PACW PacWest Bancorp

Highlights

PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the first quarter of 2019 of $112.6 million, or $0.92 per diluted share, compared to net earnings for the fourth quarter of 2018 of $115.0 million, or $0.93 per diluted share.

Matt Wagner, President and CEO, commented, “We continue to see the results of our credit de-risking strategy with continued downward trends in net charge-offs and credit loss provision and continued improvement in our credit quality metrics. Our first quarter of 2019 results produced a return on assets of 1.77% and a return on tangible equity of 20.64%.”

Mr. Wagner continued, “We had one of our strongest first quarters in terms of loan production and net loan growth and will work to continue that momentum into the rest of 2019 with an emphasis on core deposit generation. We also received approval to open a full-service branch office in Denver, Colorado and will continue to execute our expansion plans in that market.” 

FINANCIAL HIGHLIGHTS

	At or For the												At or For the
	Three Months Ended												Three Months Ended
	March 31,				December 31,				Increase				March 31,								Increase
Financial Highlights	2019				2018				(Decrease)				2019				2018				(Decrease)
	(Dollars in thousands, except per share data)
Net earnings	$	112,604			$	115,041			$	(2,437	)		$	112,604			$	118,276			$	(5,672	)
Diluted earnings per share	$	0.92			$	0.93			$	(0.01	)		$	0.92			$	0.93			$	(0.01	)
Return on average assets		1.77	%			1.84	%			(0.07	)			1.77	%			1.99	%			(0.22	)
Return on average tangible equity (1)		20.64	%			21.23	%			(0.59	)			20.64	%			21.08	%			(0.44	)
Net interest margin ("NIM") (tax equivalent)		4.69	%			4.91	%			(0.22	)			4.69	%			5.11	%			(0.42	)
Yield on average loans and leases (tax equivalent)		6.16	%			6.27	%			(0.11	)			6.16	%			6.11	%			0.05
Cost of average total deposits		0.73	%			0.62	%			0.11				0.73	%			0.31	%			0.42
Efficiency ratio		42.4	%			41.7	%			0.7				42.4	%			41.7	%			0.7
Total assets	$	26,324,138			$	25,731,354			$	592,784			$	26,324,138			$	24,149,330			$	2,174,808
Loans and leases held for investment, net of deferred fees	$	18,307,697			$	17,957,713			$	349,984			$	18,307,697			$	16,455,285			$	1,852,412
Noninterest-bearing demand deposits	$	7,712,409			$	7,888,915			$	(176,506	)		$	7,712,409			$	8,232,140			$	(519,731	)
Core deposits	$	16,127,638			$	16,346,671			$	(219,033	)		$	16,127,638			$	15,661,529			$	466,109
Total deposits	$	19,285,927			$	18,870,501			$	415,426			$	19,285,927			$	18,078,788			$	1,207,139
As percentage of total deposits:
Noninterest-bearing demand deposits		40	%			42	%			(2	)			40	%			46	%			(6	)
Core deposits		84	%			87	%			(3	)			84	%			87	%			(3	)
Equity to assets ratio		18.20	%			18.75	%			(0.55	)			18.20	%			20.16	%			(1.96	)
Tangible common equity ratio (1)		9.23	%			9.60	%			(0.37	)			9.23	%			10.43	%			(1.20	)
Book value per share	$	39.86			$	39.17			$	0.69			$	39.86			$	38.47			$	1.39
Tangible book value per share (1)	$	18.22			$	18.02			$	0.20			$	18.22			$	17.75			$	0.47
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income decreased by $6.9 million to $254.9 million for the first quarter of 2019 compared to $261.8 million for the fourth quarter of 2018 due to interest expense growth exceeding interest income growth and two less days in the first quarter compared to the fourth quarter. Interest expense increased by $8.7 million due mainly to higher deposit costs, offset partially by two less days in the first quarter of 2019. Interest income increased by $1.8 million due primarily to a higher balance of average loans and leases, offset partially by a lower yield on average loans and leases and two less days in the first quarter of 2019.  The tax equivalent yield on average loans and leases was 6.16% for the first quarter of 2019 compared to 6.27% for the fourth quarter of 2018. The decrease in the yield on average loans and leases was due principally to lower discount accretion on acquired loans (seven basis points in the first quarter versus 16 basis points in the fourth quarter).

The tax equivalent NIM was 4.69% for the first quarter of 2019 compared to 4.91% for the fourth quarter of 2018. The decrease in the NIM was due mainly to higher deposit and borrowing costs and a lower yield on average loans and leases.

The cost of average total deposits increased to 0.73% for the first quarter of 2019 from 0.62% for the fourth quarter of 2018. The increase was driven primarily by a shift in our deposit mix with increases in time and money market deposits and lower noninterest-bearing demand deposits along with higher rates paid on deposits in conjunction with the Federal Reserve December rate move.

Provision for Credit Losses

The following table presents details of the provision for credit losses for the periods indicated:

	Three Months Ended
	March 31,			December 31,			Increase
Provision for Credit Losses	2019			2018			(Decrease)
	(In thousands)
Addition to allowance for loan and lease losses	$	4,000		$	10,500		$	(6,500	)
Addition to reserve for unfunded loan commitments		-			1,500			(1,500	)
Total provision for credit losses	$	4,000		$	12,000		$	(8,000	)

Noninterest Income

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

	Three Months Ended
	March 31,			December 31,				Increase
Noninterest Income	2019			2018				(Decrease)
	(In thousands)
Service charges on deposit accounts	$	3,730		$	4,091			$	(361	)
Other commissions and fees		11,008			11,114				(106	)
Leased equipment income		9,282			9,384				(102	)
Gain on sale of securities		2,161			786				1,375
Other income:
Dividends and gains (losses) on equity investments		296			(1,331	)			1,627
Warrant income		2,279			2,187				92
Other		2,308			7,295				(4,987	)
Total noninterest income	$	31,064		$	33,526			$	(2,462	)

Noninterest income decreased by $2.5 million to $31.1 million for the first quarter of 2019 compared to $33.5 million for the fourth quarter of 2018 due mainly to a $5.0 million decrease in other income, offset partially by an increase of $1.6 million in dividends and gains on equity investments and a $1.4 million increase in gain on sale of securities. Other income decreased due primarily to lower miscellaneous income from borrower settlements and lower BOLI income attributable to a death benefit received in the fourth quarter of 2018.  Dividends and gains on equity investments increased mainly due to negative mark-to-market valuation adjustments in the fourth quarter on equity investments arising from exercised warrants. The increase in gain on sale of securities was attributable to a net gain of $2.2 million on sales of $405.8 million of securities in the first quarter of 2019 as part of a partial portfolio repositioning compared to a net gain of $0.8 million on sales of $70.9 million of securities in the fourth quarter of 2018.

Noninterest Expense

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

	Three Months Ended
	March 31,			December 31,				Increase
Noninterest Expense	2019			2018				(Decrease)
	(In thousands)
Compensation	$	70,845		$	69,299			$	1,546
Occupancy		14,320			13,356				964
Data processing		6,925			6,930				(5	)
Other professional services		4,513			6,198				(1,685	)
Insurance and assessments		4,038			4,202				(164	)
Intangible asset amortization		4,870			4,986				(116	)
Leased equipment depreciation		5,651			5,758				(107	)
Foreclosed assets expense (income), net		29			(311	)			340
Acquisition, integration and reorganization costs		618			970				(352	)
Loan expense		2,885			2,991				(106	)
Other		11,593			14,856				(3,263	)
Total noninterest expense	$	126,287		$	129,235			$	(2,948	)

Noninterest expense decreased by $2.9 million to $126.3 million for the first quarter of 2019 compared to $129.2 million for the fourth quarter of 2018 attributable primarily to a $3.3 million decrease in other expense and a $1.7 million decrease in other professional services, offset partially by a $1.5 million increase in compensation expense. The decrease in other expense was mainly due to the $2.1 million write-off of the Square 1 Bank trademark asset in the fourth quarter of 2018 as a result of our plan to retire the Square 1 Bank name and increased employee expense in the fourth quarter of 2018 due to executive relocation costs.  Other professional services expense decreased due to lower legal and consulting expenses. Compensation expense increased due to normal seasonal increases in payroll tax and other employee benefit expenses and higher bonus expense, offset partially by lower stock compensation expense, due to an increase in forfeitures, and lower commissions expense.

Income Taxes

The overall effective income tax rate was 27.7% for the first quarter of 2019 and 25.3% for the fourth quarter of 2018.  The fourth quarter 2018 effective tax rate was lower due primarily to a change in the state apportionment method applied by the state of Maryland.  The effective tax rate for the full year 2019 is estimated to be in the range of 27-28%.   

BALANCE SHEET HIGHLIGHTS

Loans and Leases

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

	Three Months Ended
Roll Forward of Loans and Leases Held	March 31,				December 31,
for Investment, Net of Deferred Fees (1)	2019				2018
	(Dollars in thousands)
Balance, beginning of period	$	17,957,713			$	17,230,146
Additions:
Production		1,174,838				1,571,565
Disbursements		1,192,972				1,186,351
Total production and disbursements		2,367,810				2,757,916
Reductions:
Payoffs		(933,300	)			(1,070,691	)
Paydowns		(1,038,964	)			(920,633	)
Total payoffs and paydowns		(1,972,264	)			(1,991,324	)
Sales		(16,936	)			-
Transfers to foreclosed assets		(37	)			(13,679	)
Charge-offs		(3,465	)			(25,346	)
Transfers to loans held for sale		(25,124	)			-
Total reductions		(2,017,826	)			(2,030,349	)
Balance, end of period	$	18,307,697			$	17,957,713
Weighted average rate on production (2)		5.11	%			5.38	%
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.(2) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees.  Amortized fees added approximately 24 basis points to loan yields in 2019 and 31 basis points to loan yields in 2018.

Loans and leases held for investment, net of deferred fees, increased by $350.0 million, or 8% annualized, in the first quarter of 2019 to $18.3 billion at March 31, 2019.  The net loan growth in the first quarter was primarily from the real estate construction loan class and income producing and other residential loan class, which included $285 million of multi-family loan pool purchases.

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

	March 31, 2019					December 31, 2018					March 31, 2018
			% of					% of					% of
Loan and Lease Portfolio (1)	Amount		Total			Amount		Total			Amount		Total
	(In thousands)
Real estate mortgage:
Commercial	$	4,640,510	25	%		$	4,824,298	27	%		$	5,033,006	31	%
Income producing and other residential		3,518,948	19	%			3,093,843	17	%			2,521,237	15	%
Total real estate mortgage		8,159,458	44	%			7,918,141	44	%			7,554,243	46	%
Real estate construction and land:
Commercial		943,596	5	%			912,583	5	%			789,892	5	%
Residential		1,408,128	8	%			1,321,073	8	%			887,110	5	%
Total real estate construction and land		2,351,724	13	%			2,233,656	13	%			1,677,002	10	%
Total real estate		10,511,182	57	%			10,151,797	57	%			9,231,245	56	%
Commercial:
Asset-based		3,422,202	19	%			3,305,421	18	%			2,957,890	18	%
Venture capital		2,027,450	11	%			2,038,748	11	%			1,920,643	12	%
Other commercial		1,974,702	11	%			2,060,426	12	%			1,947,590	12	%
Total commercial		7,424,354	41	%			7,404,595	41	%			6,826,123	42	%
Consumer		372,161	2	%			401,321	2	%			397,917	2	%
Total loans and leases held for investment, net of deferred fees	$	18,307,697	100	%		$	17,957,713	100	%		$	16,455,285	100	%
Total unfunded loan commitments	$	7,465,392				$	7,528,248				$	6,352,803

____________________(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.

Allowance for Credit Losses

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

	Three Months Ended March 31, 2019
	Allowance for				Reserve for			Total
Allowance for Credit	Loan and				Unfunded Loan			Allowance for
Losses Rollforward	Lease Losses				Commitments			Credit Losses
	(In thousands)
Beginning balance	$	132,472			$	36,861		$	169,333
Charge-offs		(3,465	)			-			(3,465	)
Recoveries		3,274				-			3,274
Net charge-offs		(191	)			-			(191	)
Provision		4,000				-			4,000
Ending balance	$	136,281			$	36,861		$	173,142
	Three Months Ended December 31, 2018
	Allowance for				Reserve for			Total
Allowance for Credit	Loan and				Unfunded Loan			Allowance for
Losses Rollforward	Lease Losses				Commitments			Credit Losses
	(In thousands)
Beginning balance	$	141,920			$	35,361		$	177,281
Charge-offs		(25,346	)			-			(25,346	)
Recoveries		5,398				-			5,398
Net charge-offs		(19,948	)			-			(19,948	)
Provision		10,500				1,500			12,000
Ending balance	$	132,472			$	36,861		$	169,333

The allowance for credit losses as a percentage of loans and leases held for investment increased to 0.95% at March 31, 2019 from 0.94% at December 31, 2018.

Gross charge-offs for the first quarter of 2019 were $3.5 million and were primarily for other commercial loans.  Gross charge-offs for the fourth quarter of 2018 were $25.3 million and included $23.4 million for venture capital loans, of which $20.0 million related to two loans, and $1.7 million for other commercial loans.  Recoveries for the first quarter of 2019 were $3.3 million and included $2.3 million for venture capital loans and $0.8 million for other commercial loans. Recoveries for the fourth quarter of 2018 were $5.4 million and included $3.1 million for venture capital loans and $1.7 million for other commercial loans.     

For the first quarter of 2019 and fourth quarter of 2018, annualized net charge-offs to average loans and leases were 0.00% and 0.46%.  

Deposits and Client Investment Funds

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

	March 31, 2019					December 31, 2018					March 31, 2018
			% of					% of					% of
Deposit Composition	Amount		Total			Amount		Total			Amount		Total
	(Dollars in thousands)
Noninterest-bearing demand	$	7,712,409	40	%		$	7,888,915	42	%		$	8,232,140	46	%
Interest checking		3,163,228	16	%			2,842,463	15	%			2,076,152	11	%
Money market		4,714,078	25	%			5,043,871	27	%			4,676,734	26	%
Savings		537,923	3	%			571,422	3	%			676,503	4	%
Total core deposits		16,127,638	84	%			16,346,671	87	%			15,661,529	87	%
Non-core non-maturity deposits		454,277	2	%			518,192	3	%			585,399	3	%
Total non-maturity deposits		16,581,915	86	%			16,864,863	90	%			16,246,928	90	%
Time deposits $250,000 and under		2,258,989	12	%			1,593,453	8	%			1,482,118	8	%
Time deposits over $250,000		445,023	2	%			412,185	2	%			349,742	2	%
Total time deposits		2,704,012	14	%			2,005,638	10	%			1,831,860	10	%
Total deposits	$	19,285,927	100	%		$	18,870,501	100	%		$	18,078,788	100	%

At March 31, 2019, core deposits totaled $16.1 billion, or 84% of total deposits, including $7.7 billion of noninterest-bearing demand deposits, or 40% of total 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, 2019 were $2.2 billion, of which $1.6 billion was managed by S1AM.

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	2019				2018				(Decrease)
	(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)(2)	$	88,527			$	79,333			$	9,194
Accruing loans contractually past due 90 days or more		-				-				-
Foreclosed assets, net		3,291				5,299				(2,008	)
Total nonperforming assets ("NPAs")	$	91,818			$	84,632			$	7,186
Nonaccrual loans and leases held for investment to loans and leases held for investment		0.48	%			0.44	%
Nonperforming assets to loans and leases held for investment and foreclosed assets		0.50	%			0.47	%
Nonaccrual loans and leases held for investment (1)(2)	$	88,527			$	79,333			$	9,194
Performing TDRs held for investment		17,027				17,701				(674	)
Total impaired loans and leases	$	105,554			$	97,034			$	8,520
Loan and Lease Credit Risk Ratings:
Pass	$	17,824,612			$	17,459,205			$	365,407
Special mention		292,780				261,398				31,382
Classified (1)		190,305				237,110				(46,805	)
Total loans and leases held for investment, net of deferred fees	$	18,307,697			$	17,957,713			$	349,984
Classified loans and leases held for investment to loans and leases held for investment		1.04	%			1.32	%
Allowance for Credit Losses:
Allowance for credit losses	$	173,142			$	169,333			$	3,809
Provision for credit losses (for the quarter)	$	4,000			$	12,000			$	(8,000	)
Net charge-offs (for the quarter)	$	191			$	19,948			$	(19,757	)
Net charge-offs to average loans and leases (for the quarter)		0.00	%			0.46	%
Allowance for credit losses to loans and leases held for investment		0.95	%			0.94	%
Allowance for credit losses to nonaccrual loans and leases held for investment		195.6	%			213.5	%
(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.
(2) Nonaccrual loans include guaranteed amounts of $10.2 million at March 31, 2019 and $11.2 million at December 31, 2018.

Nonaccrual, classified, and special mention loans and leases fluctuate from period to period as a result of loan repayments and our ongoing active portfolio monitoring.

During the first quarter of 2019, nonaccrual loans and leases increased $9.2 million from what was a five-year low as of December 31, 2018, while classified loans and leases decreased by $46.8 million driven primarily by the payoff of a $30 million commercial real estate mortgage loan.  

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, 2019					December 31, 2018					30-89 Days Past Due
			% of					% of			March 31,			December 31,
			Loan					Loan			2019			2018
	Amount		Category			Amount		Category			Amount			Amount
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	12,750	0.3	%		$	15,321	0.3	%		$	6,863		$	3,276
Income producing and other residential		2,444	0.1	%			2,524	0.1	%			1,853			1,557
Total real estate mortgage		15,194	0.2	%			17,845	0.2	%			8,716			4,833
Real estate construction and land:
Commercial		430	0.0	%			442	0.0	%			-			-
Residential		-	0.0	%			-	0.0	%			8,949			1,527
Total real estate construction and land		430	0.0	%			442	0.0	%			8,949			1,527
Commercial:
Asset-based		43,406	1.3	%			32,324	1.0	%			3,750			47
Venture capital		20,437	1.0	%			20,299	1.0	%			4,500			1,028
Other commercial		8,633	0.4	%			7,380	0.4	%			1,694			2,467
Total commercial		72,476	1.0	%			60,003	0.8	%			9,944			3,542
Consumer		427	0.1	%			1,043	0.3	%			614			581
Total held for investment	$	88,527	0.5	%		$	79,333	0.4	%		$	28,223		$	10,483

____________________(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.

STOCK REPURCHASE PROGRAM

In February 2019, the Company announced a new stock repurchase program with an authorized repurchase amount not to exceed $225 million and with a program maturity of February 29, 2020.  During the first quarter of 2019, we repurchased 3,070,676 shares at an average price of $38.94 and a total cost of $119.6 million, of which $65.4 million was under the new plan, leaving $159.6 million remaining under the plan as of March 31, 2019.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $26 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Our Community Banking group provides lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices. We offer additional products and services through our National Lending and Venture Banking groups. National Lending provides asset-based, equipment, real estate and security cash flow loans and treasury management services to established middle-market businesses on a national basis. Venture Banking offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovative 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 communication 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. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on information available at the time of this communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by the Company with the Securities and Exchange Commission.

We are under no obligation (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,
	2019				2018
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	224,758			$	175,830
Interest-earning deposits in financial institutions		332,124				209,937
Total cash and cash equivalents		556,882				385,767
Securities available-for-sale, at estimated fair value		3,994,708				4,009,431
Federal Home Loan Bank stock, at cost		29,430				32,103
Total investment securities		4,024,138				4,041,534
Loans held for sale		25,124				-
Gross loans and leases held for investment		18,371,295				18,026,365
Deferred fees, net		(63,598	)			(68,652	)
Total loans and leases held for investment, net of deferred fees		18,307,697				17,957,713
Allowance for loan and lease losses		(136,281	)			(132,472	)
Total loans and leases held for investment, net		18,171,416				17,825,241
Equipment leased to others under operating leases		293,853				292,677
Premises and equipment, net		37,783				34,661
Foreclosed assets, net		3,291				5,299
Deferred tax asset, net		-				17,489
Goodwill		2,548,670				2,548,670
Core deposit and customer relationship intangibles, net		52,250				57,120
Other assets		610,731				522,896
Total assets	$	26,324,138			$	25,731,354
LIABILITIES:
Noninterest-bearing deposits	$	7,712,409			$	7,888,915
Interest-bearing deposits		11,573,518				10,981,586
Total deposits		19,285,927				18,870,501
Borrowings		1,481,087				1,371,114
Subordinated debentures		454,458				453,846
Accrued interest payable and other liabilities		311,684				210,305
Total liabilities		21,533,156				20,905,766
STOCKHOLDERS' EQUITY (1)		4,790,982				4,825,588
Total liabilities and stockholders’ equity	$	26,324,138			$	25,731,354
Book value per share	$	39.86			$	39.17
Tangible book value per share (2)	$	18.22			$	18.02
Shares outstanding		120,201,149				123,189,833
(1) Includes net unrealized gain (loss) on securities available-for-sale, net	$	37,258			$	(6,075	)
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
	Three Months Ended
	March 31,			December 31,				March 31,
	2019			2018				2018
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	274,229		$	272,522			$	251,085
Investment securities		29,680			29,690				26,138
Deposits in financial institutions		650			527				552
Total interest income		304,559			302,739				277,775
Interest expense:
Deposits		34,235			28,834				13,818
Borrowings		7,710			4,602				920
Subordinated debentures		7,738			7,538				6,537
Total interest expense		49,683			40,974				21,275
Net interest income		254,876			261,765				256,500
Provision for credit losses		4,000			12,000				4,000
Net interest income after provision for credit losses		250,876			249,765				252,500
Noninterest income:
Service charges on deposit accounts		3,730			4,091				4,174
Other commissions and fees		11,008			11,114				10,265
Leased equipment income		9,282			9,384				9,587
Gain on sale of loans and leases		-			-				4,569
Gain on sale of securities		2,161			786				6,311
Other income		4,883			8,151				3,653
Total noninterest income		31,064			33,526				38,559
Noninterest expense:
Compensation		70,845			69,299				71,023
Occupancy		14,320			13,356				13,223
Data processing		6,925			6,930				6,659
Other professional services		4,513			6,198				4,439
Insurance and assessments		4,038			4,202				5,727
Intangible asset amortization		4,870			4,986				6,346
Leased equipment depreciation		5,651			5,758				5,375
Foreclosed assets expense (income), net		29			(311	)			(122	)
Acquisition, integration and reorganization costs		618			970				-
Loan expense		2,885			2,991				2,271
Other expense		11,593			14,856				12,454
Total noninterest expense		126,287			129,235				127,395
Earnings before income taxes		155,653			154,056				163,664
Income tax expense		43,049			39,015				45,388
Net earnings	$	112,604		$	115,041			$	118,276
Basic and diluted earnings per share	$	0.92		$	0.93			$	0.93
Dividends declared and paid per share	$	0.60		$	0.60			$	0.50

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
	Three Months Ended
	March 31,				December 31,				March 31,
	2019				2018				2018
	(In thousands, except per share data)
Basic Earnings Per Share:
Net earnings	$	112,604			$	115,041			$	118,276
Less: earnings allocated to unvested restricted stock (1)		(1,163	)			(1,219	)			(1,115	)
Net earnings allocated to common shares	$	111,441			$	113,822			$	117,161
Weighted-average basic shares and unvested restricted stock outstanding		122,227				123,238				127,487
Less: weighted-average unvested restricted stock outstanding		(1,352	)			(1,426	)			(1,413	)
Weighted-average basic shares outstanding		120,875				121,812				126,074
Basic earnings per share	$	0.92			$	0.93			$	0.93
Diluted Earnings Per Share:
Net earnings allocated to common shares	$	111,441			$	113,822			$	117,161
Weighted-average basic shares outstanding		120,875				121,812				126,074
Diluted earnings per share	$	0.92			$	0.93			$	0.93
(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, 2019							December 31, 2018							March 31, 2018
			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)(2)	$	18,064,230	$	274,513	6.16	%		$	17,275,343	$	272,824	6.27	%		$	16,682,124	$	251,260	6.11	%
Investment securities (3)		3,968,531		30,572	3.12	%			3,899,520		30,992	3.15	%			3,682,138		27,935	3.08	%
Deposits in financial institutions		111,950		650	2.35	%			94,500		527	2.21	%			150,674		552	1.49	%
Total interest-earning assets (1)		22,144,711		305,735	5.60	%			21,269,363		304,343	5.68	%			20,514,936		279,747	5.53	%
Other assets		3,631,238							3,515,099							3,556,212
Total assets	$	25,775,949						$	24,784,462						$	24,071,148
Liabilities and Stockholders' Equity:
Interest checking	$	3,041,822		9,321	1.24	%		$	2,785,702		7,932	1.13	%		$	2,311,988		3,050	0.54	%
Money market		5,274,987		14,908	1.15	%			5,107,468		13,621	1.06	%			5,038,119		6,812	0.55	%
Savings		553,032		242	0.18	%			597,259		273	0.18	%			685,173		258	0.15	%
Time		2,286,932		9,764	1.73	%			1,932,332		7,008	1.44	%			1,923,963		3,698	0.78	%
Total interest-bearing deposits		11,156,773		34,235	1.24	%			10,422,761		28,834	1.10	%			9,959,243		13,818	0.56	%
Borrowings		1,218,319		7,710	2.57	%			764,039		4,602	2.39	%			239,293		920	1.56	%
Subordinated debentures		454,203		7,738	6.91	%			452,998		7,538	6.60	%			461,648		6,537	5.74	%
Total interest-bearing liabilities		12,829,295		49,683	1.57	%			11,639,798		40,974	1.40	%			10,660,184		21,275	0.81	%
Noninterest-bearing demand deposits		7,783,652							8,163,699							8,311,104
Other liabilities		347,037							222,564							198,653
Total liabilities		20,959,984							20,026,061							19,169,941
Stockholders' equity		4,815,965							4,758,401							4,901,207
Total liabilities and stockholders' equity	$	25,775,949						$	24,784,462						$	24,071,148
Net interest income (1)			$	256,052						$	263,369						$	258,472
Net interest spread (1)					4.03	%						4.28	%						4.72	%
Net interest margin (1)					4.69	%						4.91	%						5.11	%
Total deposits (4)	$	18,940,425	$	34,235	0.73	%		$	18,586,460	$	28,834	0.62	%		$	18,270,347	$	13,818	0.31	%
(1) Tax equivalent.(2) Includes discount accretion on acquired loans of $3.0 million, $6.9 million, and $7.6 million for the three months ended March 31, 2019, December 31, 2018, and March 31, 2018, respectively.(3) Includes tax-equivalent adjustments of $0.9 million, $1.3 million, and $1.8 million for the three months ended March 31, 2019, December 31, 2018, and March 31, 2018 related to tax-exempt income on investment securities. The federal statutory tax rate utilized was 21%.(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 total deposits divided by average total deposits.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
	March 31,				December 31,				September 30,				June 30,				March 31,
	2019				2018				2018				2018				2018
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	224,758			$	175,830			$	196,502			$	245,998			$	235,061
Interest-earning deposits in financial institutions		332,124				209,937				185,284				205,567				312,735
Total cash and cash equivalents		556,882				385,767				381,786				451,565				547,796
Securities available-for-sale		3,994,708				4,009,431				3,820,333				3,857,788				3,801,986
Federal Home Loan Bank stock		29,430				32,103				31,077				26,271				17,250
Total investment securities		4,024,138				4,041,534				3,851,410				3,884,059				3,819,236
Loans held for sale		25,124				-				-				-				-
Gross loans and leases held for investment		18,371,295				18,026,365				17,295,589				16,947,502				16,516,627
Deferred fees, net		(63,598	)			(68,652	)			(65,443	)			(62,310	)			(61,342	)
Total loans and leases held for investment, net of deferred fees		18,307,697				17,957,713				17,230,146				16,885,192				16,455,285
Allowance for loan and lease losses		(136,281	)			(132,472	)			(141,920	)			(132,139	)			(134,275	)
Total loans and leases held for investment, net		18,171,416				17,825,241				17,088,226				16,753,053				16,321,010
Equipment leased to others under operating leases		293,853				292,677				275,707				266,576				280,648
Premises and equipment, net		37,783				34,661				34,012				34,513				33,686
Foreclosed assets, net		3,291				5,299				4,407				2,231				1,236
Deferred tax asset, net		-				17,489				41,280				25,551				12,584
Goodwill		2,548,670				2,548,670				2,548,670				2,548,670				2,548,670
Core deposit and customer relationship intangibles, net		52,250				57,120				62,106				67,693				73,280
Other assets		610,731				522,896				494,522				495,646				511,184
Total assets	$	26,324,138			$	25,731,354			$	24,782,126			$	24,529,557			$	24,149,330
LIABILITIES:
Noninterest-bearing deposits	$	7,712,409			$	7,888,915			$	7,834,480			$	8,126,153			$	8,232,140
Interest-bearing deposits		11,573,518				10,981,586				10,045,063				9,803,039				9,846,648
Total deposits		19,285,927				18,870,501				17,879,543				17,929,192				18,078,788
Borrowings		1,481,087				1,371,114				1,513,166				1,187,226				575,284
Subordinated debentures		454,458				453,846				452,944				451,878				452,223
Accrued interest payable and other liabilities		311,684				210,305				194,788				183,302				175,545
Total liabilities		21,533,156				20,905,766				20,040,441				19,751,598				19,281,840
STOCKHOLDERS' EQUITY (1)		4,790,982				4,825,588				4,741,685				4,777,959				4,867,490
Total liabilities and stockholders’ equity	$	26,324,138			$	25,731,354			$	24,782,126			$	24,529,557			$	24,149,330
Book value per share	$	39.86			$	39.17			$	38.46			$	38.36			$	38.47
Tangible book value per share (2)	$	18.22			$	18.02			$	17.28			$	17.35			$	17.75
Shares outstanding		120,201,149				123,189,833				123,283,450				124,567,950				126,537,871
(1) Includes net unrealized gain (loss) on securities available-for-sale, net	$	37,258			$	(6,075	)		$	(43,854	)		$	(22,340	)		$	(11,936	)
(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,
	2019			2018				2018				2018				2018
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	274,229		$	272,522			$	264,062			$	260,300			$	251,085
Investment securities		29,680			29,690				28,061				27,730				26,138
Deposits in financial institutions		650			527				519				484				552
Total interest income		304,559			302,739				292,642				288,514				277,775
Interest expense:
Deposits		34,235			28,834				21,121				16,367				13,818
Borrowings		7,710			4,602				3,814				2,649				920
Subordinated debentures		7,738			7,538				7,390				7,166				6,537
Total interest expense		49,683			40,974				32,325				26,182				21,275
Net interest income		254,876			261,765				260,317				262,332				256,500
Provision for credit losses		4,000			12,000				11,500				17,500				4,000
Net interest income after provision for credit losses		250,876			249,765				248,817				244,832				252,500
Noninterest income:
Service charges on deposit accounts		3,730			4,091				3,979				4,265				4,174
Other commissions and fees		11,008			11,114				12,397				11,767				10,265
Leased equipment income		9,282			9,384				9,120				9,790				9,587
Gain on sale of loans and leases		-			-				-				106				4,569
Gain on sale of securities		2,161			786				826				253				6,311
Other income		4,883			8,151				10,590				13,457				3,653
Total noninterest income		31,064			33,526				36,912				39,638				38,559
Noninterest expense:
Compensation		70,845			69,299				72,333				69,913				71,023
Occupancy		14,320			13,356				13,069				13,575				13,223
Data processing		6,925			6,930				6,740				6,896				6,659
Other professional services		4,513			6,198				6,058				5,257				4,439
Insurance and assessments		4,038			4,202				5,446				5,330				5,727
Intangible asset amortization		4,870			4,986				5,587				5,587				6,346
Leased equipment depreciation		5,651			5,758				5,001				5,237				5,375
Foreclosed assets expense (income), net		29			(311	)			(257	)			(61	)			(122	)
Acquisition, integration and reorganization costs		618			970				800				-				-
Loan expense		2,885			2,991				2,249				3,058				2,271
Other expense		11,593			14,856				11,127				11,657				12,454
Total noninterest expense		126,287			129,235				128,153				126,449				127,395
Earnings before income taxes		155,653			154,056				157,576				158,021				163,664
Income tax expense		43,049			39,015				41,289				42,286				45,388
Net earnings	$	112,604		$	115,041			$	116,287			$	115,735			$	118,276
Basic and diluted earnings per share	$	0.92		$	0.93			$	0.94			$	0.92			$	0.93
Dividends declared and paid per share	$	0.60		$	0.60			$	0.60			$	0.60			$	0.50

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,
	2019				2018				2018				2018				2018
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		1.77	%			1.84	%			1.89	%			1.93	%			1.99	%
Return on average equity (1)		9.48	%			9.59	%			9.72	%			9.61	%			9.79	%
Return on average tangible equity (1)(2)		20.64	%			21.23	%			21.61	%			20.98	%			21.08	%
Yield on average loans and leases (1)(3)		6.16	%			6.27	%			6.20	%			6.30	%			6.11	%
Yield on average interest-earning assets (1)(3)		5.60	%			5.68	%			5.60	%			5.70	%			5.53	%
Cost of average interest-bearing deposits (1)		1.24	%			1.10	%			0.83	%			0.68	%			0.56	%
Cost of average total deposits (1)		0.73	%			0.62	%			0.46	%			0.37	%			0.31	%
Cost of average interest-bearing liabilities (1)		1.57	%			1.40	%			1.14	%			0.98	%			0.81	%
Net interest spread (1)(3)		4.03	%			4.28	%			4.46	%			4.72	%			4.72	%
Net interest margin (1)(3)		4.69	%			4.91	%			4.99	%			5.18	%			5.11	%
Efficiency ratio		42.4	%			41.7	%			40.9	%			39.8	%			41.7	%
Noninterest expense as a percentage of average assets (1)		1.99	%			2.07	%			2.09	%			2.11	%			2.15	%
Average Balances:
Loans and leases, net of deferred fees	$	18,064,230			$	17,275,343			$	16,913,792			$	16,576,361			$	16,682,124
Interest-earning assets		22,144,711				21,269,363				20,866,478				20,492,121				20,514,936
Total assets		25,775,949				24,784,462				24,357,771				23,999,637				24,071,148
Noninterest-bearing deposits		7,783,652				8,163,699				8,120,306				8,253,413				8,311,104
Interest-bearing deposits		11,156,773				10,422,761				10,111,927				9,703,611				9,959,243
Total deposits		18,940,425				18,586,460				18,232,233				17,957,024				18,270,347
Borrowings		1,218,319				764,039				720,449				549,665				239,293
Subordinated debentures		454,203				452,998				452,312				451,973				461,648
Interest-bearing liabilities		12,829,295				11,639,798				11,284,688				10,705,249				10,660,184
Stockholders' equity		4,815,965				4,758,401				4,748,819				4,832,480				4,901,207
(1) Annualized.
(2) Non-GAAP measure.
(3) 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,
	2019				2018				2018				2018				2018
	(Dollars in thousands)
Credit Quality Ratios:
Nonaccrual loans and leases held for investment to loans and leases held for investment		0.48	%			0.44	%			0.66	%			0.67	%			0.63	%
Nonperforming assets to loans and leases held for investment and foreclosed assets		0.50	%			0.47	%			0.68	%			0.69	%			0.64	%
Classified loans and leases held for investment to loans and leases held for investment		1.04	%			1.32	%			1.51	%			1.40	%			1.26	%
Trailing 12 months net charge-offs to average loans and leases held for investment		0.22	%			0.26	%			0.28	%			0.28	%			0.31	%
Allowance for credit losses to loans and leases held for investment		0.95	%			0.94	%			1.03	%			0.99	%			1.02	%
Allowance for credit losses to nonaccrual loans and leases held  for investment		195.6	%			213.5	%			156.9	%			147.3	%			161.1	%
PacWest Bancorp Consolidated Capital:
Tier 1 leverage ratio (1)		9.38	%			10.13	%			10.10	%			10.33	%			10.66	%
Common equity tier 1 capital ratio (1)		9.48	%			10.01	%			10.18	%			10.59	%			11.16	%
Tier 1 capital ratio (1)		9.48	%			10.01	%			10.18	%			10.59	%			11.16	%
Total capital ratio (1)		12.15	%			12.72	%			13.03	%			13.48	%			14.11	%
Risk-weighted assets (1)	$	22,939,074			$	22,525,096			$	21,650,542			$	20,929,325			$	20,523,487
Equity to assets ratio		18.20	%			18.75	%			19.13	%			19.48	%			20.16	%
Tangible common equity ratio (2)		9.23	%			9.60	%			9.61	%			9.86	%			10.43	%
Book value per share	$	39.86			$	39.17			$	38.46			$	38.36			$	38.47
Tangible book value per share (2)	$	18.22			$	18.02			$	17.28			$	17.35			$	17.75
Pacific Western Bank Capital:
Tier 1 leverage ratio (1)		10.57	%			10.80	%			10.78	%			11.11	%			11.33	%
Common equity tier 1 capital ratio (1)		10.69	%			10.68	%			10.87	%			11.40	%			11.86	%
Tier 1 capital ratio (1)		10.69	%			10.68	%			10.87	%			11.40	%			11.86	%
Total capital ratio (1)		11.45	%			11.44	%			11.69	%			12.21	%			12.67	%
(1) Capital information for March 31, 2019 is preliminary.
(2) 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	2019				2018				2018
	(Dollars in thousands)
Net earnings	$	112,604			$	115,041			$	118,276
Average stockholders' equity	$	4,815,965			$	4,758,401			$	4,901,207
Less: Average intangible assets		2,603,842				2,608,497				2,625,593
Average tangible common equity	$	2,212,123			$	2,149,904			$	2,275,614
Return on average equity (1)		9.48	%			9.59	%			9.79	%
Return on average tangible equity (2)		20.64	%			21.23	%			21.08	%
(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	2019				2018				2018				2018				2018
	(Dollars in thousands, except per share data)
Stockholders' equity	$	4,790,982			$	4,825,588			$	4,741,685			$	4,777,959			$	4,867,490
Less: Intangible assets		2,600,920				2,605,790				2,610,776				2,616,363				2,621,950
Tangible common equity	$	2,190,062			$	2,219,798			$	2,130,909			$	2,161,596			$	2,245,540
Total assets	$	26,324,138			$	25,731,354			$	24,782,126			$	24,529,557			$	24,149,330
Less: Intangible assets		2,600,920				2,605,790				2,610,776				2,616,363				2,621,950
Tangible assets	$	23,723,218			$	23,125,564			$	22,171,350			$	21,913,194			$	21,527,380
Equity to assets ratio		18.20	%			18.75	%			19.13	%			19.48	%			20.16	%
Tangible common equity ratio (1)		9.23	%			9.60	%			9.61	%			9.86	%			10.43	%
Book value per share	$	39.86			$	39.17			$	38.46			$	38.36			$	38.47
Tangible book value per share (2)	$	18.22			$	18.02			$	17.28			$	17.35			$	17.75
Shares outstanding		120,201,149				123,189,833				123,283,450				124,567,950				126,537,871
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

Contact:		Matthew P. WagnerPresident and CEO		Patrick J. RusnakExecutive Vice President and CFO
Phone:		310-887-8520		714-989-4705