updated 4/20/2011 9:16:58 AM ET 2011-04-20T13:16:58

Net Earnings of $10.7 Million
Net Interest Margin Increases to 5.34%
Credit Loss Reserve at 3.41% of Net Non-Covered Loans
Core Deposits Grow $53.1 Million
Noninterest-Bearing Deposits at 35% of Total Deposits

LOS ANGELES, April 20, 2011 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the first quarter of 2011 of $10.7 million, or $0.29 per diluted share, compared to a net loss of $7.7 million, or $0.22 per diluted share, for the fourth quarter of 2010. The $18.4 million increase in net earnings for the linked quarters was due primarily to a lower credit loss provision on non-covered loans of $27.5 million ($16.0 million after-tax) and lower noninterest expense of $7.9 million ($4.6 million after-tax).

This press release contains non-GAAP financial disclosures for tangible common equity. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. Given the use of tangible common equity amounts and ratios is prevalent among banking regulators, investors and analysts, we disclose our tangible common equity ratios in addition to equity-to-assets ratios. Also, as analysts and investors view pre-credit, pre-tax earnings as an indicator of the Company's ability to absorb credit losses, we disclose this amount in addition to net earnings. Please refer to the table at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.

FIRST QUARTER RESULTS  
   
  Three Months Ended
  March 31,  December 31, 
  2011 2010
  (Dollars in thousands, except per share data)
Financial Highlights:    
Net earnings (loss)   $ 10,676  $ (7,688)
Diluted earnings (loss) per share  $ 0.29  $ (0.22)
Annualized return on average assets 0.79% (0.53%)
Annualized return on average equity 8.97% (6.15%)
Net interest margin 5.34% 5.21%
Efficiency ratio (1) 56.4% 67.4%
     
At Quarter End:    
Allowance for credit losses to non-covered loans, net of unearned income (2) 3.41% 3.30%
Allowance for credit losses to non-covered nonaccrual loans (2)  135.6% 110.8%
Equity to assets ratios:    
PacWest Bancorp Consolidated 8.98% 8.66%
Pacific Western Bank 10.72% 10.34%
Tangible common equity ratios:    
PacWest Bancorp Consolidated 7.80% 7.44%
Pacific Western Bank 9.55% 9.13%
     
(1) FDIC loss sharing income and net covered OREO costs reduced the first quarter 2011 and increased fourth quarter 2010 efficiency ratios by 491 bps and 209 bps, respectively.
(2) Non-covered loans exclude loans from the Los Padres and Affinity acquisitions covered by a loss sharing agreement with the FDIC.

The improvement in first quarter net earnings compared to the prior quarter was due to a combination of lower provision for credit losses on non-covered loans, higher FDIC loss sharing income, and lower noninterest expense, offset partially by lower net interest income. Net interest income declined due primarily to lower average loans during the current quarter attributable to the $74.9 million classified loan sale in December 2010 and the continuing decline in the loan portfolio. FDIC loss sharing income grew principally due to an increase in covered loan credit costs. Noninterest expense decreased mostly due to lower compensation costs, OREO costs and other expense. 

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

  Three Months Ended
  March 31,  December 31, 
  2011 2010
  (In thousands)
Provision for credit losses on non-covered loans  $ 7,800  $ 35,315
Non-covered OREO expense  703  1,093
Total non-covered credit costs  8,503  36,408
     
Provision for credit losses on covered loans  5,747  2,096
Covered OREO (income) expense  (2,578)  699
Total covered net credit costs  3,169  2,795
Increase in FDIC loss sharing asset for net credit costs  (2,275)  (2,206)
Total covered net credit costs  894  589
     
Total credit-related costs  $ 9,397  $ 36,997
     
Non-covered loan net charge-offs  $ 7,889  $ 32,231
Charge-offs on loans sold included in non-covered loan net charge-offs above  $ --  $ 20,942

The credit loss provision for the first quarter had two components: $7.8 million for non-covered loans and $5.7 million for covered loans. The first quarter non-covered credit loss provision was driven by (a) non-covered loan net charge-offs of $7.9 million and (b) the level and trends of nonaccrual and classified loans.   The covered loan credit loss provision was driven by decreases in expected cash flows on covered loans compared to those previously estimated. The covered loan credit loss provision and covered net OREO income or expense are offset partially by an increase in the FDIC loss sharing asset, which represents the FDIC's share of these net costs.

Matt Wagner, Chief Executive Officer, commented, "We are very pleased with the positive earnings we generated this quarter. As we commented previously, we have maintained our solid core earnings engine, which was overshadowed by higher provisioning during the past several quarters as we addressed this credit cycle head-on. Our core earnings generation ability and balance sheet strength gives us the flexibility to address issues timely and appropriately."

"In addition to our solid first quarter earnings performance," continued Mr. Wagner, "we substantially increased core deposits through organic growth.  While we remain vigilant about credit and cautious on its outlook, we are well-positioned to take advantage of potential growth opportunities. Our Company remains well-capitalized and our balance sheet strength is evidenced by our credit loss reserve coverage ratios of 3.4% to total loans and 136% to nonaccrual loans."

Vic Santoro, Executive Vice President and Chief Financial Officer, stated, "The events of the first quarter reflect the strengths of our core business and the focus we've had on earnings improvement. Our net interest margin expanded to the level it was in 2008, our all-in deposit cost remains quite low, and noninterest expenses are managed. On a pre-credit, pre-tax basis, our earnings exceeded $28 million for the first quarter. Our core deposits increased over $53 million and noninterest-bearing deposits were at 35% of total deposits at quarter-end." 

Mr. Santoro continued, "The Company's cash and available-for-sale securities exceed $1 billion and represent almost 20% of assets at quarter-end. Our capital position is strong, as the earnings generated in the first quarter contributed to increases in total capital of over $12 million and tangible capital of over $15 million. The combination of strong liquidity and capital enables us to take advantage of growth opportunities as they arise." 

BALANCE SHEET CHANGES

During the first quarter total loans declined $152.5 million on a net basis, including a $103.4 million decrease in non-covered loans. The loan portfolio continues to decline generally due to repayments, resolution activities and low loan demand. Non-covered loans, net of unearned income, were $3.1 billion at March 31, 2011 and the covered loan portfolio was $859.4 million at March 31, 2011.

While total assets declined $58.5 million during the first quarter, on-balance sheet liquidity increased $98.1 million, including a $78.6 million increase in overnight funds held at the Federal Reserve Bank. Investment securities available-for-sale grew $13.1 million during the first quarter due to the purchase of $71.1 million in government-sponsored entity pass through securities, offset partially by principal reductions.

Total deposits declined $65.0 million during the first quarter to $4.6 billion at March 31, 2011 largely as a result of brokered deposit maturities and runoff of higher cost acquired time deposit accounts. Time deposits decreased $118.1 million during the first quarter, including brokered deposit maturities of $36.2 million, to $1.1 billion at March 31, 2011. We had no brokered deposits at March 31, 2011. Core deposits, which include noninterest-bearing demand, interest checking, money market and savings accounts, increased $53.1 million during the first quarter and totaled $3.5 billion at March 31, 2011, or 76% of total deposits at that date. Noninterest-bearing demand deposits grew $140.6 million during the first quarter to $1.6 billion and represented 35% of total deposits at March 31, 2011.

COVERED ASSETS

As part of the Los Padres and Affinity acquisitions we entered into loss sharing agreements with the FDIC that cover a substantial portion of losses incurred after the acquisition dates on loans and other real estate owned, and in the case of the Affinity acquisition, certain investment securities.

A summary of the covered assets at March 31, 2011 and December 31, 2010 is shown in the following table:

  March 31,  December 31, 
Covered Assets 2011 2010
   (In thousands) 
Loans, net  $ 859,433  $ 908,576
Investment securities   52,132  50,437
Other real estate owned   42,117  55,816
Total covered assets   $ 953,682  $ 1,014,829

NET INTEREST INCOME

Net interest income was $65.7 million for the first quarter of 2011 compared to $68.5 million for the fourth quarter of 2010. The $2.8 million decline is due mostly to a $3.2 million decrease in interest income, which is attributed mainly to lower average loans as a result of the $74.9 million classified loan sale in the fourth quarter and the continued decline of the loan portfolio from loan payoffs. Partially offsetting the decline in net interest income was a reduction in interest expense of $459,000 due mainly to the early repayment of $50 million in FHLB advances during the fourth quarter of 2010.

NET INTEREST MARGIN

Our net interest margin for the first quarter of 2011 was 5.34%, an increase of 13 basis points from the 5.21% posted for the fourth quarter of 2010. The yield on average loans was 6.78% for the first quarter of 2011 compared to 6.64% for the prior quarter.  The loan yield, earning asset yield and net interest margin are all affected by loans being placed on or removed from nonaccrual status and the acceleration of purchase discounts on covered loan pay-offs; the loan yield and net interest margin for the first quarter were positively impacted by 27 basis points and 22 basis points, respectively, from the combination of these items.  The loan yield and net interest margin for the fourth quarter were positively impacted by 20 basis points and 16 basis points, respectively, from these items.  The cost of interest-bearing deposits and all-in deposit cost increased 6 basis points and 2 basis points to 0.79% and 0.52%, respectively, due mostly to an increase in the cost of time deposits. The cost of time deposits increased primarily from lower discount accretion on certain acquired time deposits, the maturities of brokered deposits having a lower rate than the overall time deposit rate, and an increase in the average remaining life of the time deposit portfolio.

NONINTEREST INCOME

Noninterest income for the first quarter of 2011 totaled $7.6 million compared to $4.6 million for the fourth quarter of 2010. The $3.0 million increase was due mostly to higher FDIC loss sharing income stemming from higher credit-related net costs on covered loans and OREO. Contributing to the growth in noninterest income was an increase in service charges on deposit accounts attributable to mid-quarter increases in rates charged for certain deposit services.

NONINTEREST EXPENSE

Noninterest expense totaled $41.4 million for the first quarter of 2011 compared to $49.3 million for the fourth quarter of 2010. The $7.9 million decline was due mostly to decreases in compensation expense, covered OREO costs and other expense. Compensation expense decreased by $2.0 million due mostly to a higher discretionary bonus accrual in the prior quarter.   Covered OREO costs decreased by $3.3 million due principally to a $3.3 million gain on sale of one commercial real estate property during the current quarter. Other expense declined by $2.2 million due mostly to a $1.9 million penalty recorded in the prior quarter for the early repayment of $50 million in FHLB advances; there was no similar expense item in 2011. We consolidated five acquired Los Padres branches into nearby branch locations in February 2011.

Noninterest expense includes amortization of time-based restricted stock, which is included in compensation, and intangible asset amortization. Amortization of restricted stock totaled $2.0 million for the first quarter of 2011 and $1.9 million for the fourth quarter of 2010. Intangible asset amortization totaled $2.3 million and $2.4 million for the first quarter of 2011 and the fourth quarter of 2010, respectively.

CREDIT QUALITY    
     
  March 31,  December 31, 
  2011 2010
   (Dollars in thousands) 
Non-Covered Credit Quality Metrics:    
Allowance for credit losses to loans, net of  unearned income  3.41% 3.30%
Allowance for credit losses to nonaccrual loans 135.6% 110.8%
Nonperforming assets to loans, net of unearned income, and other real estate owned 4.03% 3.76%
Classified loans (1)  $ 207,012  $ 214,009
     
(1) Classified loans are those with a credit risk rating of substandard or doutbtful.

Credit Loss Provisions

The first quarter of 2011 provision for credit losses totaled $13.5 million and was composed of $7.8 million on the non-covered loan portfolio and $5.7 million on the covered loan portfolio. The fourth quarter provision for credit losses totaled $37.4 million and was composed of $35.3 million on the non-covered loan portfolio, including $14.3 million attributed to the December classified loan sale, and $2.1 million on the covered loan portfolio. The provision on the non-covered portfolio is generated by our allowance methodology and reflects net charge-offs, the levels of nonaccrual and classified loans, and the migration of loans into various risk classifications. The covered loan credit loss provision increases the covered loan allowance for credit losses and results from decreases in expected cash flows on covered loans compared to those previously estimated.

First quarter of 2011 net charge-offs on non-covered loans totaled $7.9 million compared to fourth quarter net charge-offs on non-covered loans of $32.2 million. The fourth quarter net charge-offs included $20.9 million in charge-offs from the $74.9 million of classified loans sold in the same quarter. The allowance for credit losses on the non-covered portfolio totaled $104.2 million and $104.3 million at March 31, 2011 and December 31, 2010, respectively, and represented 3.41% and 3.30% of the non-covered loan balances at those respective dates. The allowance for credit losses as a percent of nonaccrual loans was 136% and 111% at March 31, 2011 and December 31, 2010, respectively.

Non-covered Nonaccrual Loans and Other Real Estate Owned

Non-covered nonperforming assets include non-covered nonaccrual loans and non-covered OREO and totaled $125.2 million at March 31, 2011 compared to $119.8 million at December 31, 2010. The $5.4 million increase in non-covered nonperforming assets is due primarily to a higher non-covered OREO balance at March 31, 2011. During the first quarter of 2011, two non-covered nonaccrual loans with an aggregate balance of $23.0 million secured by the same undeveloped land located in Ventura County were foreclosed and transferred to non-covered OREO. The ratio of non-covered nonperforming assets to non-covered loans and non-covered OREO increased to 4.03% at March 31, 2011 from 3.76% at December 31, 2010.

The amount of new nonaccrual loans has slowed over the last several quarters as shown in the following chart: http://media.globenewswire.com/cache/13824/file/10372.pdf

The types and balances of non-covered loans included in the categories of nonaccrual and accruing loans past due between 30 and 89 days at March 31, 2011 and December 31, 2010 follow:

  Nonaccrual Loans (1) Accruing and Over 
  March 31, 2011 December 31, 2010 30 days Past Due (1)
    % of   % of March 31, December 31,
    Loan   Loan 2011 2010
Loan Category Balance Category Balance Category Balance Balance
  (Dollars in thousands)
Real estate mortgage:            
Hospitality  $ 4,109 2.7%  $ 4,151 2.6%  $ 864  $ --
SBA 504  5,138 7.9%  9,346 13.5%  188  190
Other commercial  21,679 1.2%  17,311 0.9%  1,395  1,652
Residential  9,917 5.7%  10,141 5.5%  90  585
Total real estate mortgage  40,843 1.9%  40,949 1.8%  2,537  2,427
Real estate construction and land:            
Residential  4,586 10.9%  24,004 36.9%  --  --
Commercial  8,620 6.4%  5,238 4.6%  1,484  --
Total real estate construction  13,206 7.5%  29,242 16.3%  1,484  --
Commercial:            
Collateralized  5,748 1.6%  6,241 1.7%  661  680
Unsecured  9,009 7.8%  9,104 7.0%  400  71
Asset-based   15 0.0%  15 0.0%  --  --
SBA 7(a)   6,234 19.9%  6,518 20.2%  1,253  423
Total commercial  21,006 3.1%  21,878 3.3%  2,314  1,174
Consumer   1,794 8.2%  1,951 7.8%  267  133
Foreign  -- 0.0%  163 0.7%  --  --
Total non-covered loans  $ 76,849 2.5%  $ 94,183 3.0%  $ 6,602  $ 3,734
             
(1) Excludes covered loans acquired from the Los Padres and Affinity acquisitions.    

The $17.3 million decline in non-covered nonaccrual loans during the first quarter was attributable to (a) foreclosures of $25.1 million, (b) other reductions, payoffs and returns to accrual status of $6.6 million, (c) charge-offs of $8.8 million, and (d) additions of $23.2 million.

The following lending relationships, excluding SBA-related loans, were on nonaccrual status at March 31, 2011:

Nonaccrual  
 Amount  Description
(In thousands)  
 $ 6,948 Two unsecured loans that are fully reserved for.
 $ 6,441 Collateralized by 2nd trust deeds on two single-family residences in Beverly Hills, California with current appraised values in excess of the loan carrying value. Foreclosure is in process.
 $ 5,734 Four industrial warehouse loans in Riverside County, California. The borrower is paying as agreed.
 $ 5,670 The loan, secured by an out-of-state shopping center, has been written down to its underlying collateral value based on the most recent appraisal. A receiver is managing the property and foreclosure is in process.
 $ 4,109 A hotel in San Diego County, California. The borrower's interest payments are current.
 $ 3,615 The collateral for this loan is residential and commercial land in Las Vegas, Nevada. The loan has been written down to its underlying collateral value based on the most recent appraisal.
 $ 2,594 This loan is secured by a medical-related office building in Los Angeles County, California and has been written down to its underlying collateral value based on the most recent appraisal.
 $ 2,402 This loan is unsecured and has a specific reserve for 50% of the balance. The borrower is current on interest payments.
 $ 2,339 This loan is secured by commercial land in Riverside County, California. 
 $ 2,200 Two loans that are secured by a retail shopping center in San Diego County, California. 

The details of non-covered OREO as of the dates indicated follow:

  March 31,  December 31, 
Property Type 2011 2010
  (In thousands)
Commercial real estate   $ 18,674  $ 18,205
Single family residences  2,502  2,743
Construction and land development   27,191  4,650
Total non-covered OREO  $ 48,367  $ 25,598

The activity in non-covered and covered OREO for the first quarter is shown in the following table:

  Three Months Ended
  March 31, 2011
  Non-Covered Covered 
  OREO OREO
  (In thousands)
Beginning of period  $ 25,598  $ 55,816
Foreclosures  25,931  4,130
Write-downs from updated appraisals  (382)  (890)
Reductions related to sales  (2,780)  (16,939)
End of period  $ 48,367  $ 42,117

The increase in non-covered OREO relates to the foreclosure on undeveloped land located in Ventura County which secured two non-covered loans with an aggregate balance of $23.0 million.  During the first quarter of 2011, there were gains of $152,000 and $3.8 million on the sales of non-covered and covered OREO, respectively.

REGULATORY CAPITAL MEASURES ARE ABOVE THE WELL-CAPITALIZED MINIMUMS

PacWest and its wholly-owned banking subsidiary, Pacific Western Bank, each remained well capitalized at March 31, 2011 as shown in the following table.

  March 31, 2011
  Well  Pacific PacWest
  Capitalized Western Bancorp
  Requirement Bank Consolidated
Tier 1 leverage capital ratio  5.00% 9.02% 9.21%
Tier 1 risk-based capital ratio  6.00% 13.22% 13.42%
Total risk-based capital ratio 10.00% 14.50% 14.70%
Tangible common equity ratio N/A 9.55% 7.80%

ABOUT PACWEST BANCORP

PacWest Bancorp ("PacWest") is a bank holding company with $5.5 billion in assets as of March 31, 2011, with one wholly-owned banking subsidiary, Pacific Western Bank ("Pacific Western"). Through 77 full-service community banking branches, Pacific Western provides commercial banking services, including real estate, construction and commercial loans, to small and medium-sized businesses. Pacific Western's branches are located in Los Angeles, Orange, Riverside, San Bernardino, Santa Barbara, San Diego, San Francisco, San Luis Obispo, San Mateo and Ventura Counties in California and Maricopa County in Arizona. Through its subsidiary BFI Business Finance and its division First Community Financial, Pacific Western also provides working capital financing to growing companies located throughout the Southwest, primarily in the states of Arizona, California and Texas. Additional information regarding PacWest Bancorp is available on the Internet at www.pacwestbancorp.com.  Information regarding Pacific Western Bank is also available on the Internet at www.pacificwesternbank.com.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to: lower than expected revenues; credit quality deterioration or a reduction in real estate values could cause an increase in the allowance for credit losses and a reduction in net earnings; increased competitive pressure among depository institutions; the Company's ability to complete future acquisitions, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies within expected time-frames or at all; settlements with the FDIC related to our loss-sharing arrangement and other adjustments related to the Los Padres Bank and Affinity Bank acquisitions; the possibility that personnel changes will not proceed as planned; the cost of additional capital is more than expected; a change in the interest rate environment reduces interest margins; asset/liability repricing risks and liquidity risks; pending legal matters may take longer or cost more to resolve or may be resolved adversely to the Company; general economic conditions, either nationally or in the market areas in which the Company does or anticipates doing business, are less favorable than expected; environmental conditions, including natural disasters, may disrupt our business, impede our operations, negatively impact the values of collateral securing the Company's loans or impair the ability of our borrowers to support their debt obligations; the economic and regulatory effects of the continuing war on terrorism and other events of war, including the conflicts in the Middle East; legislative or regulatory requirements or changes adversely affecting the Company's business; and changes in the securities markets; regulatory approvals for any capital activities cannot be obtained on the terms expected or on the anticipated schedule; and, other risks that are described in PacWest's public filings with the U.S. Securities and Exchange Commission (the "SEC"). If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, PacWest's results could differ materially from those expressed in, implied or projected by such forward-looking statements. PacWest assumes no obligation to update such forward-looking statements.

For a more complete discussion of risks and uncertainties, investors and security holders are urged to read PacWest Bancorp's annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by PacWest with the SEC. The documents filed by PacWest with the SEC may be obtained at PacWest Bancorp's website at www.pacwestbancorp.com or at the SEC's website at www.sec.gov . These documents may also be obtained free of charge from PacWest by directing a request to: PacWest Bancorp c/o Pacific Western Bank, 275 North Brea Boulevard, Brea, CA 92821. Attention: Investor Relations. Telephone 714-671-6800.

PACWEST BANCORP AND SUBSIDIARIES    
CONDENSED CONSOLIDATED BALANCE SHEETS     
(Unaudited)    
  March 31,  December 31, 
  2011 2010
  (In thousands, except per share and share data)
ASSETS    
Cash and due from banks  $ 88,634  $ 82,170
Interest-earning deposits in financial institutions  104,925  26,382
Total cash and cash equivalents  193,559  108,552
     
Non-covered securities available-for-sale  835,022  823,579
Covered securities available-for-sale  52,132  50,437
Total securities available-for-sale, at estimated fair value   887,154  874,016
Federal Home Loan Bank stock, at cost  52,857  55,040
Total investment securities  940,011  929,056
     
Non-covered loans, net of unearned income  3,057,654  3,161,055
Allowance for loan losses  (98,564)  (98,653)
Total non-covered loans, net  2,959,090  3,062,402
Covered loans, net  859,433  908,576
Total loans  3,818,523  3,970,978
     
Non-covered other real estate owned, net  48,367  25,598
Covered other real estate owned, net  42,117  55,816
Total other real estate owned  90,484  81,414
     
Premises and equipment  22,343  22,578
Goodwill   46,751  47,301
Core deposit and customer relationship intangibles  23,536  25,843
Cash surrender value of life insurance  66,560  66,182
FDIC loss sharing asset  116,081  116,352
Other assets  152,669  160,765
Total assets  $ 5,470,517  $ 5,529,021
     
LIABILITIES    
Noninterest-bearing deposits  $ 1,606,182  $ 1,465,562
Interest-bearing deposits  2,978,557  3,184,136
Total deposits  4,584,739  4,649,698
Borrowings  225,000  225,000
Subordinated debentures  129,498  129,572
Accrued interest payable and other liabilities  39,920  45,954
Total liabilities  4,979,157  5,050,224
STOCKHOLDERS' EQUITY (1)  491,360  478,797
Total liabilities and stockholders' equity  $ 5,470,517  $ 5,529,021
     
(1) Includes net unrealized gain (loss) on securities available-for-sale, net  $ 4,653  $ 3,969
     
Tangible book value per share  $ 11.31  $ 11.06
Book value per share  $ 13.20  $ 13.06
     
Shares outstanding (includes unvested restricted shares of 1,756,437 at March 31, 2011 and 1,230,582 at December 31, 2010)  37,218,047  36,672,429
     
     
PACWEST BANCORP AND SUBSIDIARIES    
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited)      
       
  Three Months Ended
  March 31,  December 31,  March 31, 
  2011 2010 2010
  (In thousands, except per share data)
Interest income:      
Loans  $ 66,781  $ 70,597  $ 63,745
Investment securities   7,819  7,222  5,121
Deposits in financial institutions   57  79  129
Total interest income   74,657  77,898  68,995
       
Interest expense:      
Deposits   5,956  6,028  6,889
Borrowings   1,744  2,113  2,668
Subordinated debentures   1,219  1,237  1,415
Total interest expense   8,919  9,378  10,972
       
Net interest income  65,738  68,520  58,023
       
Provision for credit losses:      
Non-covered loans  7,800  35,315  112,527
Covered loans  5,747  2,096  20,700
Total provision for credit losses  13,547  37,411  133,227
       
Net interest income after provision for credit losses   52,191  31,109  (75,204)
       
Noninterest income:      
Service charges on deposit accounts  3,558  3,305  2,729
Other commissions and fees   1,720  1,896  1,790
Increase in cash surrender value of life insurance   379  320  398
FDIC loss sharing income (expense), net  1,667  (1,277)  16,172
Other income  302  404  180
Total noninterest income   7,626  4,648  21,269
       
Noninterest expense:      
Compensation   21,929  23,944  19,411
Occupancy   6,983  7,233  6,958
Data processing   2,475  2,556  1,969
Other professional services   2,296  1,833  1,998
Business development   569  570  667
Communications   859  919  804
Insurance and assessments   2,337  2,369  2,274
Non-covered other real estate owned, net  703  1,093  8,441
Covered other real estate owned, net  (2,578)  699  2,169
Intangible asset amortization   2,307  2,360  2,424
Other expense  3,519  5,710  3,455
Total noninterest expense   41,399  49,286  50,570
       
Earnings (loss) before income taxes   18,418  (13,529)  (104,505)
Income tax (expense) benefit  (7,742)  5,841  43,972
Net earnings (loss)  $ 10,676  $ (7,688)  $ (60,533)
       
Earnings per share information:      
Basic earning (loss) per share  $ 0.29  $ (0.22)  $ (1.76)
Diluted earnings (loss) per share  $ 0.29  $ (0.22)  $ (1.76)
Basic weighted average shares   35,454.1  35,406.5  34,362.1
Diluted weighted average shares  35,454.1  35,406.5  34,362.1
       
       
PACWEST BANCORP AND SUBSIDIARIES      
AVERAGE BALANCE SHEETS AND YIELD ANALYSIS      
(Unaudited)      
  Three Months Ended
  March 31,  December 31,  March 31, 
  2011 2010 2010
  (Dollars in Thousands)
Average Assets:      
Loans, net of unearned income  $ 3,992,204  $ 4,216,088  $ 4,122,853
Investment securities  913,613  886,392  469,732
Interest-earning deposits in financial institutions  89,248  116,721  206,887
Average interest-earning assets  4,995,065  5,219,201  4,799,472
Other assets  515,717  531,829  418,517
Average total assets  $ 5,510,782  $ 5,751,030  $ 5,217,989
       
Average liabilities:      
Interest checking deposits  $ 495,950  $ 494,313  $ 434,446
Money market deposits  1,240,524  1,305,199  1,166,688
Savings deposits  141,027  139,228  110,564
Time deposits  1,167,468  1,327,869  1,045,417
Average interest-bearing deposits  3,044,969  3,266,609  2,757,115
Borrowings  227,122  272,848  445,754
Subordinated debentures  129,545  129,621  129,780
Average interest-bearing liabilities  3,401,636  3,669,078  3,332,649
Noninterest-bearing deposits  1,582,720  1,538,748  1,332,862
Other liabilities  43,501  47,002  46,756
Average total liabilities  5,027,857  5,254,828  4,712,267
Average stockholders' equity  482,925  496,202  505,722
 Average liabilities and stockholders' equity  $ 5,510,782  $ 5,751,030  $ 5,217,989
       
Average deposits   $ 4,627,689  $ 4,805,357  $ 4,089,977
Average funding sources (1)   $ 4,984,356  $ 5,207,826  $ 4,665,511
       
Yield on:      
Average loans 6.78% 6.64% 6.27%
Average investment securities 3.47% 3.23% 4.42%
Average interest-earning deposits 0.26% 0.27% 0.25%
Average interest-earning assets 6.06% 5.92% 5.83%
       
Cost of:      
Average interest-bearing deposits 0.79% 0.73% 1.01%
Average borrowings 3.11% 3.07% 2.43%
Average subordinated debentures 3.82% 3.79% 4.42%
Average interest-bearing liabilities 1.06% 1.01% 1.34%
       
Interest rate spread (2) 5.00% 4.91% 4.49%
Net interest margin (3) 5.34% 5.21% 4.90%
       
Cost of average deposits (4) 0.52% 0.50% 0.68%
Cost of average funding sources (5) 0.73% 0.71% 0.95%
       
(1) Average funding sources is the sum of average interest-bearing liabilities plus average noninterest-bearing deposits.
(2) Interest rate spread is calculated as the yield on average interest-earning assets less the cost of average interest-bearing liabilities.
(3) Net interest rate margin is calculated as annualized net interest income divided by average interest-earning assets.
(4) Cost of average deposits is calculated as annualized interest expense on deposits divided by average deposits.
(5) Cost of average funding sources is calculated as annualized total interest expense divided by average funding sources.
         
PACWEST BANCORP AND SUBSIDIARIES        
NON-COVERED LOAN CONCENTRATION         
(Unaudited)          
           
  March 31, December 31, September 30, June 30, March 31,
Loan Category 2011 2010 2010 2010 2010
  (In thousands)
Domestic:          
Real estate mortgage   $ 2,172,923  $ 2,274,733  $ 2,368,943  $ 2,229,331  $ 2,197,295
Commercial   667,401  663,557  708,329  709,075  720,105
Real estate construction   176,758  179,479  192,595  194,181  284,274
Consumer   21,815  25,058  28,328  30,323  28,804
Foreign:          
Commercial   21,808  21,057  22,948  25,309  26,736
Other, including real estate   1,488  1,551  1,595  1,637  1,675
Total gross non-covered loans  $ 3,062,193  $ 3,165,435  $ 3,322,738  $ 3,189,856  $ 3,258,889
     
     
PACWEST BANCORP AND SUBSIDIARIES    
COVERED LOAN CONCENTRATION     
(Unaudited)    
  March 31, December 31, 
Loan Category 2011 2010
   (In thousands) 
Multi-family  $ 299,832  $ 321,650
Commercial real estate  430,160  444,244
Single family  151,281  157,424
Construction and land  82,992  87,301
Commercial and industrial  24,583  34,828
Home equity lines of credit  5,811  5,916
Consumer   724  1,378
Total gross covered loans  995,383  1,052,741
Less: discount  (106,512)  (110,901)
Covered loans, net of discount  888,871  941,840
Less: allowance for loan losses  (29,438)  (33,264)
Covered loans, net  $ 859,433  $ 908,576
           
           
PACWEST BANCORP AND SUBSIDIARIES          
NON-COVERED LOAN CONCENTRATION           
REAL ESTATE MORTGAGE LOANS          
(Unaudited)            
             
  March 31, 2011 December 31, 2010 March 31, 2010
    % of    % of    % of 
Loan Category Balance Total Balance Total Balance Total
  (Dollars in thousands)
Commercial real estate mortgage:            
Industrial/warehouse  $ 393,000 18.1%  $ 432,263 19.0%  $ 322,122 14.7%
Retail  337,149 15.5%  374,027 16.4%  396,721 18.1%
Office buildings  332,233 15.3%  350,192 15.4%  314,682 14.3%
Owner-occupied  276,631 12.7%  263,603 11.6%  278,189 12.7%
Hotel   149,928 6.9%  156,614 6.9%  176,295 8.0%
Healthcare  106,061 4.9%  102,227 4.5%  96,264 4.4%
Mixed use  57,624 2.7%  57,230 2.5%  89,794 4.1%
Gas station  36,227 1.7%  38,502 1.7%  38,533 1.8%
Self storage  26,312 1.2%  26,432 1.2%  29,877 1.4%
Restaurant  24,166 1.1%  26,463 1.2%  26,548 1.2%
Land acquisition/development  9,602 0.4%  9,649 0.4%  9,775 0.4%
Unimproved land  1,519 0.1%  1,494 0.1%  1,090 0.0%
Other  248,558 11.4%  250,068 11.0%  247,377 11.3%
Total commercial real estate mortgage  1,999,010 92.0%  2,088,764 91.8%  2,027,267 92.3%
             
Residential real estate mortgage:            
Multi-family  75,775 3.5%  81,880 3.6%  73,416 3.3%
Single family owner-occupied  37,230 1.7%  38,025 1.7%  42,701 1.9%
Single family nonowner-occupied  23,070 1.1%  26,618 1.2%  15,331 0.7%
HELOCs  37,838 1.7%  38,823 1.7%  38,580 1.8%
Unimproved land  -- 0.0%  623 0.0%  -- 0.0%
Total residential real estate mortgage  173,913 8.0%  185,969 8.2%  170,028 7.7%
             
Total gross non-covered real estate mortgage loans  $ 2,172,923 100.0%  $ 2,274,733 100.0%  $ 2,197,295 100.0%
           
           
PACWEST BANCORP AND SUBSIDIARIES          
NON-COVERED LOAN CONCENTRATION           
REAL ESTATE CONSTRUCTION LOANS          
(Unaudited)            
             
  March 31, 2011 December 31, 2010 March 31, 2010
    % of    % of    % of 
Loan Category Balance Total Balance Total Balance Total
  (Dollars in thousands)
Commercial real estate construction:            
Retail  $ 21,129 12.0%  $ 20,378 11.4%  $ 22,498 7.9%
Industrial/warehouse  7,987 4.5%  11,329 6.3%  62,432 22.0%
Office buildings  11,131 6.3%  3,805 2.1%  4,538 1.6%
Owner-occupied  2,000 1.1%  2,000 1.1%  3,548 1.2%
Healthcare  -- 0.0%  4,305 2.4%  2,421 0.9%
Gas station  -- 0.0%  -- 0.0%  6,183 2.2%
Self storage  19,151 10.8%  13,191 7.3%  9,171 3.2%
Land acquisition/development  34,963 19.8%  16,983 9.5%  8,853 3.1%
Unimproved land  33,870 19.2%  26,032 14.5%  35,561 12.5%
Other  4,499 2.5%  9,062 5.0%  24,959 8.8%
Total commercial real estate construction  134,730 76.2%  107,085 59.7%  180,164 63.4%
             
Residential real estate construction:            
Multi-family  23,296 13.2%  26,474 14.8%  20,576 7.2%
Single family owner-occupied  9 0.0%  -- 0.0%  3,215 1.1%
Single family nonowner-occupied  1,055 0.6%  1,026 0.6%  20,121 7.1%
Land acquisition/development  3,240 1.8%  1,482 0.8%  2,558 0.9%
Unimproved land  14,428 8.2%  43,412 24.2%  57,640 20.3%
Total residential real estate construction  42,028 23.8%  72,394 40.3%  104,110 36.6%
             
Total gross non-covered real estate construction loans  $ 176,758 100.0%  $ 179,479 100.0%  $ 284,274 100.0%
   
   
PACWEST BANCORP AND SUBSIDIARIES  
ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING 
ASSETS AND CREDIT QUALITY RATIOS FOR   
NON-COVERED LOANS     
(Unaudited)      
       
  March 31,  December 31,  March 31,
  2011 2010 2010
  (Dollars in thousands)
Allowance for loan losses (1)  $ 98,564  $ 98,653  $ 86,163
Reserve for unfunded loan commitments (1)  5,675  5,675  5,216
Total allowance for credit losses  $ 104,239  $ 104,328  $ 91,379
       
Nonaccrual loans (2)   $ 76,849  $ 94,183  $ 99,920
Other real estate owned (2)  48,367  25,598  29,643
Total nonperforming assets  $ 125,216  $ 119,781  $ 129,563
       
Performing restructured loans (1)  $ 71,669  $ 89,272  $ 68,127
       
Allowance for credit losses to loans, net of unearned income 3.41% 3.30% 2.81%
Allowance for credit losses to nonaccrual loans 135.6% 110.8% 91.5%
Nonperforming assets to loans, net of unearned income, and other real estate owned 4.03% 3.76% 3.95%
Nonaccrual loans to loans, net of unearned income 2.51% 2.98% 3.07%
       
(1) Applies to non-covered loans.    
(2) Excludes covered nonperforming assets from the Los Padres and Affinity acquisitions.
       
       
PACWEST BANCORP AND SUBSIDIARIES      
DEPOSITS      
(Unaudited)      
       
  March 31,  December 31,  March 31,
Deposit Category 2011 2010 2010
  (Dollars in thousands)
Noninterest-bearing deposits  $ 1,606,182  $ 1,465,562  $ 1,388,646
Interest checking deposits  486,761  494,617  436,570
Money market deposits  1,232,766  1,321,780  1,171,565
Savings deposits  145,217  135,876  112,720
Total core deposits  3,470,926  3,417,835  3,109,501
Time deposits under $100,000  372,650  436,838  468,356
Time deposits $100,000 and over  741,163  795,025  576,380
Total time deposits  1,113,813  1,231,863  1,044,736
Total deposits   $ 4,584,739  $ 4,649,698  $ 4,154,237
       
Noninterest-bearing deposits as a percentage of total deposits 35% 32% 33%
Core deposits as a percentage of total deposits 76% 74% 75%
   
   
PACWEST BANCORP AND SUBSIDIARIES  
ALLOWANCE FOR CREDIT LOSSES ROLLFORWARD 
AND NET CHARGE-OFF RATIOS FOR   
NON-COVERED LOANS (1)     
(Unaudited)      
  Three Months Ended
  March 31,  December 31,  March 31, 
  2011 2010 2010
  (Dollars in thousands)
Allowance for credit losses, beginning of period   $ 104,328  $ 101,244  $ 124,278
Loans charged-off:      
Real estate mortgage   (1,212)  (22,591)  (82,849)
Real estate construction   (4,645)  (1,476)  (55,741)
Commercial  (3,121)  (7,311)  (8,139)
Consumer   (160)  (1,469)  (58)
Foreign   --  (193)  --
Total loans charged off   (9,138)  (33,040)  (146,787)
Recoveries on loans charged-off:    
Real estate mortgage   97  25  180
Real estate construction   92  --  681
Commercial  617  591  488
Consumer   411  193  12
Foreign   32  --  --
Total recoveries on loans charged off   1,249  809  1,361
Net charge-offs  (7,889)  (32,231)  (145,426)
Provision for credit losses  7,800  35,315  112,527
Allowance for credit losses, end of period   $ 104,239  $ 104,328  $ 91,379
     
Charge-offs on loans sold included in "Loans charged-off" section of table above  $ --   $ 20,942  $ 123,705
     
Annualized net charge-off ratios:    
Net charge-offs to average loans 1.03% 3.90% 16.81%
Net charge-offs, excluding charge-offs on loans sold, to average loans 1.03% 1.37% 2.51%
       
(1) Applies only to non-covered loans.    

This press release contains certain non-GAAP financial disclosures for tangible capital. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance.  Given the use of tangible capital amounts and ratios is prevalent among banking regulators, investors and analysts, we disclose our tangible capital ratios in addition to equity-to-assets ratios. Also, as analysts and investors view pre-credit, pre-tax earnings as an indicator of the Company's ability to absorb credit losses, we disclose this amount in addition to net earnings.

These non-GAAP financial measures are presented for supplemental informational purposes only for understanding the Company's operating results and should not be considered a substitute for financial information presented in accordance with United States generally accepted accounting principles (GAAP). The following table presents performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measurements to the GAAP financial measurements:

PACWEST BANCORP AND SUBSIDIARIES    
GAAP TO NON-GAAP RECONCILIATIONS    
(Unaudited)      
       
  March 31,  December 31,  March 31, 
  2011 2010 2010
  (Dollars in thousands)
PacWest Bancorp Consolidated:      
Net earnings (loss)  $ 10,676  $ (7,688)  $ (60,533)
Plus: Total provision for credit losses  13,547  37,411  133,227
Other real estate owned expense (income):      
Non-covered  703  1,093  8,441
Covered  (2,578)  699  2,169
Income tax expense (benefit)  7,742  (5,841)  (43,972)
Less: FDIC loss sharing income (expense), net  1,667  (1,277)  16,172
Pre-credit, pre-tax earnings  $ 28,423  $ 26,951  $ 23,160
       
Stockholders' equity  $ 491,360  $ 478,797  $ 474,844
Less: Intangible assets  70,287  73,144  30,872
Tangible common equity  $ 421,073  $ 405,653  $ 443,972
       
Total assets  $ 5,470,517  $ 5,529,021  $ 5,203,217
Less: Intangible assets  70,287  73,144  30,872
Tangible assets  $ 5,400,230  $ 5,455,877  $ 5,172,345
       
Equity to assets ratio 8.98% 8.66% 9.13%
Tangible common equity ratio (1) 7.80% 7.44% 8.58%
       
Pacific Western Bank:      
Stockholders' equity  $ 584,418  $ 570,118  $ 559,909
 Less: Intangible assets  70,287  73,144  30,872
Tangible common equity  $ 514,131  $ 496,974  $ 529,037
       
Total assets  $ 5,453,971  $ 5,513,601  $ 5,192,003
Less: Intangible assets  70,287  73,144  30,872
Tangible assets  $ 5,383,684  $ 5,440,457  $ 5,161,131
       
Equity to assets ratio 10.72% 10.34% 10.78%
Tangible common equity ratio (1) 9.55% 9.13% 10.25%
       
(1) Calculated as tangible common equity divided by tangible assets.  
CONTACT: Matthew P. Wagner
         Chief Executive Officer
         10250 Constellation Boulevard
         Suite 1640
         Los Angeles, CA 90067
         
         Phone: 310-728-1020
         Fax:   310-201-0498
         
         Victor R. Santoro
         Executive Vice President and CFO
         10250 Constellation Boulevard
         Suite 1640
         Los Angeles, CA 90067
         
         Phone: 310-728-1021
         Fax:   310-201-0498

© Copyright 2012, GlobeNewswire, Inc. All Rights Reserved

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.71%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.14%
17.14%
Source: Bankrate.com