |
Total non-covered net credit costs |
(117) |
130 |
|
|
|
Negative provision for credit losses on
covered loans |
(141) |
(271) |
Covered OREO expense, net |
4,290 |
2,130 |
|
4,149 |
1,859 |
|
|
|
Less: FDIC loss sharing expense, net,
excluding the FDIC share of the OTTI loss |
(367) |
(994) |
Total covered net credit costs |
4,516 |
2,853 |
|
|
|
Total net credit costs |
$ 4,399 |
$ 2,983 |
The provision for credit losses for the third quarter had two
components: a $2.0 million negative provision for non-covered loans
and leases and a $141,000 negative provision for covered loans. The
third quarter negative non-covered provision for credit losses was
based on our allowance methodology which reflected (a) lower
historical net charge-off levels, (b) lower nonaccrual and
classified loans and leases and (c) the migration of loans and
leases into various risk classifications. During the third
quarter, net charge-offs declined by $2.7 million to $1.0 million,
nonaccrual loans and leases decreased by $15.8 million to $37.0
million, and classified loans and leases declined by $43.0 million
to $96.9 million. 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
third quarter and successfully completed two significant
transactions. The American Perspective Bank acquisition closed
on August 1 and we closed the sale of 10 branches on September
21. The APB acquisition has augmented our earnings and growth
potential in the Central Coast market and the branch sale will
result in lower overhead of approximately $500,000 per quarter
beginning in the fourth quarter.
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 our
securities portfolio yield. We prefer to selectively make or renew
quality loans to our good customers at appropriate margins and
build relationships rather than focus on attracting customers at
low prices. Given our disciplined approach in generating new
business, we see short-term loan growth as relatively
flat. Nevertheless, the legacy loan portfolio experienced $8.9
million of organic growth during the third quarter. Our core
earnings engine remains very strong 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 third quarter results were very good, with
$33.4 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 was 5.58%, being positively
impacted by a strong loan yield and increasing DDA
balances. Credit quality trends remain positive and core
deposit growth continues to be strong, generated both organically
and through the APB acquisition. The combination of these
factors, along with our continued focus on controlling noninterest
expenses, strengthens our balance sheet and allows us to pursue
attractive growth and acquisition opportunities as they arise."
YEAR TO DATE RESULTS |
|
|
Nine Months
Ended |
|
September
30, |
|
2012 |
2011 |
|
(Dollars in thousands,
except per share data) |
Financial Highlights: |
|
|
Net earnings |
$ 36,909 |
$ 36,821 |
Diluted earnings per share |
$ 1.00 |
$ 0.99 |
Adjusted earnings before income taxes
(1) |
$ 94,376 |
$ 89,143 |
Annualized return on average assets |
0.90% |
0.90% |
Annualized return on average equity |
8.78% |
9.81% |
Net interest margin |
5.53% |
5.35% |
Efficiency ratio |
76.2% |
61.5% |
Adjusted efficiency ratio (2) |
58.2% |
58.9% |
|
|
|
(1) Represents pre-tax
earnings excluding net credit costs, impairment loss on a covered
security, debt termination |
expense, and acquisition and
integration costs. See GAAP to Non-GAAP Reconciliation
table. |
(2) Excludes OREO expenses,
FDIC loss sharing income, impairment loss on a covered security,
acquisition |
and integration costs, and debt
termination expense. See GAAP to Non-GAAP Reconciliation
table. |
The net earnings for the nine months ended September 30, 2012
are relatively flat compared to the same period last year. The
2012 period included $6.1 million of net earnings from our 2012
acquisitions. Highlights are as follows:
- Higher net interest income of $8.0 million ($4.6 million
after-tax) attributed mostly to a decrease in interest expense from
both lower volume and rate of interest-bearing liabilities.
- Lower provision for credit losses of $30.9 million ($17.9
million after tax); the provision on non-covered loans is lower by
$25.3 million ($14.7 million after tax) and the provision on
covered loans is lower by $5.6 million ($3.2 million after
tax). These declines are due to improving credit quality.
- Other credit related costs and loss sharing contract activities
reduced net earnings by $12.6 million ($7.3 million after tax);
this amount includes lower FDIC loss sharing income of $9.2 million
($5.3 million after tax), higher net covered OREO expense of $3.8
million ($2.2 million after tax), and higher covered OTTI expense
of $1.1 million ($647,000 after tax), offset by lower non-covered
OREO expense of $1.5 million ($848,000 after tax).
- Noninterest income includes $1.8 million ($1.1 million after
tax) related to gain on sale of leases and the gain on sale of the
10 branches; there were no such items in 2011.
- $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 in fixed-rate term FHLB advances and the early
redemption of $18.6 million in trust-preferred securities; there
was no such item in 2011.
- $3.0 million ($1.7 million after tax) of acquisition and
integration costs in 2012 related to the Company's acquisition
activity; there was no such item in 2011.
- Excluding debt termination costs, OREO costs, and acquisition
and integration costs, noninterest expense increased $3.7 million
($2.1 million after tax) attributed mostly to higher compensation
and overhead costs for the acquired operations offset by lower
insurance assessments, lower CDI amortization expense, and lower
other professional services expense.
- Lower tax expense of $1.3 million as the Company's effective
tax rate declined due to higher tax-free interest income and tax
credits.
BALANCE SHEET CHANGES
Total assets increased $216.9 million during the third quarter
due primarily to the APB acquisition.
At September 30, 2012, gross non-covered loans and leases
totaled $3.1 billion and the covered loan portfolio was $567.4
million. The gross non-covered loan and lease portfolio
increased $206.2 million, due mainly to the addition of $197.3
million in loans from the APB acquisition. When the acquired
loans are excluded, organic non-covered loan and lease growth was
$8.9 million. This growth was a combination of new loans and
leases and reductions due to (a) a sale of a $17.9 million
classified loan at a slight discount and (b) refinancings of
existing loans by other lenders. During the third quarter, our
regional presidents reported that loans having balances of $1.0
million or more refinanced by other lenders totaled approximately
$77.0 million. We observed that the rates on these takeouts ranged
from a low of 3.85% to a high of 5.00% and fixed terms ranged from
a low of 5 years to a high of 30 years. The pricing in the
market for new loans continues to be irrational in our
view. The covered loan portfolio declined $41.6 million due to
repayments and resolution activities.
Total liabilities increased $198.4 million during the third
quarter due to the addition of deposits from the APB acquisition,
offset by the deposit decline from the branch sale. Total
deposits increased $196.0 million during the third quarter to $4.8
billion at September 30, 2012. Core deposits increased $198.7
million during the third quarter due mostly to increases of $134.5
million in noninterest-bearing demand deposits and $87.5 million in
money market deposits. Time deposits decreased $2.7 million
during the third quarter to $862.3 million at September 30, 2012.
At September 30, 2012, core deposits totaled $3.9 billion, or 82%
of total deposits at that date. Noninterest-bearing demand
deposits were $2.0 billion at September 30, 2012 and represented
42% of total deposits at that date. A summary of the change in
deposits during the third quarter follows:
|
Total Deposits |
Core Deposits |
Time Deposits |
|
(In
thousands) |
Balance at June 30, 2012 |
$ 4,591,329 |
$ 3,726,307 |
$ 865,022 |
APB acquisition |
219,564 |
169,989 |
49,575 |
Branch sale |
(125,222) |
(103,183) |
(22,039) |
Organic growth (1) |
101,677 |
131,894 |
(30,217) |
Balance at September 30, 2012 |
$ 4,787,348 |
$ 3,925,007 |
$ 862,341 |
|
|
|
|
(1) Organic growth in core
deposits includes a $120 million noninterest-bearing deposit
received at quarter-end. |
Such funds were withdrawn in October
2012. |
|
|
|
SECURITIES AVAILABLE-FOR-SALE
The following table presents the components, yields, and
durations related to our securities available-for-sale portfolio as
of the date indicated:
|
September 30,
2012 |
|
Amortized |
Carrying |
Book |
Duration |
Security Type |
Cost |
Value |
Yield |
(in
years) |
|
(Dollars in
thousands) |
Residential mortgage-backed securities: |
|
|
|
|
Government and
government-sponsored |
|
|
|
|
entity pass through securities |
$ 901,955 |
$ 945,581 |
2.15% |
3.7 |
Government and
government-sponsored |
|
|
|
|
entity collateralized mortgage |
|
|
|
|
obligations |
89,320 |
91,275 |
0.74% |
3.1 |
Covered private label
collateralized |
|
|
|
|
mortgage obligations |
37,116 |
45,887 |
9.48% |
3.8 |
Municipal securities (1) |
236,385 |
247,280 |
2.96% |
6.4 |
Corporate debt securities |
17,049 |
17,255 |
5.07% |
12.6 |
Other securities |
6,395 |
9,933 |
-- |
-- |
Total securities available-for-sale
(1) |
$ 1,288,220 |
$ 1,357,211 |
2.47% |
4.2 |
|
|
|
|
|
(1) The tax equivalent yield was
4.50% and 2.75% for municipal securities and total securities
available for sale, respectively. |
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:
|
September 30, |
June 30, |
Covered Assets |
2012 |
2012 |
|
(In
thousands) |
Loans, net |
$ 567,396 |
$ 608,949 |
Investment securities |
45,887 |
44,053 |
Other real estate owned, net |
26,374 |
31,090 |
Total covered assets |
$ 639,657 |
$ 684,092 |
|
|
|
Percentage of total assets |
11.5% |
12.9% |
NET INTEREST INCOME
Net interest income increased by $2.4 million to $70.8 million
for the third quarter of 2012 compared to $68.4 million for the
second quarter of 2012. This change was due to a $3.4 million
increase in interest income on loans and leases, offset by a $1.2
million decrease in interest income on investment
securities. Interest income on loans and leases increased due
to additional interest income from the APB portfolio, offset by
lower accelerated accretion of discount resulting from covered loan
payoffs. Interest income on investment securities declined due
mainly to the call of $33.8 million in higher yield corporate debt
securities in July 2012 and accelerated premium amortization on our
government agency and government-sponsored enterprise pass through
securities and collateralized mortgage obligations due to increased
prepayment speeds in the third quarter. Interest expense
declined $125,000 due mostly to lower time deposit costs despite
adding $219.6 million of deposits in the APB acquisition.
Net interest income increased by $8.0 million to $206.9 million
during the nine months ended September 30, 2012 compared to $198.9
million for the same period last year. This change was due to a
$10.0 million decrease in interest expense and a $1.8 million
increase in interest on investment securities, offset by a $3.7
million decrease in loan and lease interest income. Interest
expense on deposits decreased $6.3 million due to lower rates on
all interest-bearing deposits and lower average time
deposits. Interest expense on borrowings declined $2.9 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 of 2012 and replaced a portion of those advances
with lower cost overnight FHLB advances that were repaid during the
third quarter. Interest expense on subordinated debentures
decreased $779,000 due to the March 2012 redemption of $18.6
million in fixed-rate trust preferred securities. Interest
income on investment securities increased $1.8 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 third quarter of 2012
was 5.58%, a decrease of 2 basis points from the 5.60% reported for
the second quarter of 2012.
The NIM is impacted by changes in interest income from
accelerated accretion of purchase discounts resulting from covered
loan payoffs, nonaccrual loans, early lease payoffs, and
amortization of premiums on certain purchased loans. The
effects of such items on the NIM and the calculation of our core
NIM are shown in the following table:
|
|
|
Nine |
|
|
|
Months |
|
Three
Months Ended |
Ended |
|
September 30, |
June 30, |
September 30, |
|
2012 |
2012 |
2012 |
Net interest margin as reported |
5.58% |
5.60% |
5.53% |
Less: |
|
|
|
Accelerated accretion of purchase
discounts |
|
|
|
resulting from covered loan payoffs |
0.12% |
0.19% |
0.15% |
Nonaccrual loan interest |
0.04% |
(0.02)% |
0.01% |
Equipment Finance lease payoffs |
0.10% |
0.07% |
0.06% |
Net premium amortization/other |
-- |
(0.12)% |
(0.03)% |
Core net interest margin |
5.32% |
5.48% |
5.34% |
The yield on average loans and leases increased 16 basis points
to 7.44% for the third quarter of 2012 from 7.28% for the second
quarter of 2012. When the effects of accelerated accretion,
nonaccrual loan interest, and early lease payoffs and premium
amortization are excluded, our core loan and lease yield was 7.07%
for the third quarter and 7.12% for the second quarter.
All-in deposit cost declined 2 basis points to 0.27% during the
third quarter of 2012 compared to the second quarter of
2012. The cost of interest-bearing deposits declined 3 basis
points to 0.46% due to the lower rate on average time
deposits. The cost of total interest-bearing liabilities
declined 2 basis points to 0.59% for the third quarter of 2012.
The NIM for the first nine months of 2012 was 5.53%, an increase
of 18 basis points from 5.35% 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. When the effects of accelerated
accretion, nonaccrual loan interest, and early lease payoffs and
premium amortization are excluded, our core NIMs were 5.34% and
5.10% for the nine months ended September 30, 2012 and 2011,
respectively.
The yield on average loans and leases increased 39 basis points
to 7.34% for the nine months ended September 30, 2012 compared to
6.95% for the same period last year, due mainly to the addition of
Celtic's and EQF's higher-yielding loan and lease
portfolios. When the effects of accelerated accretion,
nonaccrual loan interest, and early lease payoffs and premium
amortization are excluded, our core loan and lease yields were
7.07% and 6.63% for the nine months ended September 30, 2012 and
2011, respectively. All-in deposit cost declined 18
basis points to 0.30% for the first nine months of 2012 compared to
the same period last year. The cost of interest-bearing
deposits declined 25 basis points to 0.49% due to lower rates on
all interest-bearing deposits and a decline in time
deposits. The cost of total interest-bearing liabilities
declined 34 basis points to 0.69% due to the reduction in the cost
of interest-bearing deposits and the first quarter of 2012
repayment of $225.0 million in fixed-rate term FHLB advances and
the redemption of $18.6 million in fixed-rate trust preferred
securities.
NONINTEREST INCOME
Noninterest income increased by $811,000 to $5.7 million for the
third quarter of 2012 compared to $4.9 million for the second
quarter of 2012. The change was due to a
$1.1 million OTTI loss on one of our covered private label
collateralized mortgage obligation ("CMO") securities incurred in
the second quarter and not repeated in the third
quarter. After the 80% loss share on the covered private label
CMO, our share of the loss was $223,000.
Additionally, FDIC loss sharing
expense is lower by $627,000 when the loss share income related to
the OTTI is excluded. We also recognized in other noninterest
income a $297,000 gain on the sale of 10 branches to during the
third quarter. These items were offset by lower gains on sales
of leases of $271,000 and lower service charges on deposit accounts
of $220,000.
The third quarter includes net FDIC loss sharing expense of
$367,000 compared to second quarter net FDIC loss sharing expense
of $102,000; such change was due mostly to the second quarter OTTI
loss on a covered private label CMO security and higher write-offs
of the FDIC loss sharing asset relating to resolution of covered
loans at amounts higher than their carrying values, offset by
higher covered OREO write-downs during the third
quarter. The reduction in service charges on
deposit accounts was attributable primarily to lower analysis
charges and NSF fees.
The following table presents the details of FDIC loss sharing
income (expense), net for the periods indicated:
|
Three Months
Ended |
|
September 30, |
June 30, |
Increase |
|
2012 |
2012 |
(Decrease) |
|
(In
thousands) |
FDIC Loss Sharing Income (Expense),
Net: |
|
|
|
(Loss) gain on FDIC loss sharing asset
(1) |
$ (593) |
$ 575 |
$ (1,168) |
Net amortization |
(2,488) |
(1,917) |
(571) |
Loan recoveries shared with FDIC |
(640) |
(1,246) |
606 |
Net reimbursement from FDIC
for |
|
|
|
covered OREO write-downs and sales |
3,350 |
1,589 |
1,761 |
Other-than-temporary impairment loss
on |
|
|
|
covered security |
-- |
892 |
(892) |
Other |
4 |
5 |
(1) |
Total FDIC loss sharing income (expense),
net |
$ (367) |
$ (102) |
$ (265) |
|
|
|
|
(1) Includes increases related to
covered loan loss provisions and decreases for write-offs for
covered loans resolved or expected to be resolved at amounts higher
than their carrying value. |
Noninterest income declined by $9.4 million to $13.8 million for
the nine months ended September 30, 2012 compared to $23.2 million
for the same period last year. The change was due principally
to a decrease in net FDIC loss sharing income of $9.2 million, a
$1.1 million OTTI loss on one of our covered private label CMO's,
and a $714,000 reduction in service charges on deposit accounts,
offset partially by a $1.5 million gain on sale of leases
attributable to EQF. FDIC loss sharing income, net, decreased
due mainly to lower provisions for credit losses on covered loans,
increased write-offs of the FDIC loss sharing asset relating to
resolution of covered loans at amounts higher than their carrying
values, and higher amortization of the FDIC loss sharing asset,
offset partially by higher covered OREO
write-downs.
NONINTEREST EXPENSE
Noninterest expense increased by $4.1 million to $51.7 million
during the third quarter of 2012 compared to $47.6 million for the
second quarter of 2012. Noninterest expense for APB's
operations totaled $718,000 since the August 1, 2012 acquisition
date. Covered OREO expense increased $2.2 million due to
higher write-downs of $2.5 million offset by higher gains on sales
of $309,000. Non-covered OREO expense increased $1.8 million
due to $2.5 million in higher write-downs offset by higher gains on
sales of $709,000. Acquisition and integration costs increased
$1.2 million due to the APB acquisition. Such costs
include severance, systems conversion and professional fees, and
accruals for the closures of Pacific Western Bank offices at the
time of the APB acquisition. Partially offsetting these items
was a decrease in other expense relating to a lawsuit settlement of
$595,000 incurred in the second quarter; there was no similar
expense in the third quarter.
Noninterest expense includes (a) amortization of time-based
restricted stock, which is included in compensation, and (b)
intangible asset amortization. Amortization of restricted
stock totaled $1.4 million and $1.3 million for the third and
second quarters of 2012, respectively. Intangible asset
amortization totaled $1.7 million for each of the third and second
quarters of 2012.
Noninterest expense increased by $31.6 million to $168.1 million
during the nine months ended September 30, 2012 compared to $136.5
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 $9.0 million.
Noninterest expense for APB, Celtic and EQF totaled
$10.2 million since their acquisition dates, and the increase in
acquisition and integration costs totaled $3.0 million. Covered
OREO expense increased $3.8 million due mostly to lower gains on
sales of $4.9 million offset by lower write-downs of
$909,000. The majority of the other expense categories
declined. The following items are net of the impact of
acquisition activity. Intangible asset amortization declined
$1.8 million due to certain intangibles being fully
amortized. Insurance and assessments decreased $1.6 million
due to the revised deposit insurance assessment
formula. Non-covered OREO expense decreased $1.5 million due
to higher gains on sales of $1.2 million and lower write-downs of
$536,000. Other professional services declined $1.2 million
due to lower legal fees for litigation and loans and to lower fees
for our outsourced internal audit function.
Amortization of restricted stock totaled $4.3 million and $6.2
million for the nine months ended September 30, 2012 and 2011,
respectively. Intangible asset amortization totaled $5.2
million and $6.6 million for the same year-to-date periods,
respectively.
CREDIT QUALITY |
|
|
|
|
September 30, |
June 30, |
September 30, |
|
2012 |
2012 |
2011 |
|
(Dollars in
thousands) |
Non-Covered Credit Quality
Metrics: |
|
|
|
Allowance for credit losses |
$ 75,012 |
$ 78,031 |
$ 96,535 |
Nonaccrual loans and leases |
36,985 |
52,763 |
59,968 |
Classified loans and leases (1) |
96,898 |
139,910 |
177,745 |
Performing restructured loans |
112,834 |
103,815 |
86,406 |
Net charge-offs (for the quarter) |
1,019 |
3,706 |
6,017 |
Allowance for credit losses to loans and
leases, net of unearned income |
2.46% |
2.74% |
3.34% |
Allowance for credit losses to nonaccrual
loans and leases |
203% |
148% |
161% |
Nonperforming assets to loans and leases,
net of unearned income, and other real estate owned |
2.41% |
3.27% |
3.68% |
|
|
|
|
(1) Classified loans and leases
are those with a credit risk rating of substandard or
doubtful. |
|
Our non-covered loans and leases include $341.2 million in loans
and leases acquired in our 2012 acquisitions and that were
initially recorded at their estimated fair values. Only
$350,000 of our allowance for credit losses applies to such loans
and leases because the fair value amounts at which they were
initially recorded included an estimate of their credit loss.
When these loans and leases are excluded from the total of
non-covered loans and leases, the coverage ratio of our allowance
for credit losses increases to 2.76% at September 30, 2012.
The comparable ratio at June 30, 2012 was 2.91%.
Credit Loss Provisions
The Company recorded a negative provision for credit losses of
$2.1 million in the third quarter of 2012 compared to a negative
provision for credit losses of $271,000 in the second quarter of
2012. The provision in the third quarter was composed of a
$2.0 million negative provision for credit losses on non-covered
loans and leases and a $141,000 negative provision for credit
losses on covered loans. The negative provision in the second
quarter was composed solely of a $271,000 negative 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.
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 $74.3 million at
September 30, 2012 compared to $94.5 million at June 30,
2012. The ratio of non-covered nonperforming assets to
non-covered loans and leases and non-covered OREO decreased to
2.41% at September 30, 2012 from 3.27% at June 30, 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:
|
Nonaccrual Loans
and Leases (1) |
Accruing
and |
|
September 30,
2012 |
June 30,
2012 |
30 - 89 Days Past
Due (1) |
|
|
% of |
|
% of |
September 30, |
June 30, |
|
|
Loan |
|
Loan |
2012 |
2012 |
|
Balance |
Category |
Balance |
Category |
Balance |
Balance |
|
(Dollars in
thousands) |
Real estate mortgage: |
|
|
|
|
|
|
Hospitality |
$ 6,993 |
5.9% |
$ 13,279 |
9.6% |
$ -- |
$ -- |
SBA 504 |
1,330 |
2.4% |
1,873 |
3.3% |
2,926 |
2,948 |
Other |
9,031 |
0.5% |
14,548 |
0.9% |
-- |
2,495 |
Total real estate |
|
|
|
|
|
|
mortgage |
17,354 |
0.9% |
29,700 |
1.6% |
2,926 |
5,443 |
Real estate construction: |
|
|
|
|
|
|
Residential |
1,063 |
2.5% |
1,069 |
3.4% |
-- |
-- |
Commercial |
3,885 |
3.5% |
4,453 |
4.6% |
1,301 |
-- |
Total real estate |
|
|
|
|
|
|
construction |
4,948 |
3.2% |
5,522 |
4.3% |
1,301 |
-- |
Commercial: |
|
|
|
|
|
|
Collateralized |
7,180 |
1.7% |
7,258 |
2.0% |
12 |
310 |
Unsecured |
2,055 |
2.4% |
2,554 |
3.4% |
-- |
-- |
Asset-based |
176 |
0.1% |
176 |
0.1% |
-- |
-- |
SBA 7(a) |
4,433 |
17.0% |
6,830 |
26.2% |
210 |
404 |
Total commercial |
13,844 |
1.8% |
16,818 |
2.4% |
222 |
714 |
Leases |
420 |
0.3% |
244 |
0.2% |
-- |
148 |
Consumer |
419 |
2.0% |
479 |
2.8% |
23 |
216 |
Total non-covered |
|
|
|
|
|
|
loans and leases |
$ 36,985 |
1.2% |
$ 52,763 |
1.9% |
$ 4,472 |
$ 6,521 |
|
|
|
|
|
|
|
(1) Excludes covered loans. |
|
|
|
|
|
The $15.8 million decrease in non-covered nonaccrual loans and
leases during the third quarter was attributable to (a) additions
of $5.5 million, (b) foreclosures of $1.7 million, (c) other
reductions, payoffs and returns to accrual status of $17.7 million,
and (d) charge-offs of $1.9 million.
Below is a summary of the ten largest lending relationships on
nonaccrual status, excluding SBA-related loans, as of the date
indicated:
Nonaccrual |
|
Amount |
|
September 30, |
|
2012 |
Description |
(In thousands) |
|
|
|
$ 6,993 |
Two loans, each secured by a hotel in San
Diego County, California. The borrower is paying according to
the restructured terms of each loan. (1) |
|
|
3,057 |
This loan is unsecured. The borrower is
paying according to the restructured terms of the
loan. (1) |
|
|
2,388 |
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) |
|
|
2,106 |
This loan is secured by two industrial
buildings in San Diego County, California. |
|
|
1,811 |
This loan is unsecured and has a specific
reserve for 96% of the balance. The borrower is paying
according to the restructured terms of the
loan. (1) |
|
|
1,635 |
Three loans, two of which are secured by
apartment buildings in San Diego County, California; and one of
which is secured by an office building in San Diego County,
California. One of the loans secured by an apartment building
was repaid early in the 4th quarter. The borrower is paying
according to the original terms of the loans. |
|
|
1,241 |
This loan is secured by three industrial
buildings in Riverside County, California. The borrower is
paying according to the original terms of the loan. (1) |
|
|
1,005 |
This loan is secured by a multi-tenant
industrial building in Riverside County, California. The
borrower is not paying currently. (1) |
|
|
984 |
This loan is unsecured and has a specific
reserve for 100% of the balance. The borrower is not paying
currently.(1) |
931 |
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) |
|
|
$ 22,151 |
Total |
|
|
(1) On nonaccrual status at June
30, 2012 |
The following table presents the details of non-covered and
covered OREO as of the dates indicated:
|
September 30,
2012 |
June 30,
2012 |
|
Non-Covered |
Covered |
Non-Covered |
Covered |
Property Type |
OREO |
OREO |
OREO |
OREO |
|
(In
thousands) |
Commercial real estate |
$ 9,962 |
$ 18,500 |
$ 17,630 |
$ 17,896 |
Construction and land development |
25,633 |
6,807 |
24,112 |
10,011 |
Multi-family |
-- |
939 |
-- |
-- |
Single family residences |
1,738 |
128 |
-- |
3,183 |
Total OREO, net |
$ 37,333 |
$ 26,374 |
$ 41,742 |
$ 31,090 |
The following table presents non-covered and covered OREO
activity for the period indicated:
|
|
Three Months
Ended |
|
|
September 30,
2012 |
|
|
Non-Covered |
Covered |
Total |
|
|
OREO |
OREO |
OREO |
|
|
(In
thousands) |
Beginning of period |
|
$ 41,742 |
$ 31,090 |
$ 72,832 |
Addition from the APB
acquisition |
1,561 |
-- |
1,561 |
Foreclosures |
|
1,700 |
10,823 |
12,523 |
Payments to third parties
(1) |
176 |
-- |
176 |
Provision for losses |
|
(2,566) |
(5,214) |
(7,780) |
Reductions related to sales |
|
(5,280) |
(10,325) |
(15,605) |
End of period |
|
$ 37,333 |
$ 26,374 |
$ 63,707 |
Net gain on sale |
|
$ 1,037 |
$ 1,026 |
$ 2,063 |
|
|
|
|
|
(1) Represents 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 as of the date indicated as
shown in the following table:
|
September 30,
2012 |
|
Well |
Pacific |
PacWest |
|
Capitalized |
Western |
Bancorp |
|
Requirement |
Bank |
Consolidated |
Tier 1 leverage capital ratio |
5.00% |
9.64% |
10.26% |
Tier 1 risk-based capital ratio |
6.00% |
14.25% |
14.91% |
Total risk-based capital ratio |
10.00% |
15.52% |
16.18% |
Tangible common equity ratio |
N/A |
10.42% |
8.98% |
AMERICAN PERSPECTIVE BANK ACQUISITION
On August 1, 2012, Pacific Western Bank completed the
acquisition of American Perspective Bank ("APB") and acquired all
of the outstanding common stock and restricted stock of APB for
$58.1 million in cash, or $13.00 per share for each share of
common stock of American Perspective. APB had two operating
branches located in San Luis Obispo and Santa Maria, California,
and a loan production office located in Paso Robles,
California. Immediately following the completion of the
acquisition, APB was merged with and into Pacific Western Bank.
SALE OF BRANCHES
On September 21, 2012, Pacific Western Bank completed the sale
of 10 branches to Opus Bank. The branches are located in Los
Angeles, San Bernardino, Riverside, and San Diego
Counties.
The transaction resulted 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. The deposits of
the offices sold totaled $125.2 million. Although certain
other immaterial assets related to the branches were included in
the transaction, no loans were transferred. The annual cost
savings, representing noninterest expense less noninterest income,
are estimated to be $2.0 million after tax.
ABOUT PACWEST BANCORP
PacWest Bancorp ("PacWest") is a bank holding company with $5.5
billion in assets as of September 30, 2012, with one wholly-owned
banking subsidiary, Pacific Western Bank ("Pacific Western").
Through 66 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.
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2012 |
2012 |
2011 |
|
(In thousands, except
per share and share data) |
ASSETS |
|
|
|
Cash and due from banks |
$ 89,370 |
$ 97,499 |
$ 92,342 |
Interest-earning deposits in financial
institutions |
71,036 |
25,970 |
203,275 |
Total cash and cash
equivalents |
160,406 |
123,469 |
295,617 |
|
|
|
|
Non-covered securities
available-for-sale |
1,311,324 |
1,307,648 |
1,281,209 |
Covered securities
available-for-sale |
45,887 |
44,053 |
45,149 |
Total securities available-for-sale, at
estimated fair value |
1,357,211 |
1,351,701 |
1,326,358 |
Federal Home Loan Bank stock, at
cost |
40,923 |
41,736 |
46,106 |
Total investment
securities |
1,398,134 |
1,393,437 |
1,372,464 |
|
|
|
|
Non-covered loans and leases, net of
unearned income |
3,050,891 |
2,844,291 |
2,807,713 |
Allowance for loan and lease losses |
(69,142) |
(72,061) |
(85,313) |
Total non-covered loans and
leases, net |
2,981,749 |
2,772,230 |
2,722,400 |
Covered loans, net |
567,396 |
608,949 |
703,023 |
Total loans and leases,
net |
3,549,145 |
3,381,179 |
3,425,423 |
|
|
|
|
Non-covered other real estate owned,
net |
37,333 |
41,742 |
48,412 |
Covered other real estate owned, net |
26,374 |
31,090 |
33,506 |
Total other real estate owned,
net |
63,707 |
72,832 |
81,918 |
|
|
|
|
Premises and equipment, net |
18,064 |
21,565 |
23,068 |
FDIC loss sharing asset |
72,640 |
76,401 |
95,187 |
Cash surrender value of life
insurance |
67,900 |
67,595 |
67,469 |
Goodwill |
79,592 |
62,008 |
39,141 |
Core deposit and customer relationship
intangibles |
15,899 |
16,943 |
17,415 |
Other assets |
113,015 |
106,193 |
110,535 |
Total assets |
$ 5,538,502 |
$ 5,321,622 |
$ 5,528,237 |
|
|
|
|
LIABILITIES |
|
|
|
Noninterest-bearing demand deposits |
$ 2,006,996 |
$ 1,872,459 |
$ 1,685,799 |
Interest-bearing deposits |
2,780,352 |
2,718,870 |
2,891,654 |
Total deposits |
4,787,348 |
4,591,329 |
4,577,453 |
Borrowings |
17,996 |
15,546 |
225,000 |
Subordinated debentures |
108,250 |
108,250 |
129,271 |
Accrued interest payable and other
liabilities |
40,822 |
40,849 |
50,310 |
Total liabilities |
4,954,416 |
4,755,974 |
4,982,034 |
STOCKHOLDERS' EQUITY
(1) |
584,086 |
565,648 |
546,203 |
Total liabilities and
stockholders' equity |
$ 5,538,502 |
$ 5,321,622 |
$ 5,528,237 |
|
|
|
|
(1) Includes net unrealized gain on
securities available-for-sale, net |
$ 40,015 |
$ 32,494 |
$ 22,803 |
|
|
|
|
Tangible book value per share |
$ 13.06 |
$ 13.01 |
$ 13.14 |
Book value per share |
$ 15.61 |
$ 15.12 |
$ 14.66 |
|
|
|
|
Shares outstanding (includes unvested
restricted shares of 1,718,019 at September 30, 2012; 1,703,936 at
June 30, 2012; and 1,675,730 at December 31, 2011) |
37,420,025 |
37,402,293 |
37,254,318 |
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
|
2012 |
2012 |
2011 |
2012 |
2011 |
|
(In thousands, except
per share data) |
Interest income: |
|
|
|
|
|
Loans and leases |
$ 66,711 |
$ 63,312 |
$ 63,347 |
$ 194,775 |
$ 198,459 |
Investment securities |
8,346 |
9,558 |
9,077 |
27,484 |
25,678 |
Deposits in financial
institutions |
66 |
20 |
94 |
154 |
234 |
Total interest
income |
75,123 |
72,890 |
72,518 |
222,413 |
224,371 |
|
|
|
|
|
|
Interest expense: |
|
|
|
|
|
Deposits |
3,292 |
3,336 |
5,072 |
10,232 |
16,546 |
Borrowings |
210 |
293 |
1,782 |
2,428 |
5,289 |
Subordinated debentures |
850 |
848 |
1,223 |
2,889 |
3,668 |
Total interest
expense |
4,352 |
4,477 |
8,077 |
15,549 |
25,503 |
Net interest income |
70,771 |
68,413 |
64,441 |
206,864 |
198,868 |
|
|
|
|
|
|
Provision for credit
losses: |
|
|
|
|
|
Non-covered loans and leases |
(2,000) |
-- |
-- |
(12,000) |
13,300 |
Covered loans |
(141) |
(271) |
348 |
3,514 |
9,148 |
Total provision for credit
losses |
(2,141) |
(271) |
348 |
(8,486) |
22,448 |
Net interest income after |
|
|
|
|
|
provision for credit losses |
72,912 |
68,684 |
64,093 |
215,350 |
176,420 |
|
|
|
|
|
|
Noninterest income: |
|
|
|
|
|
Service charges on deposit accounts |
3,108 |
3,328 |
3,545 |
9,789 |
10,503 |
Other commissions and fees |
2,123 |
2,095 |
2,052 |
6,101 |
5,752 |
Gain on sale of leases |
132 |
403 |
-- |
1,525 |
-- |
Other-than-temporary
impairment |
|
|
|
|
|
loss on covered security |
-- |
(1,115) |
-- |
(1,115) |
-- |
Increase in cash surrender
value |
|
|
|
|
|
of life insurance |
304 |
295 |
359 |
964 |
1,106 |
FDIC loss sharing income (expense),
net |
(367) |
(102) |
963 |
(4,048) |
5,109 |
Other income |
382 |
(33) |
224 |
599 |
702 |
Total noninterest
income |
5,682 |
4,871 |
7,143 |
13,815 |
23,172 |
|
|
|
|
|
|
Noninterest expense: |
|
|
|
|
|
Compensation |
23,812 |
23,699 |
21,557 |
71,698 |
65,203 |
Occupancy |
6,964 |
7,088 |
7,423 |
21,340 |
21,548 |
Data processing |
2,310 |
2,258 |
2,228 |
6,848 |
6,832 |
Other professional services |
2,019 |
2,378 |
2,239 |
6,167 |
7,040 |
Business development |
635 |
581 |
548 |
1,854 |
1,712 |
Communications |
652 |
626 |
678 |
1,886 |
2,371 |
Insurance and assessments |
1,398 |
1,323 |
1,641 |
4,014 |
5,581 |
Non-covered other real estate owned,
net |
1,883 |
130 |
2,293 |
3,834 |
5,296 |
Covered other real estate owned, net |
4,290 |
2,130 |
4,813 |
7,242 |
3,440 |
Intangible asset amortization |
1,678 |
1,737 |
1,977 |
5,150 |
6,592 |
Acquisition and integration costs |
2,101 |
871 |
-- |
2,997 |
-- |
Debt termination |
-- |
-- |
-- |
22,598 |
-- |
Other expenses |
3,915 |
4,764 |
3,190 |
12,509 |
10,909 |
Total noninterest
expense |
51,657 |
47,585 |
48,587 |
168,137 |
136,524 |
|
|
|
|
|
|
Earnings before income taxes |
26,937 |
25,970 |
22,649 |
61,028 |
63,068 |
Income tax expense |
(10,849) |
(10,413) |
(9,345) |
(24,119) |
(26,247) |
Net earnings |
$ 16,088 |
$ 15,557 |
$ 13,304 |
$ 36,909 |
$ 36,821 |
|
|
|
|
|
|
Basic and diluted earnings per share |
$ 0.43 |
$ 0.42 |
$ 0.36 |
$ 1.00 |
$ 0.99 |
|
|
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
AVERAGE BALANCE SHEETS
AND YIELD ANALYSIS |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
|
2012 |
2012 |
2011 |
2012 |
2011 |
|
(Dollars in
Thousands) |
Average Assets: |
|
|
|
|
|
Loans and leases, net of unearned
income |
$ 3,565,637 |
$ 3,499,056 |
$ 3,656,184 |
$ 3,542,571 |
$ 3,820,036 |
Investment securities |
1,377,016 |
1,390,080 |
1,168,822 |
1,376,722 |
1,030,416 |
Interest-earning deposits in |
|
|
|
|
|
financial institutions |
101,491 |
28,478 |
142,691 |
77,928 |
119,698 |
Federal funds sold |
-- |
10 |
-- |
3 |
-- |
Average interest-earning
assets |
5,044,144 |
4,917,624 |
4,967,697 |
4,997,224 |
4,970,150 |
Other assets |
478,428 |
463,962 |
486,276 |
471,216 |
502,435 |
Average total assets |
$ 5,522,572 |
$ 5,381,586 |
$ 5,453,973 |
$ 5,468,440 |
$ 5,472,585 |
|
|
|
|
|
|
Average liabilities: |
|
|
|
|
|
Interest checking deposits |
$ 522,551 |
$ 514,969 |
$ 489,988 |
$ 516,924 |
$ 491,942 |
Money market deposits |
1,248,723 |
1,172,050 |
1,222,787 |
1,206,820 |
1,226,840 |
Savings deposits |
160,843 |
160,937 |
154,922 |
160,912 |
148,552 |
Time deposits |
885,181 |
889,705 |
1,049,805 |
905,721 |
1,102,865 |
Average interest-bearing
deposits |
2,817,298 |
2,737,661 |
2,917,502 |
2,790,377 |
2,970,199 |
Borrowings |
22,700 |
113,233 |
225,022 |
124,863 |
225,722 |
Subordinated debentures |
108,250 |
108,250 |
129,395 |
113,279 |
129,469 |
Average interest-bearing
liabilities |
2,948,248 |
2,959,144 |
3,271,919 |
3,028,519 |
3,325,390 |
Noninterest-bearing demand deposits |
1,956,929 |
1,824,278 |
1,616,012 |
1,833,855 |
1,602,518 |
Other liabilities |
43,786 |
40,984 |
43,983 |
44,829 |
43,057 |
Average total liabilities |
4,948,963 |
4,824,406 |
4,931,914 |
4,907,203 |
4,970,965 |
Average stockholders'
equity |
573,609 |
557,180 |
522,059 |
561,237 |
501,620 |
Average liabilities and stockholders'
equity |
$ 5,522,572 |
$ 5,381,586 |
$ 5,453,973 |
$ 5,468,440 |
$ 5,472,585 |
|
|
|
|
|
|
Average deposits |
$ 4,774,227 |
$ 4,561,939 |
$ 4,533,514 |
$ 4,624,232 |
$ 4,572,717 |
|
|
|
|
|
|
Yield on: |
|
|
|
|
|
Average loans and leases |
7.44% |
7.28% |
6.87% |
7.34% |
6.95% |
Average investment securities |
2.41% |
2.77% |
3.08% |
2.67% |
3.33% |
Average interest-earning deposits |
0.26% |
0.28% |
0.26% |
0.26% |
0.26% |
Average interest-earning
assets |
5.92% |
5.96% |
5.79% |
5.95% |
6.04% |
|
|
|
|
|
|
Cost of: |
|
|
|
|
|
Average deposits/all-in deposit cost
(1) |
0.27% |
0.29% |
0.44% |
0.30% |
0.48% |
Average interest-bearing deposits |
0.46% |
0.49% |
0.69% |
0.49% |
0.74% |
Average borrowings |
3.68% |
1.04% |
3.14% |
2.60% |
3.13% |
Average subordinated debentures |
3.12% |
3.15% |
3.75% |
3.41% |
3.79% |
Average interest-bearing
liabilities |
0.59% |
0.61% |
0.98% |
0.69% |
1.03% |
|
|
|
|
|
|
Net interest rate spread
(2) |
5.33% |
5.35% |
4.81% |
5.26% |
5.01% |
Net interest margin (3) |
5.58% |
5.60% |
5.15% |
5.53% |
5.35% |
|
|
|
|
|
|
(1) Cost of average
deposits/all-in deposit cost is calculated as annualized interest
expense on deposits divided by average deposits. |
|
(2) Net interest rate
spread is calculated as the yield on average interest-earning
assets less the cost of average interest-bearing
liabilities. |
(3) Net interest
margin is calculated as annualized net interest income divided by
average interest-earning assets. |
|
|
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
LOAN
CONCENTRATION |
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2012 |
|
Total
Loans |
Non-Covered
Loans |
Covered
Loans |
|
|
% of |
|
% of |
|
% of |
|
Amount |
Total |
Amount |
Total |
Amount |
Total |
|
(Dollars in
thousands) |
Real estate mortgage: |
|
|
|
|
|
|
Hospitality |
$ 121,092 |
3% |
$ 118,189 |
4% |
$ 2,903 |
0% |
SBA 504 |
55,083 |
1% |
55,083 |
2% |
-- |
-- |
Other |
2,359,139 |
64% |
1,755,618 |
57% |
603,521 |
93% |
Total real estate mortgage |
2,535,314 |
68% |
1,928,890 |
63% |
606,424 |
93% |
Real estate construction: |
|
|
|
|
|
|
Residential |
49,844 |
1% |
42,752 |
1% |
7,092 |
1% |
Commercial |
129,499 |
4% |
109,996 |
4% |
19,503 |
3% |
Total real estate construction |
179,343 |
5% |
152,748 |
5% |
26,595 |
4% |
|
|
|
|
|
|
|
Total real estate loans |
2,714,657 |
73% |
2,081,638 |
68% |
633,019 |
97% |
|
|
|
|
|
|
|
Commercial: |
|
|
|
|
|
|
Collateralized |
449,245 |
12% |
433,030 |
14% |
16,215 |
3% |
Unsecured |
88,020 |
2% |
87,335 |
3% |
685 |
0% |
Asset-based |
226,401 |
6% |
226,401 |
7% |
-- |
-- |
SBA 7(a) |
26,002 |
1% |
26,002 |
1% |
-- |
-- |
Total commercial |
789,668 |
21% |
772,768 |
25% |
16,900 |
3% |
Leases (1) |
161,934 |
4% |
161,934 |
5% |
-- |
-- |
Consumer |
21,233 |
1% |
20,615 |
1% |
618 |
0% |
Foreign |
16,126 |
1% |
16,126 |
1% |
-- |
-- |
Total gross loans |
$ 3,703,618 |
100% |
3,053,081 |
100% |
650,537 |
100% |
Less: |
|
|
|
|
|
|
Unearned income |
|
|
(2,190) |
|
-- |
|
Discount |
|
|
-- |
|
(52,437) |
|
Allowance |
|
|
(69,142) |
|
(30,704) |
|
Total net loans |
|
|
$ 2,981,749 |
|
$ 567,396 |
|
|
|
|
|
|
|
|
(1) Excludes leases in process of
$15.1 million. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
NON-COVERED LOAN
CONCENTRATION |
|
|
|
|
|
REAL ESTATE MORTGAGE
LOANS |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2012 |
June 30,
2012 |
December 31,
2011 |
|
|
% of |
|
% of |
|
% of |
Loan Category |
Amount |
Total |
Amount |
Total |
Amount |
Total |
|
(Dollars in
thousands) |
Commercial real estate mortgage: |
|
|
|
|
|
|
Industrial/warehouse |
$ 329,287 |
17.1% |
$ 344,380 |
18.8% |
$ 367,494 |
18.5% |
Retail |
255,669 |
13.3% |
253,201 |
13.8% |
286,691 |
14.5% |
Office buildings |
284,920 |
14.8% |
257,703 |
14.1% |
290,074 |
14.6% |
Owner-occupied |
196,812 |
10.2% |
204,179 |
11.2% |
226,307 |
11.4% |
Hotel |
118,189 |
6.1% |
137,621 |
7.5% |
144,402 |
7.3% |
Healthcare |
113,827 |
5.9% |
117,418 |
6.4% |
131,625 |
6.7% |
Mixed use |
47,404 |
2.5% |
48,915 |
2.7% |
53,855 |
2.7% |
Gas station |
28,563 |
1.5% |
30,328 |
1.7% |
33,715 |
1.7% |
Self storage |
19,489 |
1.0% |
19,602 |
1.1% |
23,148 |
1.2% |
Restaurant |
16,651 |
0.9% |
16,795 |
0.9% |
22,549 |
1.1% |
Land acquisition/development |
21,988 |
1.1% |
22,051 |
1.2% |
14,015 |
0.7% |
Unimproved land |
11,089 |
0.6% |
11,516 |
0.6% |
1,369 |
0.1% |
Other |
278,475 |
14.3% |
190,761 |
10.4% |
206,504 |
10.4% |
Total commercial real
estate mortgage |
1,722,363 |
89.3% |
1,654,470 |
90.4% |
1,801,748 |
90.9% |
|
|
|
|
|
|
|
Residential real estate mortgage: |
|
|
|
|
|
|
Multi-family |
86,190 |
4.5% |
93,586 |
5.1% |
93,866 |
4.7% |
Single family owner-occupied |
37,700 |
2.0% |
39,483 |
2.2% |
32,209 |
1.6% |
Single family nonowner-occupied |
7,165 |
0.4% |
8,862 |
0.5% |
19,341 |
1.0% |
HELOCs |
47,966 |
2.5% |
32,376 |
1.8% |
35,300 |
1.8% |
Other |
27,506 |
1.3% |
-- |
-- |
-- |
-- |
Total residential real estate
mortgage |
206,527 |
10.7% |
174,307 |
9.6% |
180,716 |
9.1% |
|
|
|
|
|
|
|
Total gross non-covered real estate mortgage
loans |
$ 1,928,890 |
100.0% |
$ 1,828,777 |
100.0% |
$ 1,982,464 |
100.0% |
|
|
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
COVERED LOAN
CONCENTRATION |
|
|
|
|
|
REAL ESTATE MORTGAGE
LOANS |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2012 |
June 30,
2012 |
December 31,
2011 |
|
|
% of |
|
% of |
|
% of |
Loan Category |
Amount |
Total |
Amount |
Total |
Amount |
Total |
|
(Dollars in
thousands) |
Commercial real estate mortgage: |
|
|
|
|
|
|
Industrial/warehouse |
$ 26,510 |
4.4% |
$ 27,580 |
4.2% |
$ 33,755 |
4.6% |
Retail |
94,437 |
15.5% |
99,947 |
15.4% |
113,289 |
15.4% |
Office buildings |
66,657 |
11.0% |
68,781 |
10.6% |
77,767 |
10.6% |
Owner-occupied |
20,164 |
3.3% |
20,323 |
3.1% |
24,837 |
3.4% |
Hotel |
2,903 |
0.5% |
2,916 |
0.4% |
2,944 |
0.4% |
Healthcare |
14,350 |
2.4% |
14,546 |
2.2% |
16,851 |
2.3% |
Mixed use |
5,728 |
0.9% |
6,951 |
1.1% |
7,733 |
1.1% |
Gas station |
5,141 |
0.8% |
5,941 |
0.9% |
6,001 |
0.8% |
Self storage |
50,110 |
8.3% |
53,187 |
8.2% |
52,793 |
7.2% |
Restaurant |
1,723 |
0.3% |
1,764 |
0.3% |
2,532 |
0.3% |
Unimproved land |
966 |
0.2% |
1,734 |
0.3% |
1,752 |
0.2% |
Other |
13,803 |
2.3% |
13,886 |
2.1% |
14,887 |
2.0% |
Total commercial real
estate mortgage |
302,492 |
49.9% |
317,556 |
48.8% |
355,141 |
48.3% |
|
|
|
|
|
|
|
Residential real estate mortgage: |
|
|
|
|
|
|
Multi-family |
191,736 |
31.6% |
215,759 |
33.1% |
250,633 |
34.0% |
Single family owner-occupied |
80,360 |
13.3% |
85,212 |
13.1% |
95,248 |
12.9% |
Single family nonowner-occupied |
23,266 |
3.8% |
23,911 |
3.7% |
25,624 |
3.5% |
Mixed use |
2,858 |
0.5% |
2,879 |
0.4% |
2,918 |
0.4% |
HELOCs |
5,712 |
0.9% |
5,680 |
0.9% |
6,794 |
0.9% |
Total residential real estate
mortgage |
303,932 |
50.1% |
333,441 |
51.2% |
381,217 |
51.7% |
|
|
|
|
|
|
|
Total gross covered real estate
mortgage loans |
$ 606,424 |
100.0% |
$ 650,997 |
100.0% |
$ 736,358 |
100.0% |
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
NON-COVERED LOAN
CONCENTRATION TREND |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
Loan Segment |
2012 |
2012 |
2012 |
2011 |
2011 |
|
(In
thousands) |
Real estate mortgage |
$ 1,928,890 |
$ 1,828,777 |
$ 1,896,052 |
$ 1,982,464 |
$ 2,031,893 |
Real estate construction |
152,748 |
129,107 |
118,304 |
113,059 |
152,411 |
Commercial |
772,768 |
701,044 |
665,441 |
671,939 |
671,963 |
Leases (1) |
161,934 |
153,793 |
153,845 |
-- |
-- |
Consumer |
20,615 |
17,151 |
15,826 |
23,711 |
20,621 |
Foreign: |
|
|
|
|
|
Commercial |
14,679 |
15,507 |
16,747 |
19,531 |
19,532 |
Other, including real estate |
1,447 |
1,510 |
2,005 |
1,401 |
1,400 |
Total gross non-covered loans and
leases |
$ 3,053,081 |
$ 2,846,889 |
$ 2,868,220 |
$ 2,812,105 |
$ 2,897,820 |
|
|
|
|
|
|
(1) Does not include leases
in process of $15.1 million, $12.3 million and $13.8 million at
September 30, 2012, June 30, 2012 and March 31, 2012. |
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
COVERED LOAN
CONCENTRATION TREND |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
June 30, |
March 31, |
December 31, |
September 30, |
|
2012 |
2012 |
2012 |
2011 |
2011 |
|
(In
thousands) |
Real estate mortgage |
$ 606,424 |
$ 650,997 |
$ 699,653 |
$ 736,358 |
$ 788,253 |
Real estate construction |
26,595 |
32,125 |
41,191 |
46,918 |
55,464 |
Commercial |
16,900 |
18,954 |
20,889 |
25,610 |
26,729 |
Consumer |
618 |
659 |
686 |
735 |
824 |
Total gross covered loans |
650,537 |
702,735 |
762,419 |
809,621 |
871,270 |
Less: discount |
(52,437) |
(62,323) |
(66,312) |
(75,323) |
(80,920) |
Less: allowance for loan losses |
(30,704) |
(31,463) |
(35,810) |
(31,275) |
(29,291) |
Total covered loans, net |
$ 567,396 |
$ 608,949 |
$ 660,297 |
$ 703,023 |
$ 761,059 |
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
NON-COVERED NONCLASSIFIED
AND CLASSIFIED LOANS AND LEASES |
(Unaudited) |
|
|
|
|
|
|
|
|
September 30,
2012 |
|
Nonclassified |
Classified |
Total |
|
(In
thousands) |
Real estate mortgage: |
|
|
|
Hospitality |
$ 105,417 |
$ 12,772 |
$ 118,189 |
SBA 504 |
48,971 |
6,112 |
55,083 |
Other |
1,715,968 |
39,650 |
1,755,618 |
Total real estate mortgage |
1,870,356 |
58,534 |
1,928,890 |
Real estate construction: |
|
|
|
Residential |
39,774 |
2,978 |
42,752 |
Commercial |
102,098 |
7,898 |
109,996 |
Total real estate construction |
141,872 |
10,876 |
152,748 |
Commercial: |
|
|
|
Collateralized |
417,379 |
15,651 |
433,030 |
Unsecured |
84,374 |
2,961 |
87,335 |
Asset-based |
225,700 |
701 |
226,401 |
SBA 7(a) |
19,117 |
6,885 |
26,002 |
Total commercial |
746,570 |
26,198 |
772,768 |
Leases |
161,514 |
420 |
161,934 |
Consumer |
19,745 |
870 |
20,615 |
Foreign |
16,126 |
-- |
16,126 |
Total non-covered loans and leases |
$ 2,956,183 |
$ 96,898 |
$ 3,053,081 |
|
|
|
|
|
|
|
|
|
June 30,
2012 |
|
Nonclassified |
Classified |
Total |
|
(In
thousands) |
Real estate mortgage: |
|
|
|
Hospitality |
$ 118,534 |
$ 19,087 |
$ 137,621 |
SBA 504 |
50,041 |
6,684 |
56,725 |
Other |
1,577,843 |
56,588 |
1,634,431 |
Total real estate mortgage |
1,746,418 |
82,359 |
1,828,777 |
Real estate construction: |
|
|
|
Residential |
28,365 |
2,888 |
31,253 |
Commercial |
78,869 |
18,985 |
97,854 |
Total real estate construction |
107,234 |
21,873 |
129,107 |
Commercial: |
|
|
|
Collateralized |
354,370 |
16,487 |
370,857 |
Unsecured |
73,142 |
2,902 |
76,044 |
Asset-based |
226,278 |
1,801 |
228,079 |
SBA 7(a) |
16,175 |
9,889 |
26,064 |
Total commercial |
669,965 |
31,079 |
701,044 |
Leases |
150,124 |
3,669 |
153,793 |
Consumer |
16,221 |
930 |
17,151 |
Foreign |
17,017 |
-- |
17,017 |
Total non-covered loans |
$ 2,706,979 |
$ 139,910 |
$ 2,846,889 |
|
|
|
|
Note: Nonclassified loans and
leases are those with a credit risk rating of either pass or
special mention, while classified loans and leases 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 AND
LEASES (1) |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
|
2012 |
2012 |
2011 |
2012 |
2011 |
|
(Dollars in
thousands) |
Allowance for credit losses, beginning of
period |
$ 78,031 |
$ 81,737 |
$ 102,552 |
$ 93,783 |
$ 104,328 |
Loans charged-off: |
|
|
|
|
|
Real estate mortgage |
(1,118) |
(2,583) |
(4,293) |
(5,891) |
(9,859) |
Real estate construction |
(492) |
-- |
-- |
(492) |
(5,838) |
Commercial |
(492) |
(1,352) |
(2,237) |
(2,715) |
(7,967) |
Consumer |
(25) |
(34) |
(54) |
(258) |
(1,379) |
Total loans charged off |
(2,127) |
(3,969) |
(6,584) |
(9,356) |
(25,043) |
Recoveries on loans
charged-off: |
|
|
|
|
Real estate mortgage |
845 |
43 |
225 |
1,217 |
349 |
Real estate construction |
11 |
14 |
33 |
35 |
1,021 |
Commercial |
218 |
190 |
235 |
1,232 |
1,160 |
Consumer |
32 |
16 |
74 |
79 |
1,375 |
Foreign |
2 |
-- |
-- |
22 |
45 |
Total recoveries on loans charged
off |
1,108 |
263 |
567 |
2,585 |
3,950 |
Net charge-offs |
(1,019) |
(3,706) |
(6,017) |
(6,771) |
(21,093) |
Provision for credit losses |
(2,000) |
-- |
-- |
(12,000) |
13,300 |
Allowance for credit losses, end of
period |
$ 75,012 |
$ 78,031 |
$ 96,535 |
$ 75,012 |
$ 96,535 |
|
|
|
|
|
|
Annualized net charge-offs to
average loans and leases |
0.14% |
0.52% |
0.83% |
0.31% |
0.94% |
|
|
|
|
|
|
(1) Applies only to non-covered
loans and leases. |
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
ALLOWANCE FOR CREDIT
LOSSES, NONPERFORMING |
|
ASSETS AND CREDIT QUALITY
RATIOS FOR |
|
|
NON-COVERED LOANS AND
LEASES |
|
|
(Unaudited) |
|
|
|
|
September 30, |
June 30, |
December 31, |
|
2012 |
2012 |
2011 |
|
(Dollars in
thousands) |
Allowance for loan and lease losses (1) |
$ 69,142 |
$ 72,061 |
$ 85,313 |
Reserve for unfunded loan commitments
(1) |
5,870 |
5,970 |
8,470 |
Total allowance for credit losses |
$ 75,012 |
$ 78,031 |
$ 93,783 |
|
|
|
|
Nonaccrual loans and leases (2) |
$ 36,985 |
$ 52,763 |
$ 58,260 |
Other real estate owned (2) |
37,333 |
41,742 |
48,412 |
Total nonperforming assets |
$ 74,318 |
$ 94,505 |
$ 106,672 |
|
|
|
|
Performing restructured loans (1) |
$ 112,834 |
$ 103,815 |
$ 116,791 |
|
|
|
Allowance for credit losses to loans and
leases, net of unearned income |
2.46% |
2.74% |
3.34% |
Allowance for credit losses to nonaccrual
loans and leases |
202.8% |
147.9% |
161.0% |
Nonperforming assets to loans and leases, net
of unearned income, and other real estate owned |
2.41% |
3.27% |
3.73% |
Nonperforming assets to total assets |
1.34% |
1.78% |
1.93% |
Nonaccrual loans and leases to loans and
leases, net of unearned income |
1.21% |
1.86% |
2.07% |
|
|
|
|
(1) Applies to non-covered loans. |
|
|
|
(2) Excludes covered nonperforming
assets. |
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
DEPOSITS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
September 30, |
June 30, |
December 31, |
Deposit Category |
2012 |
2012 |
2011 |
|
(Dollars in
thousands) |
Noninterest-bearing demand deposits (1) |
$ 2,006,996 |
$ 1,872,459 |
$ 1,685,799 |
Interest checking deposits |
499,734 |
518,330 |
500,998 |
Money market deposits |
1,262,406 |
1,174,915 |
1,265,282 |
Savings deposits |
155,871 |
160,603 |
157,480 |
Total core deposits |
3,925,007 |
3,726,307 |
3,609,559 |
Time deposits under $100,000 |
291,450 |
298,980 |
324,521 |
Time deposits of $100,000 and over |
570,891 |
566,042 |
643,373 |
Total time deposits |
862,341 |
865,022 |
967,894 |
Total deposits |
$ 4,787,348 |
$ 4,591,329 |
$ 4,577,453 |
|
|
|
|
Noninterest-bearing demand deposits as a
percentage of total deposits |
42% |
41% |
37% |
Core deposits as a percentage of total
deposits |
82% |
81% |
79% |
|
|
|
|
(1) The September 30, 2012
balance includes a $120 million deposit received at
quarter-end. Such funds were withdrawn in October
2012. |
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
TIME DEPOSITS |
|
|
|
|
(Unaudited) |
|
|
|
|
|
September 30,
2012 |
|
Time |
Time |
|
|
|
Deposits |
Deposits |
Total |
|
|
Under |
$100,000 |
Time |
|
Maturity |
$100,000 |
or More |
Deposits |
Rate |
|
(Dollars in
thousands) |
Due in three months or less |
$ 61,420 |
$ 104,417 |
$ 165,837 |
0.33% |
Due in over three months through six
months |
58,504 |
110,600 |
169,104 |
1.42% |
Due in over six months through twelve
months |
100,075 |
198,550 |
298,625 |
1.57% |
Due in over 12 months through 24 months |
58,026 |
122,405 |
180,431 |
1.07% |
Due in over 24 months |
13,425 |
34,919 |
48,344 |
1.09% |
Total |
$ 291,450 |
$ 570,891 |
$ 862,341 |
1.17% |
|
|
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
GAAP TO NON-GAAP
RECONCILIATIONS |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
Adjusted Earnings Before Income
Taxes |
2012 |
2012 |
2011 |
2012 |
2011 |
|
(In
thousands) |
Earnings before income taxes |
$ 26,937 |
$ 25,970 |
$ 22,649 |
$ 61,028 |
$ 63,068 |
Plus: Total provision for credit
losses |
(2,141) |
(271) |
348 |
(8,486) |
22,448 |
Non-covered OREO expense,
net |
1,883 |
130 |
2,293 |
3,834 |
5,296 |
Covered OREO expense, net |
4,290 |
2,130 |
4,813 |
7,242 |
3,440 |
Other-than-temporary impairment
loss on covered security |
-- |
1,115 |
-- |
1,115 |
-- |
Acquisition and integration
costs |
2,101 |
871 |
-- |
2,997 |
-- |
Debt termination expense |
-- |
-- |
-- |
22,598 |
-- |
Less: FDIC loss sharing income |
|
|
|
|
|
(expense),
net |
(367) |
(102) |
963 |
(4,048) |
5,109 |
Adjusted earnings before
income taxes |
$ 33,437 |
$ 30,047 |
$ 29,140 |
$ 94,376 |
$ 89,143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
Adjusted Efficiency
Ratio |
2012 |
2012 |
2011 |
2012 |
2011 |
|
(Dollars in
thousands) |
Noninterest expense |
$ 51,657 |
$ 47,585 |
$ 48,587 |
$ 168,137 |
$ 136,524 |
Less: Non-covered OREO expense, net |
1,883 |
130 |
2,293 |
3,834 |
5,296 |
Covered OREO expense, net |
4,290 |
2,130 |
4,813 |
7,242 |
3,440 |
Acquisition and integration
costs |
2,101 |
871 |
-- |
2,997 |
-- |
Debt termination expense |
-- |
-- |
-- |
22,598 |
-- |
Adjusted
noninterest expense |
$ 43,383 |
$ 44,454 |
$ 41,481 |
$ 131,466 |
$ 127,788 |
|
|
|
|
|
|
Net interest income |
$ 70,771 |
$ 68,413 |
$ 64,441 |
$ 206,864 |
$ 198,868 |
Noninterest income |
5,682 |
4,871 |
7,143 |
13,815 |
23,172 |
Net revenues |
76,453 |
73,284 |
71,584 |
220,679 |
222,040 |
Less: FDIC loss sharing income |
|
|
|
|
|
(expense),
net |
(367) |
(102) |
963 |
(4,048) |
5,109 |
Other-than-temporary impairment
loss on covered security |
-- |
(1,115) |
-- |
(1,115) |
-- |
Adjusted net
revenues |
$ 76,820 |
$ 74,501 |
$ 70,621 |
$ 225,842 |
$ 216,931 |
|
|
|
|
|
|
Base efficiency ratio (1) |
67.6% |
64.9% |
67.9% |
76.2% |
61.5% |
Adjusted efficiency ratio (2) |
56.5% |
59.7% |
58.7% |
58.2% |
58.9% |
|
|
|
|
|
|
(1) Noninterest expense
divided by net revenues. |
(2) Adjusted noninterest
expense divided by adjusted net revenues. |
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
GAAP TO NON-GAAP
RECONCILIATIONS |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
September 30, |
June 30, |
December 31, |
Tangible Common Equity |
2012 |
2012 |
2011 |
|
(Dollars in
thousands) |
PacWest Bancorp
Consolidated: |
|
|
|
Stockholders' equity |
$ 584,086 |
$ 565,648 |
$ 546,203 |
Less: Intangible assets |
95,491 |
78,951 |
56,556 |
Tangible common
equity |
$ 488,595 |
$ 486,697 |
$ 489,647 |
|
|
|
|
Total assets |
$ 5,538,502 |
$ 5,321,622 |
$ 5,528,237 |
Less: Intangible assets |
95,491 |
78,951 |
56,556 |
Tangible assets |
$ 5,443,011 |
$ 5,242,671 |
$ 5,471,681 |
|
|
|
|
Equity to assets
ratio |
10.55% |
10.63% |
9.88% |
Tangible common equity
ratio (1) |
8.98% |
9.28% |
8.95% |
|
|
|
|
Pacific Western Bank: |
|
|
|
Stockholders' equity |
$ 660,693 |
$ 642,553 |
$ 625,494 |
Less: Intangible assets |
95,491 |
78,951 |
56,556 |
Tangible common
equity |
$ 565,202 |
$ 563,602 |
$ 568,938 |
|
|
|
|
Total assets |
$ 5,520,998 |
$ 5,305,170 |
$ 5,512,025 |
Less: Intangible assets |
95,491 |
78,951 |
56,556 |
Tangible assets |
$ 5,425,507 |
$ 5,226,219 |
$ 5,455,469 |
|
|
|
|
Equity to assets
ratio |
11.97% |
12.11% |
11.35% |
Tangible common equity
ratio (1) |
10.42% |
10.78% |
10.43% |
|
|
|
|
(1) Calculated as tangible common
equity divided by tangible assets. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PACWEST BANCORP AND
SUBSIDIARIES |
|
|
|
|
|
EARNINGS PER SHARE
CALCULATIONS |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
June 30, |
September 30, |
September
30, |
|
2012 |
2012 |
2011 |
2012 |
2011 |
|
(In thousands, except
per share data) |
Basic Earnings Per
Share: |
|
|
|
|
|
Net earnings |
$ 16,088 |
$ 15,557 |
$ 13,304 |
$ 36,909 |
$ 36,821 |
Less: earnings allocated to unvested
restricted stock (1) |
(574) |
(538) |
(622) |
(1,170) |
(1,595) |
Net earnings allocated to common
shares |
$ 15,514 |
$ 15,019 |
$ 12,682 |
$ 35,739 |
$ 35,226 |
|
|
|
|
|
|
Weighted-average basic shares and
unvested restricted stock outstanding |
37,413.2 |
37,359.2 |
37,257.4 |
37,352.4 |
37,101.3 |
Less: weighted-average
unvested restricted stock outstanding |
(1,712.8) |
(1,669.2) |
(1,768.9) |
(1,678.8) |
(1,629.8) |
Weighted-average basic shares
outstanding |
35,700.4 |
35,690.0 |
35,488.5 |
35,673.6 |
35,471.5 |
|
|
|
|
|
|
Basic earnings per share |
$ 0.43 |
$ 0.42 |
$ 0.36 |
$ 1.00 |
$ 0.99 |
|
|
|
|
|
|
Diluted Earnings Per
Share: |
|
|
|
|
|
Net earnings allocated to common
shares |
$ 15,514 |
$ 15,019 |
$ 12,682 |
$ 35,739 |
$ 35,226 |
|
|
|
|
|
|
Weighted-average diluted shares
outstanding |
35,700.4 |
35,690.0 |
35,488.5 |
35,673.6 |
35,471.5 |
|
|
|
|
|
|
Diluted earnings per share |
$ 0.43 |
$ 0.42 |
$ 0.36 |
$ 1.00 |
$ 0.99 |
|
|
|
|
|
|
(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: Matt Wagner
Chief Executive Officer
(310) 728-1020
Vic Santoro
Executive Vice President and CFO
(310) 728-1021
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