PACW PacWest Bancorp

PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the first quarter of 2018 of $118.3 million, or $0.93 per diluted share, compared to net earnings for the fourth quarter of 2017 of $84.0 million, or $0.66 per diluted share.  The increase in net earnings from the prior quarter was primarily due to lower noninterest expense, lower income tax expense, higher noninterest income, and a lower provision for credit losses, offset partially by lower net interest income. 

Noninterest expense for the first quarter of 2018 was lower due mainly to a decrease in acquisition, integration and reorganization costs of $16.1 million related to the CUB acquisition and integration completed in the fourth quarter of 2017.  Income tax expense for the first quarter of 2018 was lower mainly due to the enactment of the Tax Cuts and Jobs Act which reduced our effective tax rate to 27.7% in the first quarter of 2018 from 40.2% in the fourth quarter of 2017.  Noninterest income for the first quarter of 2018 increased by $11.8 million mainly due to a $9.6 million increase in the gain on sale of securities.  In the first quarter of 2018 we sold certain securities for a net gain of $6.3 million, whereas in the fourth quarter of 2017, we made a tax-related decision to sell certain securities resulting in a net loss of $3.3 million.  Net interest income declined by $6.5 million due mostly to two fewer days in the current quarter and a lower average loan and lease balance.

Matt Wagner, President and CEO, commented, “Our performance in the first quarter was highlighted by significant earnings growth, solid margin expansion, and notable decreases in nonaccrual and classified loans and leases. Our de-risking activities have resulted in lower credit costs, improved credit quality metrics and a reduced reliance on higher-cost deposits and borrowings. Our first quarter results produced a return on assets of 1.99% and a return on tangible equity of 21.08%.”

Mr. Wagner continued, “Our first quarter tax equivalent NIM increased 14 basis points to 5.11%, benefitting from the repricing of variable-rate loans, higher loan fee income and higher recapture of nonaccrual interest.  Our strong first quarter results make us optimistic that 2018 will be another positive year for the Company.”

FINANCIAL HIGHLIGHTS

		At or For the Three Months Ended
		March 31,				December 31,
Financial Highlights			2018				2017			Change
		(Dollars in thousands, except per share data)
Net earnings		$	118,276			$	84,037			$	34,239
Diluted earnings per share		$	0.93			$	0.66			$	0.27
Return on average assets			1.99	%			1.34	%			0.65
Return on average tangible equity (1)			21.08	%			13.75	%			7.33
Net interest margin (tax equivalent)			5.11	%			4.97	%			0.14
Efficiency ratio			41.7	%			41.0	%			0.7
Total assets		$	24,149,330			$	24,994,876			$	(845,546	)
Loans and leases held for investment,
net of deferred fees		$	16,455,285			$	16,972,743			$	(517,458	)
Noninterest-bearing deposits		$	8,232,140			$	8,508,044			$	(275,904	)
Core deposits		$	15,661,529			$	15,937,012			$	(275,483	)
Total deposits		$	18,078,788			$	18,865,536			$	(786,748	)
Noninterest-bearing deposits as percentage
of total deposits			46	%			45	%			1
Core deposits as percentage of total deposits			87	%			85	%			2
Equity to assets ratio			20.16	%			19.91	%			0.25
Tangible common equity ratio (1)			10.43	%			10.50	%			(0.07	)
Book value per share		$	38.47			$	38.65			$	(0.18	)
Tangible book value per share (1)		$	17.75			$	18.24			$	(0.49	)
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income decreased by $6.5 million to $256.5 million for the first quarter of 2018 compared to $263.0 million for the fourth quarter of 2017 due mainly to two fewer days in the first quarter and a lower average loan and lease balance.  The loan and lease yield was 6.11% for the first quarter of 2018 compared to 5.89% for the fourth quarter of 2017. The increase in the loan and lease yield was principally due to the repricing of variable-rate loans, higher loan fee income, and higher recapture of nonaccrual interest.    

The tax equivalent NIM was 5.11% for the first quarter of 2018 compared to 4.97% for the fourth quarter of 2017.  The increase in the NIM was due mainly to the higher loan yield resulting from the repricing of variable-rate loans and higher loan fee income, which was partially offset by a decrease of six basis points resulting from a smaller tax equivalent adjustment due to the lower statutory federal tax rate.          

The cost of average total deposits increased to 0.31% for the first quarter of 2018 from 0.30% for the fourth quarter of 2017.  

Noninterest Income

Noninterest income increased by $11.8 million to $38.6 million for the first quarter of 2018 compared to $26.8 million for the fourth quarter of 2017 due mainly to a $9.6 million increase in the gain on sale of securities and a $2.6 million increase in the gain on sale of loans.  During the first quarter of 2018, we sold $299.9 million of securities for a gain of $6.3 million.  These securities were sold primarily for reinvestment in higher quality liquid assets, yield and credit risk purposes. During the fourth quarter of 2017, we made a tax-related decision to sell $172.6 million of securities and recognized a loss of $3.3 million to take advantage of the higher statutory federal tax rate in 2017.   In addition, the gain on sale of loans increased by $2.6 million to $4.6 million for the first quarter of 2018 from $2.0 million for the fourth quarter of 2017. The first quarter of 2018 includes a $2.4 million gain resulting from the sale of our largest nonaccrual loan above our carrying value and $1.3 million related to the settlement of our December 31, 2017 loans held for sale of $481.1 million.     

The following table presents details of noninterest income for the periods indicated:   

	Three Months Ended
	March 31,			December 31,				Increase
Noninterest Income	2018				2017			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	4,174		$	4,574			$	(400	)
Other commissions and fees		10,265			10,505				(240	)
Leased equipment income		9,587			8,258				1,329
Gain on sale of loans and leases		4,569			1,988				2,581
Gain (loss) on sale of securities		6,311			(3,329	)			9,640
Other income:
Dividends and realized gains on equity investments		251			342				(91	)
Warrant income		248			831				(583	)
Other		3,154			3,626				(472	)
Total noninterest income	$	38,559		$	26,795			$	11,764

Noninterest Expense

Noninterest expense decreased by $15.5 million to $127.4 million for the first quarter of 2018 compared to $142.9 million for the fourth quarter of 2017 due mostly to a decrease in acquisition, integration and reorganization costs of $16.1 million related to the CUB acquisition.  Other professional services decreased by $1.3 million due mostly to lower legal fees and internal audit costs.  Compensation expense decreased by $1.0 million as the fourth quarter of 2017 included a charge of $2.9 million for separation costs in connection with exiting the origination operations related to general, technology, and healthcare cash flow loans partially offset by an increase in stock compensation expense and a seasonal increase in payroll tax expense.  Intangible asset amortization increased by $1.3 million as a result of a full quarter of expense for the intangible assets related to the CUB acquisition. Other expense increased by $1.1 million due primarily to an increase in Community Reinvestment Act-related and corporate donations.

The following table presents details of noninterest expense for the periods indicated:

	Three Months Ended
	March 31,				December 31,				Increase
Noninterest Expense		2018				2017			(Decrease)
	(In thousands)
Compensation	$	71,023			$	71,986			$	(963	)
Occupancy		13,223				12,715				508
Data processing		6,659				6,764				(105	)
Other professional services		4,439				5,786				(1,347	)
Insurance and assessments		5,727				5,384				343
Intangible asset amortization		6,346				5,062				1,284
Leased equipment depreciation		5,375				5,048				327
Foreclosed assets income, net		(122	)			(475	)			353
Acquisition, integration and reorganization costs		-				16,085				(16,085	)
Loan expense		2,271				3,140				(869	)
Other		12,454				11,373				1,081
Total noninterest expense	$	127,395			$	142,868			$	(15,473	)

Income Taxes

The overall effective income tax rate was 27.7% for the first quarter of 2018 and 40.2% for the fourth quarter of 2017. The effective tax rate for the first quarter of 2018 was lower due to the enactment of the Tax Cuts and Jobs Act, which reduced the federal statutory corporate tax rate to 21% in the first quarter of 2018 from 35% in the fourth quarter of 2017. The effective tax rate for the full year 2018 is estimated to be approximately 28%.  

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Loans and leases held for investment, net of deferred fees, decreased by $517.5 million in the first quarter of 2018 to $16.5 billion at March 31, 2018.  The net decrease was driven mainly by payoffs of $974.5 million, paydowns of $936.0 million, and sales of $130.6 million, offset partially by new production of $788.5 million and disbursements of $747.4 million.

The following table presents a roll forward of loans and leases held for investment, net of deferred fees, for the periods indicated:

	Three Months Ended
Loans and Leases	March 31,				December 31,
Held for Investment Roll Forward (1)	2018				2017
	(Dollars in thousands)
Balance, beginning of period	$	16,972,743			$	15,690,517
New production		788,477				1,556,257
Existing loans and leases:
Payoffs		(974,532	)			(728,628	)
Paydowns		(936,002	)			(812,726	)
Disbursements		747,376				723,914
Sales (2)		(130,624	)			(1,026,660	)
Charge-offs		(12,153	)			(24,721	)
Transfers to loans held for sale		-				(481,100	)
Loans acquired through CUB acquisition		-				2,075,890
Balance, end of period	$	16,455,285			$	16,972,743
Weighted average rate on new production (3)		5.28	%			4.95	%
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) Sales for the three months ended March 31, 2018 exclude loans held for sale of $481.1 million at December 31, 2017.
(3) The weighted average rate on new production presents contractual rates and does not include amortized fees.  Amortized fees added approximately 30 basis points to loan yields in 2017.

The following table presents the composition of loans and leases held for investment, net of deferred fees, as of the dates indicated:

	March 31,			December 31,			September 30,			March 31,
Loan and Lease Portfolio	2018			2017			2017			2017
	(In thousands)
Real estate mortgage:
Commercial	$	5,033,006		$	5,385,740		$	4,338,933		$	4,420,923
Residential		2,521,237			2,466,894			1,850,324			1,554,946
Total real estate mortgage		7,554,243			7,852,634			6,189,257			5,975,869
Real estate construction and land:
Commercial		789,892			769,075			680,950			668,510
Residential		887,110			822,154			568,273			442,051
Total real estate construction and land		1,677,002			1,591,229			1,249,223			1,110,561
Total real estate		9,231,245			9,443,863			7,438,480			7,086,430
Commercial:
Asset-based		2,957,890			2,924,950			2,792,823			2,669,135
Venture capital		1,920,643			2,122,735			1,959,489			1,934,949
Other commercial		1,947,590			2,071,394			3,113,574			3,483,459
Total commercial		6,826,123			7,119,079			7,865,886			8,087,543
Consumer		397,917			409,801			386,151			382,716
Total loans and leases held for
investment, net of deferred fees (1)	$	16,455,285		$	16,972,743		$	15,690,517		$	15,556,689
Total unfunded loan commitments	$	6,352,803		$	6,234,061		$	5,037,084		$	4,497,373
(1) Excludes loans held for sale carried at lower of cost or fair value at December 31, 2017.

Deposits and Client Investment Funds

The following table presents the composition of our deposit portfolio as of the dates indicated:

	March 31,				December 31,				September 30,				March 31,
Deposit Category	2018				2017				2017				2017
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	8,232,140			$	8,508,044			$	6,911,874			$	6,789,808
Interest checking deposits		2,076,152				2,226,885				1,957,485				1,509,902
Money market deposits		4,676,734				4,511,730				3,967,224				3,758,962
Savings deposits		676,503				690,353				694,717				710,401
Total core deposits		15,661,529				15,937,012				13,531,300				12,769,073
Non-core non-maturity deposits		585,399				863,202				1,118,694				1,154,070
Total non-maturity deposits		16,246,928				16,800,214				14,649,994				13,923,143
Time deposits $250,000 and under		1,482,118				1,709,980				1,770,439				1,998,597
Time deposits over $250,000		349,742				355,342				352,812				409,268
Total time deposits		1,831,860				2,065,322				2,123,251				2,407,865
Total deposits	$	18,078,788			$	18,865,536			$	16,773,245			$	16,331,008
Noninterest-bearing demand deposits
as percentage of total deposits		46	%			45	%			41	%			42	%
Core deposits as percentage of total deposits		87	%			85	%			81	%			78	%

At March 31, 2018, core deposits totaled $15.7 billion, or 87% of total deposits, including $8.2 billion of noninterest-bearing demand deposits, or 46% of total deposits.  The proceeds from the cash flow loan sale in the fourth quarter of 2017 allowed us to improve our funding mix by reducing our balances of non-core non-maturity deposits and time deposits. 

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Square 1 Asset Management, Inc. (“S1AM”), our registered investment advisor subsidiary, and third-party sweep products.  Total off-balance sheet client investment funds at March 31, 2018 were $2.1 billion, of which $1.6 billion was managed by S1AM.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $4.0 million was recorded in the first quarter of 2018 compared to $6.4 million in the fourth quarter of 2017.  The lower provision for the first quarter of 2018 was due mainly to lower period-end loan and lease balances and recoveries of $7.2 million. The allowance for credit losses to loans and leases held for investment coverage ratio increased to 1.01% at March 31, 2018 from 0.95% at December 31, 2017.

The following tables show roll forwards of the allowance for credit losses for the periods indicated:

	Three Months Ended March 31, 2018
	Total
Allowance for Credit	Loans and				Unfunded
Losses Rollforward	Leases				Commitments			Total
	(In thousands)
Beginning balance	$	139,456			$	28,635		$	168,091
Charge-offs		(12,153	)			-			(12,153	)
Recoveries		7,198				-			7,198
Net charge-offs		(4,955	)			-			(4,955	)
Provision		(226	)			4,226			4,000
Ending balance	$	134,275			$	32,861		$	167,136

	Three Months Ended December 31, 2017
	Non-PCI
Allowance for Credit	Loans and				Unfunded			Total				PCI
Losses Rollforward	Leases				Commitments			Non-PCI				Loans				Total
	(In thousands)
Beginning balance	$	152,770			$	20,809		$	173,579			$	6,836			$	180,415
Charge-offs		(24,335	)			-			(24,335	)			(386	)			(24,721	)
Recoveries		1,577				-			1,577				88				1,665
Net charge-offs		(22,758	)			-			(22,758	)			(298	)			(23,056	)
Provision		3,000				3,500			6,500				(94	)			6,406
Fair value of acquired reserve
for unfunded commitments		-				4,326			4,326				-				4,326
Ending balance	$	133,012			$	28,635		$	161,647			$	6,444			$	168,091

Gross charge-offs for the first quarter of 2018 were $12.2 million and included $6.8 million for other commercial loans and $2.3 million for venture capital loans, while gross charge-offs for the fourth quarter of 2017 were $24.7 million and included $20.1 million for venture capital loans. Recoveries in the first quarter of 2018 were $7.2 million and included $4.6 million for venture capital loans, the largest of which was a $4.0 million recovery on a venture capital loan partially charged off in the fourth quarter of 2017.    

The annualized ratio of net charge-offs to average loans was 0.12% for the first quarter of 2018 and 0.52% for the fourth quarter of 2017.    

CREDIT QUALITY  

The following table presents loan and lease credit quality metrics as of the dates indicated:

	March 31,				December 31,				Increase
Credit Quality Metrics (1)	2018				2017				(Decrease)
	(Dollars in thousands)
Nonaccrual loans and leases held for investment (2)(3)	$	103,725			$	155,784			$	(52,059	)
Performing troubled debt restructured loans
held for investment		60,173				56,838				3,335
Total impaired loans and leases	$	163,898			$	212,622			$	(48,724	)
Classified loans and leases held for investment (2)	$	208,042			$	278,405			$	(70,363	)
Allowance for credit losses	$	167,136			$	161,647			$	5,489
Provision for credit losses (for the quarter)	$	4,000			$	6,500			$	(2,500	)
Net charge-offs (for the quarter)	$	4,955			$	22,758			$	(17,803	)
Net charge-offs to average loans and leases
(for the quarter)		0.12	%			0.52	%
Allowance for credit losses to loans and leases
held for investment		1.01	%			0.95	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		161.1	%			103.8	%
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.63	%			0.92	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.64	%			0.93	%
Classified loans and leases held for investment
to loans and leases held for investment		1.26	%			1.64	%
(1) Amounts and ratios related to March 31, 2018 are for total loans and leases.      Amounts and ratios related to December 31, 2017 are for Non-PCI loans and leases.
(2) Excludes loans held for sale carried at lower of cost or fair value at December 31, 2017.
(3) Nonaccrual loans include guaranteed amounts of $13.4 million and $11.6 million at March 31, 2018 and December 31, 2017.

In prior periods, our credit quality disclosures were only for Non-PCI loans. As our PCI loan portfolio reduced to less than 0.4% of total loans as of the end of 2017, beginning in 2018 the credit quality disclosures reflect our entire loan portfolio.

Nonaccrual loans and leases decreased by $52.1 million in the first quarter primarily due to the sale of our largest nonaccrual loan, a $44.6 million healthcare real estate loan. Classified loans and leases decreased by $70.3 million in the first quarter primarily due to the sale of the $44.6 million nonaccrual loan, the sale of a $9.8 million cash flow loan, and an $18.2 million decrease in classified venture capital loans.

The following table presents 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
	March 31, 2018					December 31, 2017					30-89 Days Past Due (1)
			% of					% of			March 31,			December 31,
			Loan					Loan			2018			2017
	Amount		Category			Amount		Category			Amount			Amount
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	19,116	0.4	%		$	65,563	1.2	%		$	23,505		$	27,234
Residential		5,225	0.2	%			3,350	0.1	%			708			6,629
Total real estate mortgage		24,341	0.3	%			68,913	0.9	%			24,213			33,863
Real estate construction and land:
Commercial		-	0.0	%			-	0.0	%			-			-
Residential		-	0.0	%			-	0.0	%			2,605			2,081
Total real estate
construction and land		-	0.0	%			-	0.0	%			2,605			2,081
Commercial:
Asset-based		32,838	1.1	%			33,553	1.1	%			-			344
Venture capital		21,861	1.1	%			29,424	1.4	%			-			5,959
Other commercial		24,434	1.3	%			23,874	1.2	%			663			2,436
Total commercial		79,133	1.2	%			86,851	1.2	%			663			8,739
Consumer		251	0.1	%			20	0.0	%			1,000			562
Total held for investment (2)	$	103,725	0.6	%		$	155,784	0.9	%		$	28,481		$	45,245
(1) Amounts and ratios related to March 31, 2018 are for total loans and leases.
Amounts and ratios related to December 31, 2017 are for Non-PCI loans and leases.
(2) Excludes loans held for sale carried at lower of cost or fair value at December 31, 2017.

The following table presents nonperforming assets as of the dates indicated:

	March 31,				December 31,				Increase
Nonperforming Assets	2018				2017				(Decrease)
	(Dollars in thousands)
Nonaccrual loans and leases	$	103,725			$	157,545			$	(53,820	)
Accruing loan contractually past due
90 days or more		500				-				500
Foreclosed assets, net		1,236				1,329				(93	)
Total nonperforming assets	$	105,461			$	158,874			$	(53,413	)
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.63	%			0.92	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.64	%			0.93	%
(1) Excludes loans held for sale carried at lower of cost or fair value at December 31, 2017.

STOCK REPURCHASE PROGRAM

During the first quarter of 2018, the Company amended its existing stock repurchase program to increase the authorized repurchase amount from $150 million to $350 million and extend the program maturity to February 28, 2019.  During the first quarter of 2018, we repurchased 2,285,855 shares at an average price of $52.41 and a total cost of $119.8 million.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with approximately $24 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 75 full-service branches located throughout the state of California and one branch in Durham, North Carolina. We provide commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses.  We offer additional products and services through our CapitalSource and Square 1 Bank divisions. Our CapitalSource Division provides asset-based, equipment, real estate, and security cash flow loans and treasury management services to established middle market businesses on a national basis.  Our Square 1 Bank Division offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovation hubs across the United States.  For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.

FORWARD LOOKING STATEMENTS

This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results and metrics and including statements about our expectations regarding our future effective tax rate. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. These risks and uncertainties include, but are not limited to, our ability to compete effectively against other financial institutions in our banking markets; the impact of changes in interest rates or levels of market activity, especially on our loan and investment portfolios; deterioration, weaker than expected improvement, or other changes in the state of the economy or the markets in which we conduct business (including the state of real estate markets, debt markets and stock markets); changes in credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and leases losses; our ability to attract deposits and other sources of funding or liquidity; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the impact of adverse judgments or settlements in litigation, the initiation and resolution of regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; the Company’s ability to complete future acquisitions and to successfully integrate such acquired entities or achieve expected beneficial synergies and/or operating efficiencies, in each case within expected timeframes or at all; the impact of the Tax Cuts and Jobs Act on our future effective tax rate and our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including the Annual Report on Form 10-K for the year ended December 31, 2017, and particularly the discussion of risk factors within that document.

All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
	March 31,				December 31,
		2018				2017
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	235,061			$	233,215
Interest-earning deposits in financial institutions		312,735				165,222
Total cash and cash equivalents		547,796				398,437
Securities available-for-sale, at estimated fair value		3,802,967				3,774,431
Federal Home Loan Bank stock, at cost		17,250				20,790
Total investment securities		3,820,217				3,795,221
Loans held for sale		-				481,100
Gross loans and leases held for investment		16,516,627				17,032,221
Deferred fees, net		(61,342	)			(59,478	)
Loans and leases held for investment,
net of deferred fees		16,455,285				16,972,743
Allowance for loan and lease losses		(134,275	)			(139,456	)
Total loans and leases held for investment, net		16,321,010				16,833,287
Equipment leased to others under operating leases		280,648				284,631
Premises and equipment, net		33,686				31,852
Foreclosed assets, net		1,236				1,329
Deferred tax asset, net		12,584				-
Goodwill		2,548,670				2,548,670
Core deposit and customer relationship intangibles, net		73,280				79,626
Other assets		510,203				540,723
Total assets	$	24,149,330			$	24,994,876
LIABILITIES:
Noninterest-bearing deposits	$	8,232,140			$	8,508,044
Interest-bearing deposits		9,846,648				10,357,492
Total deposits		18,078,788				18,865,536
Borrowings		575,284				467,342
Subordinated debentures		452,223				462,437
Accrued interest payable and other liabilities		175,545				221,963
Total liabilities		19,281,840				20,017,278
STOCKHOLDERS' EQUITY (1)		4,867,490				4,977,598
Total liabilities and stockholders’ equity	$	24,149,330			$	24,994,876
Book value per share	$	38.47			$	38.65
Tangible book value per share (2)	$	17.75			$	18.24
Shares outstanding		126,537,871				128,782,878
(1) Includes net unrealized (loss) gain on securities
available-for-sale, net	$	(11,936	)		$	31,171
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
	Three Months Ended
	March 31,				December 31,				March 31,
		2018				2017				2017
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	251,085			$	258,309			$	224,178
Investment securities		26,138				25,712				23,039
Deposits in financial institutions		552				576				192
Total interest income		277,775				284,597				247,409
Interest expense:
Deposits		13,818				14,041				8,377
Borrowings		920				1,366				1,018
Subordinated debentures		6,537				6,234				5,562
Total interest expense		21,275				21,641				14,957
Net interest income		256,500				262,956				232,452
Provision for credit losses		4,000				6,406				24,728
Net interest income after provision
for credit losses		252,500				256,550				207,724
Noninterest income:
Service charges on deposit accounts		4,174				4,574				3,758
Other commissions and fees		10,265				10,505				10,390
Leased equipment income		9,587				8,258				9,475
Gain on sale of loans and leases		4,569				1,988				712
Gain (loss) on sale of securities		6,311				(3,329	)			(99	)
Other income		3,653				4,799				10,878
Total noninterest income		38,559				26,795				35,114
Noninterest expense:
Compensation		71,023				71,986				64,880
Occupancy		13,223				12,715				11,608
Data processing		6,659				6,764				7,015
Other professional services		4,439				5,786				3,378
Insurance and assessments		5,727				5,384				4,791
Intangible asset amortization		6,346				5,062				3,064
Leased equipment depreciation		5,375				5,048				5,625
Foreclosed assets (income) expense, net		(122	)			(475	)			143
Acquisition, integration and
reorganization costs		-				16,085				500
Loan expense		2,271				3,140				3,387
Other expense		12,454				11,373				12,153
Total noninterest expense		127,395				142,868				116,544
Earnings before income taxes		163,664				140,477				126,294
Income tax expense		(45,388	)			(56,440	)			(47,626	)
Net earnings	$	118,276			$	84,037			$	78,668
Basic and diluted earnings per share	$	0.93			$	0.66			$	0.65

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
	Three Months Ended
	March 31,				December 31,				March 31,
		2018				2017				2017
	(In thousands, except per share data)
Basic Earnings Per Share:
Net earnings	$	118,276			$	84,037			$	78,668
Less: earnings allocated to unvested
restricted stock (1)		(1,115	)			(951	)			(999	)
Net earnings allocated to common
shares	$	117,161			$	83,086			$	77,669
Weighted-average basic shares and
unvested restricted stock outstanding		127,487				127,971				121,346
Less: weighted-average unvested
restricted stock outstanding		(1,413	)			(1,440	)			(1,503	)
Weighted-average basic shares
outstanding		126,074				126,531				119,843
Basic earnings per share	$	0.93			$	0.66			$	0.65
Diluted Earnings Per Share:
Net earnings allocated to common
shares	$	117,161			$	83,086			$	77,669
Weighted-average basic shares
outstanding		126,074				126,531				119,843
Diluted earnings per share	$	0.93			$	0.66			$	0.65
(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus
undistributed earnings amounts available to holders of unvested restricted stock, if any.

PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
	Three Months Ended
	March 31, 2018							December 31, 2017							March 31, 2017
			Interest		Average					Interest		Average					Interest		Average
	Average		Income/		Yield/			Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost			Balance		Expense		Cost
	(Dollars in thousands)
Assets:
Loans and leases (1)	$	16,682,124	$	251,260	6.11	%		$	17,426,873	$	258,586	5.89	%		$	15,297,044	$	224,178	5.94	%
Investment securities (2)		3,682,138		27,935	3.08	%			3,807,928		30,709	3.20	%			3,257,448		27,822	3.46	%
Deposits in financial
institutions		150,674		552	1.49	%			179,379		576	1.27	%			100,751		192	0.77	%
Total interest-earning
assets		20,514,936		279,747	5.53	%			21,414,180		289,871	5.37	%			18,655,243		252,192	5.48	%
Other assets		3,556,212							3,375,656							2,990,291
Total assets	$	24,071,148						$	24,789,836						$	21,645,534
Liabilities and
Stockholders' Equity:
Interest checking	$	2,311,988		3,050	0.54	%		$	2,340,166		2,891	0.49	%		$	1,505,439		1,167	0.31	%
Money market		5,038,119		6,812	0.55	%			5,415,630		7,214	0.53	%			4,866,720		4,410	0.37	%
Savings		685,173		258	0.15	%			702,023		279	0.16	%			711,529		298	0.17	%
Time		1,923,963		3,698	0.78	%			2,120,749		3,657	0.68	%			2,246,547		2,502	0.45	%
Total interest-bearing
deposits		9,959,243		13,818	0.56	%			10,578,568		14,041	0.53	%			9,330,235		8,377	0.36	%
Borrowings		239,293		920	1.56	%			445,106		1,366	1.22	%			596,903		1,018	0.69	%
Subordinated debentures		461,648		6,537	5.74	%			458,269		6,234	5.40	%			441,521		5,562	5.11	%
Total interest-bearing
liabilities		10,660,184		21,275	0.81	%			11,481,943		21,641	0.75	%			10,368,659		14,957	0.59	%
Noninterest-bearing
demand deposits		8,311,104							8,190,134							6,595,346
Other liabilities		198,653							197,261							177,854
Total liabilities		19,169,941							19,869,338							17,141,859
Stockholders' equity		4,901,207							4,920,498							4,503,675
Total liabilities and
stockholders' equity	$	24,071,148						$	24,789,836						$	21,645,534
Net interest income (3)			$	258,472						$	268,230						$	237,235
Net interest spread (3)					4.72	%						4.62	%						4.89	%
Net interest margin (3)					5.11	%						4.97	%						5.16	%
Total deposits (4)	$	18,270,347	$	13,818	0.31	%		$	18,768,702	$	14,041	0.30	%		$	15,925,581	$	8,377	0.21	%
Funding sources (5)	$	18,971,288	$	21,275	0.45	%		$	19,672,077	$	21,641	0.44	%		$	16,964,005	$	14,957	0.36	%

(1)		Starting with the third quarter of 2017, includes tax-equivalent adjustments related to tax-exempt interest on loans.
(2)		Includes tax-equivalent adjustments of $1.8 million, $5.0 million, and $4.8 million for the three months ended March 31, 2018, December 31, 2017, and March 31, 2017 related to tax-exempt income on municipal securities.  The federal statutory tax-rate utilized was 21% for the 2018 period and 35% for the 2017 periods.
(3)		Tax equivalent.
(4)		Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits.  The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(5)		Funding sources is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated as annualized total interest expense divided by average funding sources.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
	March 31,				December 31,				September 30,				June 30,				March 31,
		2018				2017				2017				2017				2017
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	235,061			$	233,215			$	147,579			$	180,330			$	184,608
Interest-earning deposits in financial
institutions		312,735				165,222				122,439				107,150				111,892
Total cash and cash equivalents		547,796				398,437				270,018				287,480				296,500
Securities available-for-sale		3,802,967				3,774,431				3,532,230				3,474,560				3,336,992
Federal Home Loan Bank stock		17,250				20,790				17,250				22,059				17,901
Total investment securities		3,820,217				3,795,221				3,549,480				3,496,619				3,354,893
Loans held for sale		-				481,100				-				175,158				-
Gross loans and leases held for
investment		16,516,627				17,032,221				15,756,285				15,609,180				15,622,871
Deferred fees, net		(61,342	)			(59,478	)			(65,768	)			(65,723	)			(66,182	)
Loans and leases held for
investment, net of deferred fees		16,455,285				16,972,743				15,690,517				15,543,457				15,556,689
Allowance for loan and lease losses		(134,275	)			(139,456	)			(159,606	)			(145,958	)			(161,307	)
Total loans and leases held for
investment, net		16,321,010				16,833,287				15,530,911				15,397,499				15,395,382
Equipment leased to others under
operating leases		280,648				284,631				233,866				203,212				224,580
Premises and equipment, net		33,686				31,852				28,910				29,108				28,908
Foreclosed assets, net		1,236				1,329				11,630				13,278				12,842
Deferred tax asset, net		12,584				-				65,321				70,354				88,765
Goodwill		2,548,670				2,548,670				2,173,949				2,173,949				2,173,949
Core deposit and customer
relationship intangibles, net		73,280				79,626				27,188				30,237				33,302
Other assets		510,203				540,723				351,659				369,983				318,133
Total assets	$	24,149,330			$	24,994,876			$	22,242,932			$	22,246,877			$	21,927,254
LIABILITIES:
Noninterest-bearing deposits	$	8,232,140			$	8,508,044			$	6,911,874			$	6,701,039			$	6,789,808
Interest-bearing deposits		9,846,648				10,357,492				9,861,371				10,173,938				9,541,200
Total deposits		18,078,788				18,865,536				16,773,245				16,874,977				16,331,008
Borrowings		575,284				467,342				250,399				217,454				460,609
Subordinated debentures		452,223				462,437				448,126				445,743				442,516
Accrued interest payable and other
liabilities		175,545				221,963				160,494				148,798				185,015
Total liabilities		19,281,840				20,017,278				17,632,264				17,686,972				17,419,148
STOCKHOLDERS' EQUITY (1)		4,867,490				4,977,598				4,610,668				4,559,905				4,508,106
Total liabilities and stockholders’
equity	$	24,149,330			$	24,994,876			$	22,242,932			$	22,246,877			$	21,927,254
Book value per share	$	38.47			$	38.65			$	37.96			$	37.55			$	37.13
Tangible book value per share (2)	$	17.75			$	18.24			$	19.84			$	19.40			$	18.95
Shares outstanding		126,537,871				128,782,878				121,449,794				121,448,321				121,408,133
(1) Includes net unrealized (loss) gain on
securities available-for-sale, net	$	(11,936	)		$	31,171			$	33,613			$	29,729			$	12,718
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
	Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2018				2017				2017				2017				2017
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	251,085			$	258,309			$	235,666			$	234,618			$	224,178
Investment securities		26,138				25,712				24,762				24,689				23,039
Deposits in financial institutions		552				576				538				237				192
Total interest income		277,775				284,597				260,966				259,544				247,409
Interest expense:
Deposits		13,818				14,041				13,071				10,205				8,377
Borrowings		920				1,366				188				1,066				1,018
Subordinated debentures		6,537				6,234				6,017				5,800				5,562
Total interest expense		21,275				21,641				19,276				17,071				14,957
Net interest income		256,500				262,956				241,690				242,473				232,452
Provision for credit losses		4,000				6,406				15,119				11,499				24,728
Net interest income after provision
for credit losses		252,500				256,550				226,571				230,974				207,724
Noninterest income:
Service charges on deposit accounts		4,174				4,574				3,465				3,510				3,758
Other commissions and fees		10,265				10,505				9,944				10,583				10,390
Leased equipment income		9,587				8,258				8,332				11,635				9,475
Gain on sale of loans and leases		4,569				1,988				2,848				649				712
Gain (loss) on sale of securities		6,311				(3,329	)			1,236				1,651				(99	)
Other income		3,653				4,799				5,557				7,254				10,878
Total noninterest income		38,559				26,795				31,382				35,282				35,114
Noninterest expense:
Compensation		71,023				71,986				64,413				65,288				64,880
Occupancy		13,223				12,715				12,729				11,811				11,608
Data processing		6,659				6,764				6,459				6,337				7,015
Other professional services		4,439				5,786				4,213				3,976				3,378
Insurance and assessments		5,727				5,384				4,702				4,856				4,791
Intangible asset amortization		6,346				5,062				3,049				3,065				3,064
Leased equipment depreciation		5,375				5,048				4,862				5,232				5,625
Foreclosed assets (income) expense, net		(122	)			(475	)			2,191				(157	)			143
Acquisition, integration and
reorganization costs		-				16,085				1,450				1,700				500
Loan expense		2,271				3,140				3,421				3,884				3,387
Other expense		12,454				11,373				11,053				11,715				12,153
Total noninterest expense		127,395				142,868				118,542				117,707				116,544
Earnings before income taxes		163,664				140,477				139,411				148,549				126,294
Income tax expense		(45,388	)			(56,440	)			(37,945	)			(54,902	)			(47,626	)
Net earnings	$	118,276			$	84,037			$	101,466			$	93,647			$	78,668
Basic and diluted earnings per share	$	0.93			$	0.66			$	0.84			$	0.77			$	0.65

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2018				2017				2017				2017				2017
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		1.99	%			1.34	%			1.82	%			1.71	%			1.47	%
Return on average equity (1)		9.79	%			6.78	%			8.77	%			8.26	%			7.08	%
Return on average tangible equity (1)(2)		21.08	%			13.75	%			16.85	%			16.06	%			13.90	%
Yield on average loans and leases (1)(3)		6.11	%			5.89	%			6.01	%			6.07	%			5.94	%
Yield on average interest-earning
assets (1)(4)		5.53	%			5.37	%			5.48	%			5.57	%			5.48	%
Cost of average total deposits (1)		0.31	%			0.30	%			0.31	%			0.25	%			0.21	%
Cost of average time deposits (1)		0.78	%			0.68	%			0.62	%			0.55	%			0.45	%
Cost of average interest-bearing
liabilities (1)		0.81	%			0.75	%			0.73	%			0.65	%			0.59	%
Cost of average funding sources (1)		0.45	%			0.44	%			0.44	%			0.40	%			0.36	%
Net interest spread (1)(4)		4.72	%			4.62	%			4.75	%			4.92	%			4.89	%
Net interest margin (1)(4)		5.11	%			4.97	%			5.08	%			5.21	%			5.16	%
Efficiency ratio		41.7	%			41.0	%			40.4	%			40.3	%			41.4	%
Noninterest expense as a percentage
of average assets (1)		2.15	%			2.29	%			2.12	%			2.15	%			2.18	%
Average Balances:
Loans and leases, net of deferred fees	$	16,682,124			$	17,426,873			$	15,575,030			$	15,497,921			$	15,297,044
Interest-earning assets		20,514,936				21,414,180				19,257,441				19,030,793				18,655,243
Total assets		24,071,148				24,789,836				22,137,874				21,936,602				21,645,534
Noninterest-bearing deposits		8,311,104				8,190,134				6,858,816				6,646,349				6,595,346
Interest-bearing deposits		9,959,243				10,578,568				10,024,554				9,692,352				9,330,235
Total deposits		18,270,347				18,768,702				16,883,370				16,338,701				15,925,581
Borrowings and subordinated
debentures		700,941				903,375				508,083				901,530				1,038,424
Interest-bearing liabilities		10,660,184				11,481,943				10,532,637				10,593,882				10,368,659
Funding sources		18,971,288				19,672,077				17,391,453				17,240,231				16,964,005
Stockholders' equity		4,901,207				4,920,498				4,592,489				4,545,276				4,503,675
(1) Annualized.
(2) Non-GAAP measure.
(3) Tax equivalent starting with the third quarter of 2017.
(4) Tax equivalent.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	March 31,				December 31,				September 30,				June 30,				March 31,
		2018				2017				2017				2017				2017
	(Dollars in thousands)
Credit Quality Ratios (1):
Allowance for credit losses to loans
and leases held for investment		1.01	%			0.95	%			1.11	%			1.02	%			1.08	%
Allowance for credit losses to
nonaccrual loans and leases held
for investment		161.1	%			103.8	%			110.1	%			92.2	%			96.9	%
Nonaccrual loans and leases held for
investment to loans and leases held
for investment		0.63	%			0.92	%			1.00	%			1.11	%			1.11	%
Nonperforming assets to loans and
leases held for investment and
foreclosed assets		0.64	%			0.93	%			1.08	%			1.20	%			1.20	%
Nonperforming assets to total assets		0.44	%			0.63	%			0.76	%			0.84	%			0.85	%
Trailing twelve month net charge-offs
to average loans and leases
held for investment		0.31	%			0.40	%			0.35	%			0.37	%			0.24	%
PacWest Bancorp Consolidated
Capital:
Tier 1 leverage ratio (2)		10.66	%			10.66	%			12.02	%			11.90	%			11.87	%
Common equity tier 1 capital ratio (2)		11.16	%			10.91	%			12.52	%			12.28	%			12.31	%
Tier 1 capital ratio (2)		11.16	%			10.91	%			12.52	%			12.28	%			12.31	%
Total capital ratio (2)		14.12	%			13.75	%			15.74	%			15.42	%			15.56	%
Risk-weighted assets (2)	$	20,523,160			$	21,657,591			$	19,086,798			$	19,084,823			$	18,732,723
Equity to assets ratio		20.16	%			19.91	%			20.73	%			20.50	%			20.56	%
Tangible common equity ratio (3)		10.43	%			10.50	%			12.02	%			11.75	%			11.67	%
Book value per share	$	38.47			$	38.65			$	37.96			$	37.55			$	37.13
Tangible book value per share (3)	$	17.75			$	18.24			$	19.84			$	19.40			$	18.95
Pacific Western Bank Capital:
Tier 1 leverage ratio (2)		11.33	%			11.75	%			11.46	%			11.41	%			11.36	%
Common equity tier 1 capital ratio (2)		11.86	%			11.91	%			11.95	%			11.79	%			11.79	%
Tier 1 capital ratio (2)		11.86	%			11.91	%			11.95	%			11.79	%			11.79	%
Total capital ratio (2)		12.67	%			12.69	%			12.89	%			12.66	%			12.74	%
(1) Ratios related to March 31, 2018 are for total loans and leases.  Ratios related to prior periods are for Non-PCI loans and leases.
(2) Capital information for March 31, 2018 is preliminary.
(3) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) return on average tangible equity, (2) tangible common equity ratio, and (3) tangible book value per share. The Company uses these 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.  In particular, the use of return on average tangible equity, tangible common equity ratio, and tangible book value per share is prevalent among banking regulators, investors and analysts.  Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) return on average equity, (2) equity to assets ratio, and (3) book value per share.   

The tables below present the reconciliations of these GAAP financial measures to the related non-GAAP financial measures:

	Three Months Ended
	March 31,				December 31,				March 31,
Return on Average Tangible Equity	2018				2017				2017
	(Dollars in thousands)
Net earnings	$	118,276			$	84,037			$	78,668
Average stockholders' equity	$	4,901,207			$	4,920,498			$	4,503,675
Less: Average intangible assets		2,625,593				2,495,876				2,209,112
Average tangible common equity	$	2,275,614			$	2,424,622			$	2,294,563
Return on average equity (1)		9.79	%			6.78	%			7.08	%
Return on average tangible equity (2)		21.08	%			13.75	%			13.90	%
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized net earnings divided by average tangible common equity.

Tangible Common Equity Ratio/	March 31,				December 31,				September 30,				June 30,				March 31,
Tangible Book Value Per Share		2018				2017				2017				2017				2017
	(Dollars in thousands, except per share data)
Stockholders' equity	$	4,867,490			$	4,977,598			$	4,610,668			$	4,559,905			$	4,508,106
Less: Intangible assets		2,621,950				2,628,296				2,201,137				2,204,186				2,207,251
Tangible common equity	$	2,245,540			$	2,349,302			$	2,409,531			$	2,355,719			$	2,300,855
Total assets	$	24,149,330			$	24,994,876			$	22,242,932			$	22,246,877			$	21,927,254
Less: Intangible assets		2,621,950				2,628,296				2,201,137				2,204,186				2,207,251
Tangible assets	$	21,527,380			$	22,366,580			$	20,041,795			$	20,042,691			$	19,720,003
Equity to assets ratio		20.16	%			19.91	%			20.73	%			20.50	%			20.56	%
Tangible common equity ratio (1)		10.43	%			10.50	%			12.02	%			11.75	%			11.67	%
Book value per share	$	38.47			$	38.65			$	37.96			$	37.55			$	37.13
Tangible book value per share (2)	$	17.75			$	18.24			$	19.84			$	19.40			$	18.95
Shares outstanding		126,537,871				128,782,878				121,449,794				121,448,321				121,408,133
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

Contact:Phone:		Matthew P. WagnerPresident and CEO310-887-8520		Patrick J. RusnakExecutive Vice President and CFO714-989-4705
Contact:Phone:		Donald D. DestinoExecutive Vice PresidentCorporate Development and InvestorRelations310-887-8521