PACW - PacWest Bancorp News Story
$40.82 1.0 2.6%
Last Trade - 8:06pm
| Market Cap | £3.38bn |
| Enterprise Value | £3.60bn |
| Revenue | £852.8m |
| Position in Universe | 1459th / 6852 |
PacWest Bancorp Announces Results for the Fourth Quarter and Full Year 2020
Wed 20th January, 2021 10:00pm
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20210120:nGNX4RsyzX&default-theme=true
Fourth Quarter 2020 Highlights
* Net Earnings of $116.8 Million, or $0.99 Per Diluted Share
* Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $163.4 Million
* Provision for Credit Losses of $10.0 Million in Q4 Compared to $97.0 Million
in Q3
* Core Deposits Up $1.1 Billion or 5% in Q4; Represents 89% of Total Deposits
* Strong Capital Position – CET1 Ratio of 10.53%
Full Year 2020 Highlights
* Excluding Goodwill Impairment, Net Earnings of $232.4 Million, or $1.97 Per
Diluted Share
* Net Loss of $1.24 Billion, or $(10.61) Per Diluted Share Due to $1.47
Billion Goodwill Impairment
* Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $646.6 Million
* Provision for Credit Losses of $339.0 Million Compared to $22.0 Million in
2019
* Core Deposits Up $6.1 Billion or 38% in 2020
* Strong Capital Position – Increased CET1 Ratio 75 Basis Points to 10.53%
in 2020
* Increased Allowance for Credit Losses Ratio to 2.41% (Excluding PPP Loans)
LOS ANGELES, Jan. 20, 2021 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW)
today announced net earnings for the fourth quarter of 2020 of $116.8 million,
or $0.99 per diluted share, compared to net earnings for the third quarter of
2020 of $45.5 million, or $0.38 per diluted share. The increase in net
earnings for the fourth quarter was due primarily to an $87.0 million decrease
in the provision for credit losses.
Net loss for the full year 2020 was $1.24 billion, or $10.61 per diluted
share, compared to net earnings for the full year 2019 of $468.6 million, or
$3.90 per diluted share. The decrease in net earnings for 2020 was primarily
due to a $1.47 billion goodwill impairment charge and a higher provision for
credit losses attributable mainly to the significant deterioration in the
economic forecast used to estimate the allowance for credit losses as a result
of the COVID-19 pandemic.
Matt Wagner, President and CEO, commented, “We finished the year strong with
fourth quarter earnings boosted by continued asset growth and improved credit
costs. Our fourth quarter results produced a return on assets of 1.58% and a
return on tangible equity of 19.63%.”
Mr. Wagner continued, “We experienced strong deposit growth again in the
fourth quarter, resulting in further increases in our liquidity position. Our
average on-balance sheet cash balance grew to $3.6 billion in the fourth
quarter with a yield of 13 basis points. While our focus is on managing net
interest income, this excess liquidity had a negative impact on our fourth
quarter NIM of 46 basis points.”
Mr. Wagner added, “Our priority continues to be on mitigating potential
credit losses in our portfolios, especially those portfolios impacted most by
COVID-19. We are also focused on assisting our customers with applying for new
PPP loans and forgiveness for their previous PPP loans during 2021.”
Mr. Wagner added, “In 2020, our operating results were significantly
impacted by the economic impact of the COVID-19 pandemic. These factors
resulted in the goodwill impairment in the first quarter and elevated credit
loss provisions in 2020, however, our strong PPNR allowed us to internally
generate capital and build our allowance for credit losses during the year. As
we head into 2021 with good momentum, we will continue to focus on the safety
of our employees amid the pandemic, delivering high quality service to our
valued clients, while strategically managing our business to optimize
profitability in this low-rate environment.”
FINANCIAL HIGHLIGHTS
At or For the At or For the
Three Months Ended Year Ended
December 31, September 30, Increase December 31, Increase
Financial Highlights 2020 2020 (Decrease) 2020 2019 (Decrease)
(Dollars in thousands, except per share data)
Net earnings (loss) $ 116,830 $ 45,503 $ 71,327 $ (1,237,574 ) $ 468,636 $ (1,706,210 )
Diluted earnings (loss)
per share $ 0.99 $ 0.38 $ 0.61 $ (10.61 ) $ 3.90 $ (14.51 )
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (1) $ 163,376 $ 156,174 $ 7,202 $ 646,599 $ 654,940 $ (8,341 )
Return on average assets 1.58 % 0.65 % 0.93 (4.46 )% 1.80 % (6.26 )
PPNR return on average
assets (1) 2.22 % 2.22 % - 2.33 % 2.51 % (0.18 )
Return on average
tangible equity (1) 19.63 % 8.20 % 11.43 10.36 % 21.49 % (11.13 )
Yield on average loans and
leases (tax equivalent) 5.15 % 5.01 % 0.14 5.18 % 6.00 % (0.82 )
Cost of average total
deposits 0.14 % 0.17 % (0.03 ) 0.27 % 0.77 % (0.50 )
Net interest margin ("NIM")
(tax equivalent) 3.83 % 3.90 % (0.07 ) 4.05 % 4.54 % (0.49 )
Efficiency ratio 43.6 % 45.1 % (1.5 ) 43.1 % 42.7 % 0.4
Total assets $ 29,498,442 $ 28,426,716 $ 1,071,726 $ 29,498,442 $ 26,770,806 $ 2,727,636
Loans and leases held
for investment,
net of deferred fees $ 19,083,377 $ 19,026,200 $ 57,177 $ 19,083,377 $ 18,846,872 $ 236,505
Noninterest-bearing
demand deposits $ 9,193,827 $ 9,346,744 $ (152,917 ) $ 9,193,827 $ 7,243,298 $ 1,950,529
Core deposits $ 22,264,480 $ 21,117,629 $ 1,146,851 $ 22,264,480 $ 16,187,287 $ 6,077,193
Total deposits $ 24,940,717 $ 23,965,695 $ 975,022 $ 24,940,717 $ 19,233,036 $ 5,707,681
As percentage of total
deposits:
Noninterest-bearing
demand deposits 37 % 39 % (2 ) 37 % 38 % (1 )
Core deposits 89 % 88 % 1 89 % 84 % 5
Equity to assets ratio 12.19 % 12.26 % (0.07 ) 12.19 % 18.51 % (6.32 )
Tangible common equity
ratio (1) 8.78 % 8.71 % 0.07 8.78 % 9.79 % (1.01 )
Book value per share $ 30.36 $ 29.42 $ 0.94 $ 30.36 $ 41.36 $ (11.00 )
Tangible book value per
share (1) $ 21.05 $ 20.09 $ 0.96 $ 21.05 $ 19.77 $ 1.28
(1) Non-GAAP measure.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income increased by $7.9 million to $259.2 million for the fourth
quarter of 2020 compared to $251.3 million for the third quarter of 2020 due
mainly to higher income on investment securities, higher loan prepayment fees,
higher recapture of nonaccrual interest, higher amortized loan fee income from
PPP loan forgiveness, and lower interest expense, partially offset by a
negative impact on net interest income due to the change in the earning asset
mix and a lower balance of average loans and leases. The tax equivalent yield
on average loans and leases was 5.15% for the fourth quarter of 2020 compared
to 5.01% for the third quarter of 2020. The increase in the tax equivalent
yield on average loans and leases was primarily due to higher loan prepayment
fees, higher recapture of nonaccrual interest, and higher amortized loan fee
income from PPP loan forgiveness in the fourth quarter as compared to the
third quarter.
The tax equivalent NIM was 3.83% for the fourth quarter of 2020 compared to
3.90% for the third quarter of 2020. The decrease in the NIM was due mostly to
the change in the earning asset mix. Average loans and leases decreased by
$426.5 million, while the average balance of deposits in financial
institutions increased by $1.0 billion and the average balance of investment
securities increased by $781.1 million in the fourth quarter of 2020. This
excess liquidity had a negative impact on the fourth quarter tax equivalent
NIM of 46 basis points.
The cost of average total deposits decreased to 0.14% for the fourth quarter
of 2020 from 0.17% for the third quarter of 2020. The lower cost of average
total deposits was due primarily to the repricing of maturing brokered time
deposits.
Provision for Credit Losses
The following table presents details of the provision for credit losses for
the periods indicated:
Three Months Ended
December 31, September 30, Increase
Provision for Credit Losses 2020 2020 (Decrease)
(In thousands)
Addition to allowance for loan and lease losses $ 21,000 $ 81,000 $ (60,000 )
(Reduction in) addition to reserve for
unfunded loan commitments (11,000 ) 16,000 (27,000 )
Total provision for credit losses $ 10,000 $ 97,000 $ (87,000 )
The provision for credit losses decreased by $87.0 million to $10.0 million
for the fourth quarter of 2020 compared to $97.0 million for the third quarter
of 2020. This reduction reflected improvement in certain key macro-economic
forecast variables, a lower provision for unfunded loan commitments, and
decreased provisions for individually evaluated loans and leases.
Noninterest Income
The following table presents details of noninterest income for the periods
indicated:
Three Months Ended
December 31, September 30, Increase
Noninterest Income 2020 2020 (Decrease)
(In thousands)
Service charges on deposit accounts $ 3,119 $ 2,570 $ 549
Other commissions and fees 9,974 10,541 (567 )
Leased equipment income 9,440 9,900 (460 )
Gain on sale of loans and leases 1,671 35 1,636
Gain on sale of securities 4 5,270 (5,266 )
Other income:
Dividends and gains on equity investments 5,064 6,945 (1,881 )
Warrant income 7,299 500 6,799
Other 3,279 2,491 788
Total noninterest income $ 39,850 $ 38,252 $ 1,598
Noninterest income increased by $1.6 million to $39.9 million for the fourth
quarter of 2020 compared to $38.3 million for the third quarter of 2020 due
primarily to an increase of $6.8 million in warrant income attributable to
higher gains from exercised warrants, and an increase of $1.6 million in gain
on sale of loans and leases, offset partially by decreases of $5.3 million in
gain on sale of securities and $1.9 million in dividends and gains on equity
investments. The increase in the gain on sale of loans and leases resulted
from the sales of $119.9 million of loans for a gain of $1.7 million in the
fourth quarter compared to sales of $3.0 million for a gain of $35 thousand in
the third quarter. The decrease in the gain on sale of securities resulted
from minimal sales in the fourth quarter compared to sales of $17.0 million of
securities for a gain of $5.3 million in the third quarter. The decrease in
dividends and gains on equity investments was due primarily to lower net fair
value gains on equity investments still held, offset partially by higher
income from distributions on fair value equity investments.
Noninterest Expense
The following table presents details of noninterest expense for the periods
indicated:
Three Months Ended
December 31, September 30, Increase
Noninterest Expense 2020 2020 (Decrease)
(In thousands)
Compensation $ 73,171 $ 75,131 $ (1,960 )
Occupancy 14,083 14,771 (688 )
Data processing 6,718 6,505 213
Other professional services 6,800 4,713 2,087
Insurance and assessments 5,064 3,939 1,125
Intangible asset amortization 3,172 3,751 (579 )
Leased equipment depreciation 7,501 7,057 444
Foreclosed assets (income) expense, net (272 ) 335 (607 )
Acquisition, integration and reorganization costs 1,060 - 1,060
Customer related expense 4,430 4,762 (332 )
Loan expense 3,926 3,499 427
Other 10,029 8,939 1,090
Total noninterest expense $ 135,682 $ 133,402 $ 2,280
Noninterest expense increased by $2.3 million to $135.7 million for the fourth
quarter of 2020 compared to $133.4 million for the third quarter of 2020
attributable primarily to increases of $2.1 million in other professional
services, $1.1 million in insurance and assessments, $1.1 million in
acquisition, integration and reorganization costs, and $1.1 million in other
expense, offset partially by a decrease of $2.0 million in compensation
expense. The increase in other professional services was due mainly to higher
consulting expense. The increase in insurance and assessments expense was due
to an increase in FDIC assessment expense. The increase in acquisition,
integration and reorganization costs was due to advisory services. The
increase in other expense was due primarily to an increase in franchise taxes.
The decrease in compensation expense was due mainly to lower bonus accruals
and lower stock compensation expense.
Income Taxes
The effective income tax rate was 23.8% for the fourth quarter of 2020
compared to 23.1% for the third quarter of 2020. The effective tax rate for
the year ended December 31, 2020 was (6.5%), however when excluding the
non-deductible goodwill impairment, the effective tax rate for the full year
2020 was 24.4%. The effective tax rate for the full year 2021 is currently
estimated to be in the range of 26% to 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 Year Ended
Roll Forward of Loans and Leases Held December 31, September 30, December 31,
for Investment, Net of Deferred Fees (1) 2020 2020 2020
(Dollars in thousands)
Balance, beginning of period $ 19,026,200 $ 19,694,631 $ 18,846,872
Additions:
Production 1,131,165 519,671 4,243,538
Disbursements 1,354,038 1,008,336 5,159,912
Total production and disbursements 2,485,203 1,528,007 9,403,450
Reductions:
Payoffs (1,330,321 ) (982,889 ) (3,738,754 )
Paydowns (957,075 ) (1,160,692 ) (5,193,848 )
Total payoffs and paydowns (2,287,396 ) (2,143,581 ) (8,932,602 )
Sales (119,931 ) (2,979 ) (125,999 )
Transfers to foreclosed assets (385 ) (12,594 ) (14,755 )
Charge-offs (20,314 ) (37,284 ) (93,589 )
Total reductions (2,428,026 ) (2,196,438 ) (9,166,945 )
Net increase (decrease) 57,177 (668,431 ) 236,505
Balance, end of period $ 19,083,377 $ 19,026,200 $ 19,083,377
Weighted average rate on production (2) 4.41 % 4.95 % 3.57 %
(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 25 basis points to loan yields in 2020.
Loans and leases held for investment, net of deferred fees, increased by $57.2
million in the fourth quarter of 2020 to $19.1 billion at December 31, 2020.
The majority of the increase in the loans and leases balance for the fourth
quarter of 2020 related to increases in the asset-based and income producing
and other residential loan classes, offset partially by decreases in the other
commercial and commercial construction and land classes. The weighted average
rate on fourth quarter production decreased to 4.41% due to fourth quarter
production including a higher percentage of lower-rate products such as equity
fund loans and multi-family loans as compared to third quarter production. The
weighted average rate on new production for the year ended December 31, 2020
of 3.57% was negatively impacted by the $1.2 billion of Paycheck Protection
Program (“PPP”) loans originated with a coupon rate of 1%. Excluding PPP
loans, the weighted average rate on new production for the year was 4.66%. For
the year ended December 31, 2020, loans and leases held for investment, net of
deferred fees, increased by $236.5 million. The majority of the increase in
the loans and leases balance for the year related to increases in the other
commercial and residential construction and land classes, offset partially by
decreases in the venture capital, asset-based, and consumer loan classes.
The following table presents the composition of loans and leases held for
investment by loan portfolio segment and class, net of deferred fees, as of
the dates indicated:
December 31, 2020 September 30, 2020 December 31, 2019
% of % of % of
Loan and Lease Portfolio Balance Total Balance Total Balance Total
(In thousands)
Real estate mortgage:
Commercial $ 4,096,671 21 % $ 4,192,466 22 % $ 4,202,687 22 %
Income producing and other
residential 3,803,265 20 % 3,684,579 19 % 3,770,060 20 %
Total real estate mortgage 7,899,936 41 % 7,877,045 41 % 7,972,747 42 %
Real estate construction and land:
Commercial 1,117,121 6 % 1,241,647 7 % 1,082,368 6 %
Residential 2,243,160 12 % 2,182,100 11 % 1,655,434 9 %
Total real estate construction
and land 3,360,281 18 % 3,423,747 18 % 2,737,802 15 %
Total real estate 11,260,217 59 % 11,300,792 59 % 10,710,549 57 %
Commercial:
Asset-based 3,429,283 18 % 3,153,048 17 % 3,748,407 20 %
Venture capital 1,698,508 9 % 1,637,132 9 % 2,179,422 12 %
Other commercial 2,375,114 12 % 2,572,994 13 % 1,767,667 9 %
Total commercial 7,502,905 39 % 7,363,174 39 % 7,695,496 41 %
Consumer 320,255 2 % 362,234 2 % 440,827 2 %
Total loans and leases held for
investment, net of deferred fees $ 19,083,377 100 % $ 19,026,200 100 % $ 18,846,872 100 %
Total unfunded loan commitments $ 7,601,390 $ 7,178,506 $ 8,183,158
Allowance for Credit Losses
The following tables present roll forwards of the allowance for credit losses
for the periods indicated:
Three Months Ended December 31, 2020
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 $ 345,966 $ 96,571 $ 442,537
Charge-offs (20,314 ) - (20,314 )
Recoveries 1,529 - 1,529
Net charge-offs (18,785 ) - (18,785 )
Provision 21,000 (11,000 ) 10,000
Ending balance $ 348,181 $ 85,571 $ 433,752
Three Months Ended September 30, 2020
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 $ 301,050 $ 80,571 $ 381,621
Charge-offs (37,284 ) - (37,284 )
Recoveries 1,200 - 1,200
Net charge-offs (36,084 ) - (36,084 )
Provision 81,000 16,000 97,000
Ending balance $ 345,966 $ 96,571 $ 442,537
Allowance for Credit Year Ended December 31,
Losses Rollforward 2020 2019
(In thousands)
Beginning balance $ 174,646 $ 169,333
Cumulative effect of change in
accounting principle - CECL 7,327 -
Charge-offs (93,589 ) (32,262 )
Recoveries 6,368 15,575
Net charge-offs (87,221 ) (16,687 )
Provision 339,000 22,000
Ending balance $ 433,752 $ 174,646
The allowance for credit losses decreased by $8.8 million in the fourth
quarter of 2020 to $433.8 million at December 31, 2020. The decrease in the
allowance for credit losses during the fourth quarter was attributable to
$18.8 million in net charge-offs, offset partially by a $10.0 million
provision for credit losses.
Net charge-offs were $18.8 million for the fourth quarter of 2020. Gross
charge-offs of $20.3 million were reduced by recoveries of $1.5 million. The
most significant charge-off was $15.5 million and related to a security
monitoring loan.
Net charge-offs were $36.1 million for the third quarter of 2020. Gross
charge-offs of $37.3 million were reduced by recoveries of $1.2 million. The
most significant charge-off was $32.8 million and also related to a security
monitoring loan.
Security monitoring loans have decreased 47% from $619.3 million as of
December 31, 2019 to $329.3 million as of December 31, 2020 since ceasing new
originations in the fourth quarter of 2019 while actively reducing the
remaining loans. As of December 31, 2020, $250.6 million of these are
performing and pass-rated, while $78.7 million are classified, of which $32.5
million are on nonaccrual.
For the fourth quarter of 2020 and third quarter of 2020, annualized net
charge-offs to average loans and leases were 0.40% and 0.75%, respectively.
The allowance for credit losses as a percentage of loans and leases held for
investment was 2.27% at December 31, 2020 and 2.33% at September 30, 2020. The
allowance for loan and lease losses as a percentage of loans and leases held
for investment was 1.82% at December 31, 2020 and September 30, 2020. The
allowance for credit losses and allowance for loan and lease losses as a
percentage of loans and leases held for investment, excluding PPP loans that
are fully guaranteed and do not carry any allowance, were 2.41% and 1.93% at
December 31, 2020, respectively, compared to 2.48% and 1.94% at September 30,
2020, respectively.
For the full year 2020, gross charge-offs were $93.6 million and included
$63.5 million for other commercial loans, of which $59.6 million related to
security monitoring loans, $11.8 million for asset-based loans, $10.2 million
for commercial real estate loans, and $6.8 million for venture capital loans
compared to gross charge-offs for the full year 2019 of $32.3 million that
included $12.0 million for asset-based loans, of which $11.8 million related
to a single loan, $9.4 million for venture capital loans, and $9.1 million for
other commercial loans.
For the full year 2020, recoveries were $6.4 million and included $3.6 million
for other commercial loans and $1.3 million for venture capital loans compared
to recoveries for the full year 2019 of $15.6 million that included $8.2
million for venture capital loans, $4.8 million for other commercial loans,
and $1.4 million for asset-based loans.
For the full year 2020, net charge-offs to average loans and leases increased
to 0.45% from 0.09% for the full year 2019.
Deposits and Client Investment Funds
The following table presents the composition of our deposit portfolio as of
the dates indicated:
(Keep as 12/31)
December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2019
% of % of % of % of
Deposit Composition Balance Total Balance Total Balance Total Balance Total
(Dollars in thousands)
Noninterest-bearing demand $ 9,193,827 37 % $ 9,346,744 39 % $ 7,243,298 38 % $ 7,243,298 38 %
Interest checking 5,974,910 24 % 4,657,511 20 % 3,753,978 19 % 3,753,978 19 %
Money market 6,532,917 26 % 6,539,313 27 % 4,690,420 24 % 4,690,420 24 %
Savings 562,826 2 % 574,061 2 % 499,591 3 % 499,591 3 %
Total core deposits 22,264,480 89 % 21,117,629 88 % 16,187,287 84 % 16,187,287 84 %
Non-core non-maturity deposits 1,149,467 5 % 1,123,909 5 % 496,407 3 % 496,407 3 %
Total non-maturity deposits 23,413,947 94 % 22,241,538 93 % 16,683,694 87 % 16,683,694 87 %
Time deposits $250,000 and under 994,197 4 % 1,047,621 4 % 2,065,733 11 % 2,065,733 11 %
Time deposits over $250,000 532,573 2 % 676,536 3 % 483,609 2 % 483,609 2 %
Total time deposits 1,526,770 6 % 1,724,157 7 % 2,549,342 13 % 2,549,342 13 %
Total deposits $ 24,940,717 100 % $ 23,965,695 100 % $ 19,233,036 100 % $ 19,233,036 100 %
At December 31, 2020, core deposits totaled $22.3 billion, or 89% of total
deposits, including $9.2 billion of noninterest-bearing demand deposits, or
37% of total deposits. Core deposits increased by $1.1 billion in the fourth
quarter driven by continued strong deposit growth from our venture banking
clients. For the year ended December 31, 2020, core deposits increased by $6.1
billion and total deposits increased by $5.7 billion.
In addition to deposit products, we also offer alternative non-depository cash
investment options for select clients; these alternatives include investments
managed by Pacific Western Asset Management Inc. (“PWAM”), our registered
investment advisor subsidiary, and third-party sweep products. Total
off-balance sheet client investment funds at December 31, 2020 were $1.3
billion, of which $1.0 billion was managed by PWAM.
CREDIT QUALITY
The following table presents loan and lease credit quality metrics as of the
dates indicated:
December 31, September 30, Increase
Credit Quality Metrics 2020 2020 (Decrease)
(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1) $ 91,163 $ 85,615 $ 5,548
Accruing loans contractually past due 90 days or more - - -
Foreclosed assets, net 14,027 13,747 280
Total nonperforming assets ("NPAs") $ 105,190 $ 99,362 $ 5,828
Performing TDRs held for investment $ 14,254 $ 13,679 $ 575
Nonaccrual loans and leases held for investment
to loans and leases held for investment 0.48 % 0.45 %
Nonperforming assets to loans and leases
held for investment and foreclosed assets 0.55 % 0.52 %
Loan and Lease Credit Risk Ratings:
Pass $ 18,076,832 $ 17,967,872 $ 108,960
Special mention 741,283 783,756 (42,473 )
Classified 265,262 274,572 (9,310 )
Total loans and leases held for investment,
net of deferred fees $ 19,083,377 $ 19,026,200 $ 57,177
Classified loans and leases held for investment
to loans and leases held for investment 1.39 % 1.44 %
Allowance for Credit Losses:
Allowance for loan and lease losses $ 348,181 $ 345,966 $ 2,215
Reserve for unfunded loan commitments 85,571 96,571 (11,000 )
Allowance for credit losses $ 433,752 $ 442,537 $ (8,785 )
Provision for credit losses (for the quarter) $ 10,000 $ 97,000 $ (87,000 )
Net charge-offs (for the quarter) $ 18,785 $ 36,084 $ (17,299 )
Net charge-offs to average loans and leases
(for the quarter) 0.40 % 0.75 %
Allowance for loan and lease losses to loans
and leases held for investment 1.82 % 1.82 %
Allowance for credit losses to loans and leases
held for investment 2.27 % 2.33 %
Allowance for credit losses to nonaccrual loans
and leases held for investment 475.8 % 516.9 %
(1) Nonaccrual loans include guaranteed amounts of $13.9 million at December 31, 2020 and $13.8 million at September 30, 2020.
After taking pro-active and decisive steps in the first quarter at the onset
of the pandemic to downgrade certain loans, the level of special mention loans
and leases, which peaked in the first quarter of 2020, and classified and
nonaccrual loans and leases, which peaked in the second quarter of 2020, have
declined with the enhanced ongoing monitoring of the loan and lease portfolio
during the course of the year. Despite the early actions, enhanced monitoring,
and build in the allowance for credit losses, certain credit metrics remain
elevated as we continue to manage the credit environment and economic impacts
caused by the pandemic.
The following table presents nonaccrual loans and leases and accruing loans
and leases past due between 30 and 89 days by loan portfolio segment and class
as of the dates indicated:
December 31, 2020 September 30, 2020 Increase (Decrease)
Accruing Accruing Accruing
and 30-89 and 30-89 and 30-89
Days Past Days Past Days Past
Nonaccrual Due Nonaccrual Due Nonaccrual Due
(Dollars in thousands)
Real estate mortgage:
Commercial $ 43,731 $ 3,636 $ 45,120 $ - $ (1,389 ) $ 3,636
Income producing and other
residential 1,826 600 2,008 1,761 (182 ) (1,161 )
Total real estate mortgage 45,557 4,236 47,128 1,761 (1,571 ) 2,475
Real estate construction and land:
Commercial 315 - 324 - (9 ) -
Residential - 759 - 3,108 - (2,349 )
Total real estate
construction and land 315 759 324 3,108 (9 ) (2,349 )
Commercial:
Asset-based 2,679 - 2,817 - (138 ) -
Venture capital 1,980 540 2,001 2,319 (21 ) (1,779 )
Other commercial 40,243 2,078 32,941 185 7,302 1,893
Total commercial 44,902 2,618 37,759 2,504 7,143 114
Consumer 389 1,260 404 791 (15 ) 469
Total held for investment $ 91,163 $ 8,873 $ 85,615 $ 8,164 $ 5,548 $ 709
During the fourth quarter of 2020, nonaccrual loans and leases increased by
$5.5 million due primarily to an addition of one security monitoring loan for
$26.3 million, partially offset by the sale of one security monitoring loan
for $12.1 million and the paydown of another security monitoring loan for $5.8
million.
CAPITAL
The following table presents certain actual capital ratios and ratios
excluding PPP loans:
December 31, 2020
Excluding September 30,
PPP 2020
Actual (1) Loans (1) Actual
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio 8.55 % 8.93 % (3 ) 8.66 %
Common equity tier 1 capital ratio 10.53 % 10.53 % 10.45 %
Total capital ratio 13.76 % 13.76 % 13.74 %
Tangible common equity ratio (2) 8.78 % 9.12 % (3 ) 8.71 %
(1) Capital information for December 31, 2020 is preliminary.
(2) Non-GAAP measure.
(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.
ABOUT PACWEST BANCORP
PacWest Bancorp (“PacWest”) is a bank holding company with over $29
billion in assets headquartered in Los Angeles, California, with executive
offices in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific
Western Bank (the “Bank”). The Bank has 70 full-service branches located
in California, one branch located in Durham, North Carolina, and one branch
located in Denver, Colorado. The Bank provides community banking products
including lending and comprehensive deposit and treasury management services
to small and medium-sized businesses conducted primarily through our
California-based branch offices and Denver, Colorado branch office. The Bank
offers national lending products including asset-based, equipment, and real
estate loans and treasury management services to established middle-market
businesses on a national basis. The Bank also offers venture banking products
including a comprehensive suite of financial services focused on
entrepreneurial and venture-backed 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 or Pacific
Western Bank, visit www.pacwest.com.
FORWARD LOOKING STATEMENTS
This communication contains certain forward-looking information about PacWest
Bancorp that is intended to be covered by the safe harbor for
“forward-looking statements” provided by the Private Securities Litigation
Reform Act of 1995. Statements that are not historical or current facts,
including statements about future financial and operational results,
expectations, or intentions are forward-looking statements. Such statements
are based on information available at the time of the 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. The COVID-19 pandemic is adversely affecting
PacWest Bancorp, its employees, customers and third-party service providers,
and the ultimate extent of the impacts on its business, financial position,
results of operations, liquidity and prospects is uncertain. The length of the
COVID-19 pandemic and the severity of its impact on key macro-economic
indicators such as unemployment and GDP may have a material impact on our
allowance for credit losses and related provision for credit losses. Continued
deterioration in general business and economic conditions could adversely
affect PacWest Bancorp’s revenues and the values of its assets, including
goodwill, and liabilities, lead to a tightening of credit, and increase stock
price volatility. In addition, PacWest Bancorp’s results could be adversely
affected by changes in interest rates, sustained high unemployment rates,
deterioration in the credit quality of its loan portfolio or in the value of
the collateral securing those loans, deterioration in the value of its
investment securities, the magnitude of individual loan losses on security
monitoring loans, and legal and regulatory developments. Actual results may
differ materially from those set forth or implied in the forward-looking
statements due to a variety of factors, including the risk factors described
in documents filed by the Company with the U.S. 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
December 31, September 30, December 31,
2020 2020 2019
(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks $ 150,464 $ 187,176 $ 172,585
Interest-earning deposits in financial institutions 3,010,197 2,766,020 465,039
Total cash and cash equivalents 3,160,661 2,953,196 637,624
Securities available-for-sale, at estimated fair value 5,235,591 4,532,614 3,797,187
Federal Home Loan Bank stock, at cost 17,250 17,250 40,924
Total investment securities 5,252,841 4,549,864 3,838,111
Gross loans and leases held for investment 19,153,357 19,101,680 18,910,740
Deferred fees, net (69,980 ) (75,480 ) (63,868 )
Total loans and leases held for investment,
net of deferred fees 19,083,377 19,026,200 18,846,872
Allowance for loan and lease losses (348,181 ) (345,966 ) (138,785 )
Total loans and leases held for investment, net 18,735,196 18,680,234 18,708,087
Equipment leased to others under operating leases 333,846 286,425 324,084
Premises and equipment, net 39,234 40,544 38,585
Foreclosed assets, net 14,027 13,747 440
Goodwill 1,078,670 1,078,670 2,548,670
Core deposit and customer relationship intangibles, net 23,641 26,813 38,394
Other assets 860,326 797,223 636,811
Total assets $ 29,498,442 $ 28,426,716 $ 26,770,806
LIABILITIES:
Noninterest-bearing deposits $ 9,193,827 $ 9,346,744 $ 7,243,298
Interest-bearing deposits 15,746,890 14,618,951 11,989,738
Total deposits 24,940,717 23,965,695 19,233,036
Borrowings 5,000 60,000 1,759,008
Subordinated debentures 465,812 463,282 458,209
Accrued interest payable and other liabilities 491,962 451,508 365,856
Total liabilities 25,903,491 24,940,485 21,816,109
STOCKHOLDERS' EQUITY:
Common stock 1,207 1,208 1,219
Additional paid-in-capital 3,100,633 3,125,554 3,306,006
Retained earnings 409,391 292,561 1,652,248
Treasury stock (88,803 ) (88,566 ) (83,434 )
Accumulated other comprehensive income 172,523 155,474 78,658
STOCKHOLDERS' EQUITY (1) 3,594,951 3,486,231 4,954,697
Total liabilities and stockholders’ equity $ 29,498,442 $ 28,426,716 $ 26,770,806
Book value per share $ 30.36 $ 29.42 $ 41.36
Tangible book value per share (2) $ 21.05 $ 20.09 $ 19.77
Shares outstanding 118,414,853 118,489,927 119,781,605
(1) Includes net unrealized gain on securities
available-for-sale, net $ 172,523 $ 155,474 $ 78,658
(2) Non-GAAP measure.
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
2020 2020 2019 2020 2019
(Dollars in thousands, except per share data)
Interest income:
Loans and leases $ 242,198 $ 240,811 $ 263,402 $ 993,138 $ 1,097,845
Investment securities 28,843 24,443 28,135 106,770 115,569
Deposits in financial institutions 1,135 654 2,056 3,583 6,479
Total interest income 272,176 265,908 293,593 1,103,491 1,219,893
Interest expense:
Deposits 8,454 9,887 34,802 59,663 148,460
Borrowings 37 27 5,189 8,161 26,961
Subordinated debentures 4,477 4,670 6,983 21,109 29,843
Total interest expense 12,968 14,584 46,974 88,933 205,264
Net interest income 259,208 251,324 246,619 1,014,558 1,014,629
Provision for credit losses 10,000 97,000 3,000 339,000 22,000
Net interest income after
provision for credit losses 249,208 154,324 243,619 675,558 992,629
Noninterest income:
Service charges on deposit accounts 3,119 2,570 3,611 10,351 14,637
Other commissions and fees 9,974 10,541 10,170 40,347 43,623
Leased equipment income 9,440 9,900 10,648 43,628 38,727
Gain on sale of loans and leases 1,671 35 23 2,139 1,114
Gain on sale of securities 4 5,270 184 13,171 25,445
Other income 15,642 9,936 2,540 36,424 19,016
Total noninterest income 39,850 38,252 27,176 146,060 142,562
Noninterest expense:
Compensation 73,171 75,131 74,637 271,494 285,862
Occupancy 14,083 14,771 14,541 57,555 57,407
Data processing 6,718 6,505 6,770 26,779 27,556
Other professional services 6,800 4,713 4,261 19,917 17,803
Insurance and assessments 5,064 3,939 4,168 22,625 16,404
Intangible asset amortization 3,172 3,751 4,153 14,753 18,726
Leased equipment depreciation 7,501 7,057 6,856 28,865 24,016
Foreclosed assets (income) expense, net (272 ) 335 (3,446 ) (17 ) (3,555 )
Acquisition, integration and
reorganization costs 1,060 - (269 ) 1,060 349
Customer related expense 4,430 4,762 3,952 17,532 13,839
Loan expense 3,926 3,499 2,967 13,454 12,931
Goodwill impairment - - - 1,470,000 -
Other expense 10,029 8,939 5,138 40,002 30,913
Total noninterest expense 135,682 133,402 123,728 1,984,019 502,251
Earnings (loss) before income taxes 153,376 59,174 147,067 (1,162,401 ) 632,940
Income tax expense 36,546 13,671 29,186 75,173 164,304
Net earnings (loss) $ 116,830 $ 45,503 $ 117,881 $ (1,237,574 ) $ 468,636
Basic and diluted earnings (loss) per share $ 0.99 $ 0.38 $ 0.98 $ (10.61 ) $ 3.90
Dividends declared and paid per share $ 0.25 $ 0.25 $ 0.60 $ 1.35 $ 2.40
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS (LOSS) PER SHARE CALCULATIONS
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
2020 2020 2019 2020 2019
(In thousands, except per share data)
Basic Earnings (Loss) Per Share:
Net earnings (loss) $ 116,830 $ 45,503 $ 117,881 $ (1,237,574 ) $ 468,636
Less: earnings allocated to unvested
restricted stock (1) (1,398 ) (578 ) (1,458 ) (1,782 ) (5,182 )
Net earnings (loss) allocated to
common shares $ 115,432 $ 44,925 $ 116,423 $ (1,239,356 ) $ 463,454
Weighted-average basic shares and
unvested restricted stock outstanding 118,446 118,438 119,804 118,463 120,468
Less: weighted-average unvested
restricted stock outstanding (1,652 ) (1,684 ) (1,566 ) (1,610 ) (1,502 )
Weighted-average basic shares
outstanding 116,794 116,754 118,238 116,853 118,966
Basic earnings (loss) per share $ 0.99 $ 0.38 $ 0.98 $ (10.61 ) $ 3.90
Diluted Earnings (Loss) Per Share:
Net earnings (loss) allocated to
common shares $ 115,432 $ 44,925 $ 116,423 $ (1,239,356 ) $ 463,454
Weighted-average diluted shares
outstanding 116,794 116,754 118,238 116,853 118,966
Diluted earnings (loss) per share $ 0.99 $ 0.38 $ 0.98 $ (10.61 ) $ 3.90
(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
December 31, 2020 September 30, 2020 December 31, 2019
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) $ 18,769,214 $ 243,188 5.15% $ 19,195,737 $ 241,547 5.01% $ 18,470,583 $ 263,783 5.67%
Investment securities (3) 4,888,993 30,757 2.50% 4,107,915 26,015 2.52% 3,811,216 29,509 3.07%
Deposits in financial
institutions 3,576,335 1,135 0.13% 2,554,349 654 0.10% 498,068 2,056 1.64%
Total interest-earning
assets (1) 27,234,542 275,080 4.02% 25,858,001 268,216 4.13% 22,779,867 295,348 5.14%
Other assets 2,100,247 2,077,192 3,600,872
Total assets $ 29,334,789 $ 27,935,193 $ 26,380,739
Liabilities and
Stockholders' Equity:
Interest checking $ 5,191,435 2,064 0.16% $ 4,904,614 2,019 0.16% $ 3,731,696 10,031 1.07%
Money market 7,636,220 3,225 0.17% 7,170,842 3,081 0.17% 5,117,553 12,063 0.94%
Savings 567,646 35 0.02% 565,395 35 0.02% 509,497 204 0.16%
Time 1,650,150 3,130 0.75% 1,876,072 4,752 1.01% 2,744,156 12,504 1.81%
Total interest-bearing
deposits 15,045,451 8,454 0.22% 14,516,923 9,887 0.27% 12,102,902 34,802 1.14%
Borrowings 237,098 37 0.06% 181,315 27 0.06% 1,179,220 5,189 1.75%
Subordinated debentures 463,951 4,477 3.84% 462,375 4,670 4.02% 456,997 6,983 6.06%
Total interest-bearing
liabilities 15,746,500 12,968 0.33% 15,160,613 14,584 0.38% 13,739,119 46,974 1.36%
Noninterest-bearing
demand deposits 9,589,789 8,812,391 7,338,888
Other liabilities 462,075 464,320 372,550
Total liabilities 25,798,364 24,437,324 21,450,557
Stockholders' equity 3,536,425 3,497,869 4,930,182
Total liabilities and
stockholders' equity $ 29,334,789 $ 27,935,193 $ 26,380,739
Net interest income (1) $ 262,112 $ 253,632 $ 248,374
Net interest spread (1) 3.69% 3.75% 3.78%
Net interest margin (1) 3.83% 3.90% 4.33%
Total deposits (4) $ 24,635,240 $ 8,454 0.14% $ 23,329,314 $ 9,887 0.17% $ 19,441,790 $ 34,802 0.71%
(1) Tax equivalent.
(2) Includes discount accretion on acquired loans of $3.8 million, $2.0 million, and $3.0 million for the three months ended December 31, 2020,
September 30, 2020, and December 31, 2019, respectively.
(3) Includes tax-equivalent adjustments of $1.9 million, $1.6 million, and $1.4 million for the three months ended December 31, 2020,
September 30, 2020, and December 31, 2019 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
December 31, September 30, June 30, March 31, December 31,
2020 2020 2020 2020 2019
(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks $ 150,464 $ 187,176 $ 174,059 $ 172,570 $ 172,585
Interest-earning deposits in financial
institutions 3,010,197 2,766,020 1,747,077 439,690 465,039
Total cash and cash equivalents 3,160,661 2,953,196 1,921,136 612,260 637,624
Securities available-for-sale 5,235,591 4,532,614 3,851,141 3,757,663 3,797,187
Federal Home Loan Bank stock 17,250 17,250 17,250 54,244 40,924
Total investment securities 5,252,841 4,549,864 3,868,391 3,811,907 3,838,111
Gross loans and leases held for investment 19,153,357 19,101,680 19,780,476 19,806,394 18,910,740
Deferred fees, net (69,980 ) (75,480 ) (85,845 ) (61,089 ) (63,868 )
Total loans and leases held for
investment, net of deferred fees 19,083,377 19,026,200 19,694,631 19,745,305 18,846,872
Allowance for loan and lease losses (348,181 ) (345,966 ) (301,050 ) (221,292 ) (138,785 )
Total loans and leases held for
investment, net 18,735,196 18,680,234 19,393,581 19,524,013 18,708,087
Equipment leased to others under
operating leases 333,846 286,425 295,191 306,530 - 324,084
Premises and equipment, net 39,234 40,544 42,299 39,799 38,585
Foreclosed assets, net 14,027 13,747 1,449 1,701 440
Goodwill 1,078,670 1,078,670 1,078,670 1,078,670 2,548,670
Core deposit and customer relationship
intangibles, net 23,641 26,813 30,564 34,446 38,394
Other assets 860,326 797,223 734,457 733,941 636,811
Total assets $ 29,498,442 $ 28,426,716 $ 27,365,738 $ 26,143,267 $ 26,770,806
LIABILITIES:
Noninterest-bearing deposits $ 9,193,827 $ 9,346,744 $ 8,629,543 $ 7,510,218 $ 7,243,298
Interest-bearing deposits 15,746,890 14,618,951 14,299,036 12,065,619 11,989,738
Total deposits 24,940,717 23,965,695 22,928,579 19,575,837 19,233,036
Borrowings 5,000 60,000 60,000 2,295,000 1,759,008
Subordinated debentures 465,812 463,282 460,772 458,994 458,209
Accrued interest payable and other
liabilities 491,962 451,508 463,489 423,047 365,856
Total liabilities 25,903,491 24,940,485 23,912,840 22,752,878 21,816,109
STOCKHOLDERS' EQUITY (1) 3,594,951 3,486,231 3,452,898 3,390,389 4,954,697
Total liabilities and stockholders’
equity $ 29,498,442 $ 28,426,716 $ 27,365,738 $ 26,143,267 $ 26,770,806
Book value per share $ 30.36 $ 29.42 $ 29.17 $ 28.75 $ 41.36
Tangible book value per share (2) $ 21.05 $ 20.09 $ 19.80 $ 19.31 $ 19.77
Shares outstanding 118,414,853 118,489,927 118,374,603 117,916,789 119,781,605
(1) Includes net unrealized gain on
securities available-for-sale, net $ 172,523 $ 155,474 $ 145,038 $ 90,916 $ 78,658
(2) Non-GAAP measure.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2020 2020 2020 2020 2019
(Dollars in thousands, except per share data)
Interest income:
Loans and leases $ 242,198 $ 240,811 $ 247,851 $ 262,278 $ 263,402
Investment securities 28,843 24,443 26,038 27,446 28,135
Deposits in financial institutions 1,135 654 186 1,608 2,056
Total interest income 272,176 265,908 274,075 291,332 293,593
Interest expense:
Deposits 8,454 9,887 13,075 28,247 34,802
Borrowings 37 27 1,319 6,778 5,189
Subordinated debentures 4,477 4,670 5,402 6,560 6,983
Total interest expense 12,968 14,584 19,796 41,585 46,974
Net interest income 259,208 251,324 254,279 249,747 246,619
Provision for credit losses 10,000 97,000 120,000 112,000 3,000
Net interest income after
provision for credit losses 249,208 154,324 134,279 137,747 243,619
Noninterest income:
Service charges on deposit accounts 3,119 2,570 2,004 2,658 3,611
Other commissions and fees 9,974 10,541 10,111 9,721 10,170
Leased equipment income 9,440 9,900 12,037 12,251 10,648
Gain on sale of loans and leases 1,671 35 346 87 23
Gain on sale of securities 4 5,270 7,715 182 184
Other income 15,642 9,936 6,645 4,201 2,540
Total noninterest income 39,850 38,252 38,858 29,100 27,176
Noninterest expense:
Compensation 73,171 75,131 61,910 61,282 74,637
Occupancy 14,083 14,771 14,494 14,207 14,541
Data processing 6,718 6,505 7,102 6,454 6,770
Other professional services 6,800 4,713 4,146 4,258 4,261
Insurance and assessments 5,064 3,939 9,373 4,249 4,168
Intangible asset amortization 3,172 3,751 3,882 3,948 4,153
Leased equipment depreciation 7,501 7,057 7,102 7,205 6,856
Foreclosed assets (income) expense, net (272 ) 335 (146 ) 66 (3,446 )
Acquisition, integration and
reorganization costs 1,060 - - - (269 )
Customer related expense 4,430 4,762 4,408 3,932 3,952
Loan expense 3,926 3,499 3,379 2,650 2,967
Goodwill impairment - - - 1,470,000 -
Other expense 10,029 8,939 11,315 9,719 5,138
Total noninterest expense 135,682 133,402 126,965 1,587,970 123,728
Earnings (loss) before income taxes 153,376 59,174 46,172 (1,421,123 ) 147,067
Income tax expense 36,546 13,671 12,968 11,988 29,186
Net earnings (loss) $ 116,830 $ 45,503 $ 33,204 $ (1,433,111 ) $ 117,881
Basic and diluted earnings (loss) per share $ 0.99 $ 0.38 $ 0.28 $ (12.23 ) $ 0.98
Dividends declared and paid per share $ 0.25 $ 0.25 $ 0.25 $ 0.60 $ 0.60
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
At or For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2020 2020 2020 2020 2019
(Dollars in thousands)
Performance Ratios:
Return on average assets (1) 1.58 % 0.65 % 0.50 % (21.27 )% 1.77 %
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")
return on average assets (1)(2) 2.22 % 2.22 % 2.51 % 2.39 % 2.26 %
Return on average equity (1) 13.14 % 5.18 % 3.87 % (116.28 )% 9.49 %
Return on average tangible equity (1)(2) 19.63 % 8.20 % 6.39 % 6.88 % 20.68 %
Efficiency ratio 43.6 % 45.1 % 42.9 % 40.6 % 44.8 %
Noninterest expense as a percentage
of average assets (1) 1.84 % 1.90 % 1.92 % 23.57 % 1.86 %
Average Yields/Costs (1):
Yield on:
Average loans and leases (3) 5.15 % 5.01 % 5.01 % 5.54 % 5.67 %
Average interest-earning assets (3) 4.02 % 4.13 % 4.53 % 5.02 % 5.14 %
Cost of:
Average interest-bearing deposits 0.22 % 0.27 % 0.40 % 0.95 % 1.14 %
Average total deposits 0.14 % 0.17 % 0.25 % 0.59 % 0.71 %
Average interest-bearing liabilities 0.33 % 0.38 % 0.55 % 1.16 % 1.36 %
Net interest spread (3) 3.69 % 3.75 % 3.98 % 3.86 % 3.78 %
Net interest margin (3) 3.83 % 3.90 % 4.20 % 4.31 % 4.33 %
Average Balances:
Assets:
Loans and leases, net of deferred fees $ 18,769,214 $ 19,195,737 $ 19,951,603 $ 19,065,035 $ 18,470,583
Interest-earning assets 27,234,542 25,858,001 24,531,204 23,455,636 22,779,867
Total assets 29,334,789 27,935,193 26,621,227 27,099,040 26,380,739
Liabilities:
Noninterest-bearing deposits 9,589,789 8,812,391 8,292,151 7,357,717 7,338,888
Interest-bearing deposits 15,045,451 14,516,923 13,116,297 11,896,780 12,102,902
Total deposits 24,635,240 23,329,314 21,408,448 19,254,497 19,441,790
Borrowings 237,098 181,315 871,110 2,026,749 1,179,220
Subordinated debentures 463,951 462,375 459,466 458,399 456,997
Interest-bearing liabilities 15,746,500 15,160,613 14,446,873 14,381,928 13,739,119
Stockholders' equity 3,536,425 3,497,869 3,446,850 4,956,778 4,930,182
(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
December 31, September 30, June 30, March 31, December 31,
2020 2020 2020 2020 2019
(Dollars in thousands)
Credit Quality Ratios:
Nonaccrual loans and leases held for
investment to loans and leases
held for investment 0.48 % 0.45 % 0.84 % 0.48 % 0.49 %
Nonperforming assets to loans and
leases held for investment and
foreclosed assets 0.55 % 0.52 % 0.85 % 0.49 % 0.49 %
Classified loans and leases held for
investment to loans and leases
held for investment 1.39 % 1.44 % 1.49 % 0.75 % 0.93 %
Provision for credit losses (for the
quarter) to average loans and leases
held for investment (annualized) 0.21 % 2.01 % 2.42 % 2.36 % 0.06 %
Net charge-offs (for the quarter) to
average loans and leases held
for investment (annualized) 0.40 % 0.75 % 0.27 % 0.40 % 0.02 %
Trailing 12 months net charge-offs
to average loans and leases
held for investment 0.45 % 0.36 % 0.20 % 0.19 % 0.09 %
Allowance for loan and lease losses to
loans and leases held for investment 1.82 % 1.82 % 1.53 % 1.12 % 0.74 %
Allowance for credit losses to loans
and leases held for investment 2.27 % 2.33 % 1.94 % 1.39 % 0.93 %
Allowance for credit losses to
nonaccrual loans and leases
held for investment 475.8 % 516.9 % 229.7 % 287.5 % 189.1 %
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio (1) 8.55 % 8.66 % 8.93 % 8.63 % 9.74 %
Common equity tier 1 capital ratio (1) 10.53 % 10.45 % 9.97 % 9.22 % 9.78 %
Tier 1 capital ratio (1) 10.53 % 10.45 % 9.97 % 9.22 % 9.78 %
Total capital ratio (1) 13.76 % 13.74 % 13.18 % 12.07 % 12.41 %
Risk-weighted assets (1) $ 22,837,693 $ 22,114,040 $ 22,781,836 $ 24,214,209 $ 23,582,495
Equity to assets ratio 12.19 % 12.26 % 12.62 % 12.97 % 18.51 %
Tangible common equity ratio (2) 8.78 % 8.71 % 8.93 % 9.10 % 9.79 %
Book value per share $ 30.36 $ 29.42 $ 29.17 $ 28.75 $ 41.36
Tangible book value per share (2) $ 21.05 $ 20.09 $ 19.80 $ 19.31 $ 19.77
Pacific Western Bank:
Tier 1 leverage capital ratio (1) 9.53 % 9.70 % 10.03 % 9.71 % 10.95 %
Common equity tier 1 capital ratio (1) 11.73 % 11.70 % 11.18 % 10.38 % 11.00 %
Tier 1 capital ratio (1) 11.73 % 11.70 % 11.18 % 10.38 % 11.00 %
Total capital ratio (1) 12.99 % 12.95 % 12.44 % 11.39 % 11.74 %
(1) Capital information for December 31, 2020 is preliminary.
(2) Non-GAAP measure.
GAAP TO NON-GAAP RECONCILIATIONS
This press release contains certain non-GAAP financial disclosures for: (1)
PPNR, (2) PPNR return on average assets (3) return on average tangible equity,
(4) tangible common equity ratio, and (5) 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, tangible book value per share, and PPNR is prevalent among
banking regulators, investors, and analysts. Accordingly, we disclose the
non-GAAP measures in addition to the related GAAP measures of: (1) net
earnings, (2) return on average assets, (3) return on average equity, (4)
equity to assets ratio, and (5) 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 Year Ended
PPNR and PPNR Return December 31, September 30, December 31, December 31,
on Average Assets 2020 2020 2019 2020 2019
(Dollars in thousands)
Net earnings (loss) $ 116,830 $ 45,503 $ 117,881 $ (1,237,574 ) $ 468,636
Add: Provision for credit losses 10,000 97,000 3,000 339,000 22,000
Add: Goodwill impairment - - - 1,470,000 -
Add: Income tax expense 36,546 13,671 29,186 75,173 164,304
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR") $ 163,376 $ 156,174 $ 150,067 $ 646,599 $ 654,940
Average assets $ 29,334,789 $ 27,935,193 $ 26,380,739 $ 27,752,412 $ 26,105,608
Return on average assets (1) 1.58 % 0.65 % 1.77 % (4.46 )% 1.80 %
PPNR return on average assets (2) 2.22 % 2.22 % 2.26 % 2.33 % 2.51 %
(1) Annualized net earnings (loss) divided by average assets.
(2) Annualized PPNR divided by average assets.
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
Return on Average Tangible Equity 2020 2020 2019 2020 2019
(Dollars in thousands)
Net earnings (loss) $ 116,830 $ 45,503 $ 117,881 $ (1,237,574 ) $ 468,636
Add: Intangible asset amortization 3,172 3,751 4,153 14,753 18,726
Add: Goodwill impairment - - - 1,470,000 -
Adjusted net earnings $ 120,002 $ 49,254 $ 122,034 $ 247,179 $ 487,362
Average stockholders' equity $ 3,536,425 $ 3,497,869 $ 4,930,182 $ 3,857,610 $ 4,864,332
Less: Average intangible assets 1,103,945 1,107,548 2,589,217 1,470,989 2,596,389
Average tangible common equity $ 2,432,480 $ 2,390,321 $ 2,340,965 $ 2,386,621 $ 2,267,943
Return on average equity (1) 13.14 % 5.18 % 9.49 % (32.08 )% 9.63 %
Return on average tangible equity (2) 19.63 % 8.20 % 20.68 % 10.36 % 21.49 %
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.
Tangible Common Equity Ratio/ December 31, September 30, June 30, March 31, December 31,
Tangible Book Value Per Share 2020 2020 2020 2020 2019
(Dollars in thousands, except per share data)
Stockholders' equity $ 3,594,951 $ 3,486,231 $ 3,452,898 $ 3,390,389 $ 4,954,697
Less: Intangible assets 1,102,311 1,105,483 1,109,234 1,113,116 2,587,064
Tangible common equity $ 2,492,640 $ 2,380,748 $ 2,343,664 $ 2,277,273 $ 2,367,633
Total assets $ 29,498,442 $ 28,426,716 $ 27,365,738 $ 26,143,267 $ 26,770,806
Less: Intangible assets 1,102,311 1,105,483 1,109,234 1,113,116 2,587,064
Tangible assets $ 28,396,131 $ 27,321,233 $ 26,256,504 $ 25,030,151 $ 24,183,742
Equity to assets ratio 12.19 % 12.26 % 12.62 % 12.97 % 18.51 %
Tangible common equity ratio (1) 8.78 % 8.71 % 8.93 % 9.10 % 9.79 %
Book value per share $ 30.36 $ 29.42 $ 29.17 $ 28.75 $ 41.36
Tangible book value per share (2) $ 21.05 $ 20.09 $ 19.80 $ 19.31 $ 19.77
Shares outstanding 118,414,853 118,489,927 118,374,603 117,916,789 119,781,605
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.
Contact: Matthew P. Wagner Bart R. Olson
President and CEO Executive Vice President and CFO
Phone: 303-802-8900 714-989-4149
Contact: William J. Black
Executive Vice President
Strategy and Corporate Development
Phone: 919-597-7466
GlobeNewswire, Inc. 2021
Recent news on PacWest Bancorp
See all news
