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PACW - PacWest Bancorp News Story

$39.97 0.5  1.3%

Last Trade - 09/04/21

Sector
Financials
Size
Large Cap
Market Cap £3.41bn
Enterprise Value £3.64bn
Revenue £846.7m
Position in Universe 1459th / 6827

PacWest Bancorp Announces Results for the Third Quarter 2020

Wed 14th October, 2020 10:00pm
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Significant Items
* Net Earnings of $45.5 Million, or $0.38 Per Diluted Share
* Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $156.2 Million
* Strong Capital Position – CET1 Ratio up 49 Basis Points to 10.46%
* Core Deposits Up $1.6 Billion or 10% in Q3; Represents 88% of Total Deposits
* Tax Equivalent Net Interest Margin of 3.90% Compared to 4.20% in Q2
* Cost of Average Total Deposits Decreased to 17 Basis Points
LOS ANGELES, Oct. 14, 2020 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW)
today announced net earnings for the third quarter of 2020 of $45.5 million,
or $0.38 per diluted share, compared to net earnings for the second quarter of
2020 of $33.2 million, or $0.28 per diluted share. The increase in net
earnings for the third quarter was due primarily to a $23 million decrease in
the provision for credit losses.

Matt Wagner, President and CEO, commented, “Our operations continue to
produce strong revenues and internal capital as evidenced by $156.2 million in
PPNR during the third quarter, which resulted in a PPNR return on average
assets of 2.22%. These solid operating earnings highlight the resilience of
our business as we navigate the challenging economic conditions.”

Mr. Wagner continued, “We experienced strong deposit growth again in the
third quarter, resulting in a significant increase in liquidity. Our average
deposits in financial institutions balance was $2.6 billion in the third
quarter with a yield of 10 basis points. While our focus is on managing net
interest income, this excess liquidity had a negative impact on our third
quarter NIM of 32 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 were proactive in downgrading loans in the first quarter at the
start of the pandemic, and the net loan migration to the special mention and
classified categories during the second and third quarters was minimal. As of
September 30, 2020, only 3.3% of loans are on deferral with the vast majority
of those expiring in November 2020, while only 13% of loans previously granted
a deferral received a second modification.”

FINANCIAL HIGHLIGHTS

                              At or For the                                                                       At or For the                                                                
                              Three Months Ended                                                                  Nine Months Ended                                                            
                              September 30,                  June 30,                  Increase                   September 30,                                        Increase                
 Financial Highlights         2020                           2020                      (Decrease)                 2020                       2019                      (Decrease)              
                                                                                                                                                                                               
                              (Dollars in thousands, except per share data)                                                                                                                    
 Net earnings (loss)          $      45,503                  $    33,204               $     12,299               $    (1,354,404  )         $    350,755              $     (1,705,159  )     
 Diluted earnings (loss)                                                                                                                                                                       
 per share                    $      0.38                    $    0.28                 $     0.10                 $    (11.60      )         $    2.91                 $     (14.51      )     
 Return on average assets            0.65        %                0.50        %              0.15                      (6.65       )%             1.80        %              (8.45       )     
 Pre-provision, pre-goodwill                                                                                                                                                                   
 impairment, pre-tax net                                                                                                                                                                       
 revenue ("PPNR") (1)         $      156,174                 $    166,172              $     (9,998     )         $    483,223               $    504,873              $     (21,650     )     
 PPNR return on average                                                                                                                                                                        
 assets (1)                          2.22        %                2.51        %              (0.29      )              2.37        %              2.59        %              (0.22       )     
 Return on average                                                                                                                                                                             
 tangible equity (1)                 8.20        %                6.39        %              1.81                      7.16        %              21.77       %              (14.61      )     
                                                                                                                                                                                               
 Net interest margin ("NIM")                                                                                                                                                                   
 (tax equivalent)                    3.90        %                4.20        %              (0.30      )              4.13        %              4.62        %              (0.49       )     
 Yield on average loans and                                                                                                                                                                    
 leases (tax equivalent)             5.01        %                5.01        %              -                         5.18        %              6.11        %              (0.93       )     
 Cost of average total                                                                                                                                                                         
 deposits                            0.17        %                0.25        %              (0.08      )              0.32        %              0.79        %              (0.47       )     
 Efficiency ratio                    45.1        %                42.9        %              2.2                       42.9        %              42.1        %              0.8               
                                                                                                                                                                                               
 Total assets                 $      28,426,716              $    27,365,738           $     1,060,978            $    28,426,716            $    26,724,627           $     1,702,089         
 Loans and leases held                                                                                                                                                                         
 for investment,                                                                                                                                                                               
 net of deferred fees         $      19,026,200              $    19,694,631           $     (668,431   )         $    19,026,200            $    18,735,543           $     290,657           
 Noninterest-bearing                                                                                                                                                                           
 demand deposits              $      9,346,744               $    8,629,543            $     717,201              $    9,346,744             $    7,441,185            $     1,905,559         
 Core deposits                $      21,117,629              $    19,535,814           $     1,581,815            $    21,117,629            $    16,471,264           $     4,646,365         
 Total deposits               $      23,965,695              $    22,928,579           $     1,037,116            $    23,965,695            $    19,733,203           $     4,232,492         
                                                                                                                                                                                               
 As percentage of total                                                                                                                                                                        
 deposits:                                                                                                                                                                                     
 Noninterest-bearing                                                                                                                                                                           
 demand deposits                     39          %                38          %              1                         39          %              38          %              1                 
 Core deposits                       88          %                85          %              3                         88          %              84          %              4                 
                                                                                                                                                                                               
 Equity to assets ratio              12.26       %                12.62       %              (0.36      )              12.26       %              18.41       %              (6.15       )     
 Tangible common equity                                                                                                                                                                        
 ratio (1)                           8.71        %                8.93        %              (0.22      )              8.71        %              9.65        %              (0.94       )     
 Book value per share         $      29.42                   $    29.17                $     0.25                 $    29.42                 $    41.06                $     (11.64      )     
 Tangible book value per                                                                                                                                                                       
 share (1)                    $      20.09                   $    19.80                $     0.29                 $    20.09                 $    19.43                $     0.66              
                                                                                                                                                                                               
 (1) Non-GAAP measure.                                                                                                                                                                         

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income decreased by $3.0 million to $251.3 million for the third
quarter of 2020 compared to $254.3 million for the second quarter of 2020 due
mainly to a lower balance of average loans and leases. The tax equivalent
yield on average loans and leases was 5.01% for both the third and second
quarters of 2020.

The tax equivalent NIM was 3.90% for the third quarter of 2020 compared to
4.20% for the second 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
$756 million, while the average balance of deposits in financial institutions
increased by $1.8 billion in the third quarter of 2020. This excess liquidity
had a negative impact on the third quarter tax equivalent NIM of 32 basis
points, while the PPP loans, which have a coupon rate of 1%, had a negative
impact of seven basis points.

The cost of average total deposits decreased to 0.17% for the third quarter of
2020 from 0.25% for the second quarter of 2020. The lower cost of average
total deposits was due primarily to the repricing of maturing time deposits.
The cost of deposits at September 30, 2020 was 0.13%.

Provision for Credit Losses

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

                                                  Three Months Ended                                                                
                                                  September 30,                       June 30,                 Increase             
 Provision for Credit Losses                      2020                                2020                     (Decrease)           
                                                                                      (In thousands)                                
 Addition to allowance for loan and lease losses  $        81,000                     $      93,000            $     (12,000  )     
 Addition to reserve for unfunded                                                                                                   
 loan commitments                                          16,000                            27,000                  (11,000  )     
 Total provision for credit losses                $        97,000                     $      120,000           $     (23,000  )     

The provision for credit losses was $97.0 million for the third quarter of
2020, down $23.0 million from the second quarter of 2020. This reduction
reflected improvement in certain key macro-economic forecast variables
(unemployment and real GDP growth), partially offset by deterioration in other
key macro-economic variables, including CRE price index and BBB spreads, and
increased provisions for individually evaluated loans and leases.

Noninterest Income

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

                                            Three Months Ended                                                     
                                            September 30,              June 30,                Increase            
 Noninterest Income                         2020                       2020                    (Decrease)          
                                                                       (In thousands)                              
 Service charges on deposit accounts        $      2,570               $      2,004            $     566           
 Other commissions and fees                        10,541                     10,111                 430           
 Leased equipment income                           9,900                      12,037                 (2,137  )     
 Gain on sale of loans and leases                  35                         346                    (311    )     
 Gain on sale of securities                        5,270                      7,715                  (2,445  )     
 Other income:                                                                                                     
 Dividends and gains on equity investments         6,945                      2,947                  3,998         
 Warrant income                                    500                        1,973                  (1,473  )     
 Other                                             2,491                      1,725                  766           
 Total noninterest income                   $      38,252              $      38,858           $     (606    )     

Noninterest income decreased by $0.6 million to $38.3 million for the third
quarter of 2020 compared to $38.9 million for the second quarter of 2020 due
primarily to decreases of $2.4 million in gain on sale of securities, $2.1
million in leased equipment income, and $1.5 million in warrant income, offset
partially by a $4.0 million increase in dividends and gains on equity
investments. The decrease in gain on sale of securities resulted from the sale
of $17 million of securities for a gain of $5.3 million in the third quarter
compared to sales of $122 million of securities for a gain of $7.7 million in
the second quarter. The decrease in leased equipment income was due to lower
gains from early lease terminations and lower rental income due to an
operating lease placed on nonaccrual status in the third quarter. The decrease
in warrant income was due to lower gains from exercised warrants. The increase
in dividends and gains on equity investments resulted primarily from net fair
value gains of $5.9 million on equity investments still held.

Noninterest Expense

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

                                          Three Months Ended                                                       
                                          September 30,               June 30,                 Increase            
 Noninterest Expense                      2020                        2020                     (Decrease)          
                                                                      (In thousands)                               
 Compensation                             $      75,131               $      61,910            $     13,221        
 Occupancy                                       14,771                      14,494                  277           
 Data processing                                 6,505                       7,102                   (597    )     
 Other professional services                     4,713                       4,146                   567           
 Insurance and assessments                       3,939                       9,373                   (5,434  )     
 Intangible asset amortization                   3,751                       3,882                   (131    )     
 Leased equipment depreciation                   7,057                       7,102                   (45     )     
 Foreclosed assets expense (income), net         335                         (146     )              481           
 Customer related expense                        4,762                       4,408                   354           
 Loan expense                                    3,499                       3,379                   120           
 Other                                           8,939                       11,315                  (2,376  )     
 Total noninterest expense                       133,402                     126,965                 6,437         

Noninterest expense increased by $6.4 million to $133.4 million for the third
quarter of 2020 compared to $127.0 million for the second quarter of 2020
attributable primarily to a $13.2 million increase in compensation expense,
offset partially by decreases of $5.4 million in insurance and assessments
expense and $2.4 million in other expense. The increase in compensation
expense was due mainly to higher bonus accruals of $12.4 million and stock
compensation expense of $1.4 million. The decrease in insurance and
assessments expense was due to a decrease in the FDIC assessment expense due
primarily to increases in liquidity and uninsured deposits during the last two
quarters. The decrease in other expense was due primarily to $6.6 million in
prepayment penalties incurred in the second quarter from the early payoff of
$750 million of FHLB term advances, which was offset partially by higher legal
accruals in the third quarter.

Income Taxes

The effective income tax rate was 23.1% for the third quarter compared to
28.1% for the second quarter of 2020. Excluding non-deductible goodwill
impairment, the effective tax rate for the full year 2020 is currently
estimated to be in the range of 25-27%. The lower effective tax rate in the
third quarter was due mainly to higher shortfall amounts from restricted stock
vestings in the second quarter that elevated the second quarter effective tax
rate.

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                                                                                                   Nine Months Ended           
 Roll Forward of Loans and Leases Held     September 30,                                       June 30,                                                         September 30,               
 for Investment, Net of Deferred Fees (1)  2020                                                2020                                                             2020                        
                                                                                               (Dollars in thousands)                                                                       
 Balance, beginning of period              $            19,694,631                             $            19,745,305                                          $       18,846,872          
 Additions:                                                                                                                                                                                 
 Production                                             519,671                                             1,802,956                                                   3,112,373           
 Disbursements                                          1,008,336                                           800,458                                                     3,805,874           
 Total production and disbursements                     1,528,007                                           2,603,414                                                   6,918,247           
 Reductions:                                                                                                                                                                                
 Payoffs                                                (982,889     )                                      (612,837     )                                              (2,408,433  )       
 Paydowns                                               (1,160,692   )                                      (2,022,376   )                                              (4,236,773  )       
 Total payoffs and paydowns                             (2,143,581   )                                      (2,635,213   )                                              (6,645,206  )       
 Sales                                                  (2,979       )                                      (3,089       )                                              (6,068      )       
 Transfers to foreclosed assets                         (12,594      )                                      -                                                           (14,370     )       
 Charge-offs                                            (37,284      )                                      (15,786      )                                              (73,275     )       
 Total reductions                                       (2,196,438   )                                      (2,654,088   )                                              (6,738,919  )       
 Net (decrease) increase                                (668,431     )                                      (50,674      )                                              179,328             
 Balance, end of period                    $            19,026,200                             $            19,694,631                                          $       19,026,200          
                                                                                                                                                                                            
 Weighted average rate on production (2)                4.95         %                                      2.33         %                                              3.27        %       
                                                                                                                                                                                            
 (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 23 basis points to loan                                                                                                    
 yields in 2020.                                                                                                                                                                            

Loans and leases held for investment, net of deferred fees, decreased by
$668.4 million in the third quarter of 2020 to $19.0 billion at September 30,
2020. The majority of the decrease in the loans and leases balance in the
third quarter of 2020 was in the commercial category as business lending
demand has decreased during the COVID-19 pandemic. Total revolving balances
declined by approximately $350 million in the third quarter due to a lower
line utilization rate. The largest decreases were in the lender finance,
equipment finance, venture capital, and security monitoring portfolios. The
weighted average rate on third quarter production increased to 4.95%. The
increase was due to the unusually low rate on second quarter production since
$1.2 billion, or 69%, of second quarter loan production related to PPP loans
at a coupon rate of 1%. Excluding PPP loans, the weighted average rate on
second quarter production was 5.39%.

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:

                                   September 30, 2020                              June 30, 2020                   September 30, 2019               
                                                         % of                                        % of                             % of          
 Loan and Lease Portfolio          Balance               Total                     Balance           Total         Balance            Total         
                                                                                   (In thousands)                                                   
 Real estate mortgage:                                                                                                                              
 Commercial                        $         4,192,466   22       %                $     4,222,075   22    %       $      4,300,566   23     %      
 Income producing and other                                                                                                                         
 residential                                 3,684,579   19       %                      3,733,659   19    %              3,596,358   19     %      
 Total real estate mortgage                  7,877,045   41       %                      7,955,734   41    %              7,896,924   42     %      
 Real estate construction and land:                                                                                                                 
 Commercial                                  1,241,647   7        %                      1,167,609   6     %              1,009,362   6      %      
 Residential                                 2,182,100   11       %                      2,172,919   11    %              1,542,112   8      %      
 Total real estate construction                                                                                                                     
 and land                                    3,423,747   18       %                      3,340,528   17    %              2,551,474   14     %      
 Total real estate                           11,300,792  59       %                      11,296,262  58    %              10,448,398  56     %      
 Commercial:                                                                                                                                        
 Asset-based                                 3,153,048   17       %                      3,412,431   17    %              3,810,741   20     %      
 Venture capital                             1,637,132   9        %                      1,814,341   9     %              2,209,649   12     %      
 Other commercial                            2,572,994   13       %                      2,760,278   14    %              1,858,167   10     %      
 Total commercial                            7,363,174   39       %                      7,987,050   40    %              7,878,557   42     %      
 Consumer                                    362,234     2        %                      411,319     2     %              408,588     2      %      
 Total loans and leases held for                                                                                                                    
 investment, net of deferred fees  $         19,026,200  100      %                $     19,694,631  100   %       $      18,735,543  100    %      
                                                                                                                                                    
 Total unfunded loan commitments   $         7,178,506                             $     7,745,921                 $      7,790,796                 

Allowance for Credit Losses

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

                       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              
                                                                                                                     
                       Three Months Ended June 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     $     221,292                    $     53,571                      $     274,863              
 Charge-offs                 (15,786        )                 -                                 (15,786        )     
 Recoveries                  2,544                            -                                 2,544                
 Net charge-offs             (13,242        )                 -                                 (13,242        )     
 Provision                   93,000                           27,000                            120,000              
 Ending balance        $     301,050                    $     80,571                      $     381,621              

The allowance for credit losses increased by $60.9 million in the third
quarter of 2020 to $442.5 million. The increase in the allowance for credit
losses during the third quarter was attributable to changes in the economic
forecast and changes to modeling assumptions. Net charge-offs increased from
$13.2 million in the second quarter to $36.1 million in the third quarter due
primarily to one security monitoring loan with a charge-off of $32.8 million.
This loan was the only junior lien exposure in the security monitoring
portfolio and, accordingly, additional losses of this magnitude are not
expected.

Gross charge-offs for the third quarter of 2020 were $37.3 million and
included $35.4 million for other commercial loans and $1.5 million for
commercial real estate mortgage loans compared to gross charge-offs for the
second quarter of 2020 of $15.8 million that included $6.5 million for venture
capital loans, $5.0 million for other commercial loans, and $4.2 million for
commercial real estate mortgage loans.

Recoveries for the third quarter of 2020 were $1.2 million and included $0.6
million for venture capital loans and $0.3 million for other commercial loans
compared to recoveries for the second quarter of 2020 of $2.5 million that
included $2.3 million for other commercial loans.

For the three and nine months ended September 30, 2020, annualized net
charge-offs to average loans and leases were 0.75% and 0.47%, respectively.

The allowance for credit losses as a percentage of loans and leases held for
investment was 2.33% at September 30, 2020 and 1.94% at June 30, 2020. The
allowance for loan and lease losses as a percentage of loans and leases held
for investment was 1.82% at September 30, 2020 and 1.53% at June 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, was 2.48% and 1.94% at
September 30, 2020, respectively, compared to 2.06% and 1.63% at June 30,
2020, respectively.

Deposits and Client Investment Funds

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

                                   September 30, 2020                 June 30, 2020                         September 30, 2019               
                                                      % of                                % of                                 % of          
 Deposit Composition               Balance            Total           Balance             Total             Balance            Total         
                                                                      (Dollars in thousands)                                                 
 Noninterest-bearing demand        $      9,346,744   39     %        $       8,629,543   38      %         $      7,441,185   38     %      
 Interest checking                        4,657,511   20     %                4,858,168   21      %                3,645,660   18     %      
 Money market                             6,539,313   27     %                5,498,150   24      %                4,870,344   25     %      
 Savings                                  574,061     2      %                549,953     2       %                514,075     3      %      
 Total core deposits                      21,117,629  88     %                19,535,814  85      %                16,471,264  84     %      
 Non-core non-maturity deposits           1,123,909   5      %                1,217,266   5       %                479,732     2      %      
 Total non-maturity deposits              22,241,538  93     %                20,753,080  90      %                16,950,996  86     %      
 Time deposits $250,000 and under         1,047,621   4      %                1,522,928   7       %                2,282,976   12     %      
 Time deposits over $250,000              676,536     3      %                652,571     3       %                499,231     2      %      
 Total time deposits                      1,724,157   7      %                2,175,499   10      %                2,782,207   14     %      
 Total deposits                    $      23,965,695  100    %        $       22,928,579  100     %         $      19,733,203  100    %      

At September 30, 2020, core deposits totaled $21.1 billion, or 88% of total
deposits, including $9.3 billion of noninterest-bearing demand deposits, or
39% of total deposits. Core deposits increased by $1.6 billion in the third
quarter driven by continued strong deposit growth from our venture banking
clients.

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 September 30, 2020 were $1.2
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:

                                                        September 30,                       June 30,                                Increase              
 Credit Quality Metrics                                 2020                                2020                                    (Decrease)            
                                                                                            (Dollars in thousands)                                        
 NPAs and Performing TDRs:                                                                                                                                
 Nonaccrual loans and leases held for investment (1)    $       85,615                      $         166,113                       $     (80,498   )     
 Accruing loans contractually past due 90 days or more          -                                     -                                   -               
 Foreclosed assets, net                                         13,747                                1,449                               12,298          
 Total nonperforming assets ("NPAs")                    $       99,362                      $         167,562                       $     (68,200   )     
                                                                                                                                                          
 Performing TDRs held for investment                    $       13,679                      $         15,037                        $     (1,358    )     
                                                                                                                                                          
 Nonaccrual loans and leases held for investment                                                                                                          
 to loans and leases held for investment                        0.45        %                         0.84        %                                       
 Nonperforming assets to loans and leases                                                                                                                 
 held for investment and foreclosed assets                      0.52        %                         0.85        %                                       
                                                                                                                                                          
 Loan and Lease Credit Risk Ratings:                                                                                                                      
 Pass                                                   $       17,967,872                  $         18,635,004                    $     (667,132  )     
 Special mention                                                783,756                               766,397                             17,359          
 Classified                                                     274,572                               293,230                             (18,658   )     
 Total loans and leases held for investment,                                                                                                              
 net of deferred fees                                   $       19,026,200                  $         19,694,631                    $     (668,431  )     
                                                                                                                                                          
 Classified loans and leases held for investment                                                                                                          
 to loans and leases held for investment                        1.44        %                         1.49        %                                       
                                                                                                                                                          
 Allowance for Credit Losses:                                                                                                                             
 Allowance for loan and lease losses                    $       345,966                     $         301,050                       $     44,916          
 Reserve for unfunded loan commitments                          96,571                                80,571                              16,000          
 Allowance for credit losses                            $       442,537                     $         381,621                       $     60,916          
 Provision for credit losses (for the quarter)          $       97,000                      $         120,000                       $     (23,000   )     
 Net charge-offs (for the quarter)                      $       36,084                      $         13,242                        $     22,842          
 Net charge-offs to average loans and leases                                                                                                              
 (for the quarter)                                              0.75        %                         0.27        %                                       
 Allowance for loan and lease losses to loans                                                                                                             
 and leases held for investment                                 1.82        %                         1.53        %                                       
 Allowance for credit losses to loans and leases                                                                                                          
 held for investment                                            2.33        %                         1.94        %                                       
 Allowance for credit losses to nonaccrual loans                                                                                                          
 and leases held for investment                                 516.9       %                         229.7       %                                       
                                                                                                                                                          
 (1) Nonaccrual loans include guaranteed amounts of $13.8 million at September 30, 2020 and $16.2 million                                                 
 at June 30, 2020.                                                                                                                                        

During the third quarter of 2020, classified loans and leases decreased by
$18.7 million driven mostly by payoffs, paydowns, and other reductions of
$55.0 million, charge-offs of $35.7 million, and the transfer to other real
estate owned of $12.6 million, offset partially by the migration of $66.0
million in loans and leases from special mention and downgrades from pass of
$19.4 million. Special mention loans and leases increased by $17.4 million
driven mainly by downgrades from pass of $167.3 million, offset partially by
upgrades to pass of $39.4 million, payoffs, paydowns, and other reductions of
$44.5 million, and the migration of $66.0 million in loans and leases to
classified.

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:

                             September 30, 2020                                     June 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                  $       45,120                  $      -               $     61,771               $     -              $     (16,651  )          $     -             
 Income producing and other                                                                                                                                                       
 residential                         2,008                          1,761                 2,207                      -                    (199     )                1,761         
 Total real estate mortgage          47,128                         1,761                 63,978                     -                    (16,850  )                1,761         
 Real estate construction and land:                                                                                                                                               
 Commercial                          324                            -                     337                        -                    (13      )                -             
 Residential                         -                              3,108                 -                          1,021                -                         2,087         
 Total real estate                                                                                                                                                                
 construction and land               324                            3,108                 337                        1,021                (13      )                2,087         
 Commercial:                                                                                                                                                                      
 Asset-based                         2,817                          -                     19,013                     3,697                (16,196  )                (3,697  )     
 Venture capital                     2,001                          2,319                 8,270                      1,924                (6,269   )                395           
 Other commercial                    32,941                         185                   73,995                     191                  (41,054  )                (6      )     
 Total commercial                    37,759                         2,504                 101,278                    5,812                (63,519  )                (3,308  )     
 Consumer                            404                            791                   520                        1,067                (116     )                (276    )     
 Total held for investment   $       85,615                  $      8,164           $     166,113              $     7,900          $     (80,498  )          $     264           

During the third quarter of 2020, nonaccrual loans and leases decreased by
$80.5 million due primarily to charge-offs of $35 million, payoffs of $29
million, and transfers to foreclosed assets of $12.6 million.

CAPITAL

The following table presents certain actual capital ratios and ratios
excluding PPP loans:

                                                                                                                                                            
                                                                                                    September 30, 2020                                      
                                                                                                                           Excluding          June 30,      
                                                                                                                           PPP                2020          
                                                                                                    Actual (1)             Loans (1)          Actual        
 PacWest Bancorp Consolidated:                                                                                                                              
 Tier 1 leverage capital ratio                                                                      8.66    %              9.07   %      (3)  8.93   %      
 Common equity tier 1 capital ratio                                                                 10.46   %              10.46  %           9.97   %      
 Total capital ratio                                                                                13.74   %              13.74  %           13.18  %      
 Tangible common equity ratio (2)                                                                   8.71    %              9.12   %      (3)  8.93   %      
                                                                                                                                                            
 (1) Capital information for September 30, 2020 is preliminary.                                                                                             
 (2) Non-GAAP measure.                                                                                                                                      
 (3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.                                                          

STOCK REPURCHASE PROGRAM

During the third quarter of 2020, there were no stock repurchases. On April
21, 2020, we announced that stock repurchases were suspended indefinitely.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $28
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 72 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                                                                                                                            
                                                                                                                                                                 
                                                          September 30,                           June 30,                            September 30,              
                                                          2020                                    2020                                2019                       
                                                                                                                                                                 
                                                          (Dollars in thousands, except per share data)                                                          
 ASSETS:                                                                                                                                                         
 Cash and due from banks                                  $        187,176                        $        174,059                    $      252,596             
 Interest-earning deposits in financial institutions               2,766,020                               1,747,077                         483,405             
 Total cash and cash equivalents                                   2,953,196                               1,921,136                         736,001             
                                                                                                                                                                 
 Securities available-for-sale, at estimated fair value   4,532,614                               3,851,141                                  3,817,348           
 Federal Home Loan Bank stock, at cost                    17,250                                  17,250                                     26,865              
 Total investment securities                              4,549,864                               3,868,391                                  3,844,213           
                                                                                                                                                                 
 Gross loans and leases held for investment                        19,101,680                              19,780,476                        18,796,011          
 Deferred fees, net                                                (75,480      )                          (85,845      )                    (60,468      )      
 Total loans and leases held for investment,                                                                                                                     
 net of deferred fees                                              19,026,200                              19,694,631                        18,735,543          
 Allowance for loan and lease losses                               (345,966     )                          (301,050     )                    (138,552     )      
 Total loans and leases held for investment, net                   18,680,234                              19,393,581                        18,596,991          
                                                                                                                                                                 
 Equipment leased to others under operating leases        286,425                                 295,191                                    295,854             
 Premises and equipment, net                              40,544                                  42,299                                     37,926              
 Foreclosed assets, net                                   13,747                                  1,449                                      1,366               
 Goodwill                                                 1,078,670                               1,078,670                                  2,548,670           
 Core deposit and customer relationship intangibles, net  26,813                                  30,564                                     42,547              
 Other assets                                                      797,223                                 734,457                           621,059             
 Total assets                                             $        28,426,716                     $        27,365,738                 $      26,724,627          
                                                                                                                                                                 
 LIABILITIES:                                                                                                                                                    
 Noninterest-bearing deposits                             $        9,346,744                      $        8,629,543                  $      7,441,185           
 Interest-bearing deposits                                         14,618,951                              14,299,036                        12,292,018          
 Total deposits                                                    23,965,695                              22,928,579                        19,733,203          
 Borrowings                                               60,000                                  60,000                                     1,253,031           
 Subordinated debentures                                  463,282                                 460,772                                    456,145             
 Accrued interest payable and other liabilities                    451,508                                 463,489                           362,140             
 Total liabilities                                        24,940,485                              23,912,840                                 21,804,519          
 STOCKHOLDERS' EQUITY (1)                                 3,486,231                               3,452,898                                  4,920,108           
 Total liabilities and stockholders’ equity               $        28,426,716                     $        27,365,738                 $      26,724,627          
                                                                                                                                                                 
 Book value per share                                     $        29.42                          $        29.17                      $      41.06               
 Tangible book value per share (2)                        $        20.09                          $        19.80                      $      19.43               
 Shares outstanding                                                118,489,927                             118,374,603                       119,831,192         
                                                                                                                                                                 
 (1) Includes net unrealized gain on securities                                                                                                                  
 available-for-sale, net                                  $        155,474                        $        145,038                    $      95,887              
 (2) Non-GAAP measure.                                                                                                                                           
                                                                                                                                                                 



 PACWEST BANCORP AND SUBSIDIARIES                                                                                                                                                    
 CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)                                                                                                                                 
                                                                                                                                                                                     
                                              Three Months Ended                                                                       Nine Months Ended                             
                                              September 30,                    June 30,                   September 30,                September 30,                                 
                                              2020                             2020                       2019                         2020                       2019               
                                                                                                                                                                                     
                                              (Dollars in thousands, except per share data)                                                                                          
 Interest income:                                                                                                                                                                    
 Loans and leases                             $       240,811                  $     247,851              $      275,978               $    750,940               $    834,443       
 Investment securities                                24,443                         26,038                      28,806                     77,927                     87,434        
 Deposits in financial institutions                   654                            186                         2,424                      2,448                      4,423         
 Total interest income                                265,908                        274,075                     307,208                    831,315                    926,300       
                                                                                                                                                                                     
 Interest expense:                                                                                                                                                                   
 Deposits                                             9,887                          13,075                      40,703                     51,209                     113,658       
 Borrowings                                           27                             1,319                       6,852                      8,124                      21,772        
 Subordinated debentures                              4,670                          5,402                       7,417                      16,632                     22,860        
 Total interest expense                               14,584                         19,796                      54,972                     75,965                     158,290       
                                                                                                                                                                                     
 Net interest income                                  251,324                        254,279                     252,236                    755,350                    768,010       
 Provision for credit losses                          97,000                         120,000                     7,000                      329,000                    19,000        
 Net interest income after                                                                                                                                                           
 provision for credit losses                          154,324                        134,279                     245,236                    426,350                    749,010       
                                                                                                                                                                                     
 Noninterest income:                                                                                                                                                                 
 Service charges on deposit accounts                  2,570                          2,004                       3,525                      7,232                      11,026        
 Other commissions and fees                           10,541                         10,111                      10,855                     30,373                     33,453        
 Leased equipment income                              9,900                          12,037                      9,615                      34,188                     28,079        
 Gain on sale of loans and leases                     35                             346                         765                        468                        1,091         
 Gain on sale of securities                           5,270                          7,715                       908                        13,167                     25,261        
 Other income                                         9,936                          6,645                       7,761                      20,782                     16,476        
 Total noninterest income                             38,252                         38,858                      33,429                     106,210                    115,386       
                                                                                                                                                                                     
 Noninterest expense:                                                                                                                                                                
 Compensation                                         75,131                         61,910                      71,424                     198,323                    211,225       
 Occupancy                                            14,771                         14,494                      14,089                     43,472                     42,866        
 Data processing                                      6,505                          7,102                       7,044                      20,061                     20,786        
 Other professional services                          4,713                          4,146                       4,400                      13,117                     13,542        
 Insurance and assessments                            3,939                          9,373                       4,100                      17,561                     12,236        
 Intangible asset amortization                        3,751                          3,882                       4,833                      11,581                     14,573        
 Leased equipment depreciation                        7,057                          7,102                       5,951                      21,364                     17,160        
 Foreclosed assets expense (income), net              335                            (146     )                  8                          255                        (109     )    
 Acquisition, integration and                                                                                                                                                        
 reorganization costs                                 -                              -                           -                          -                          618           
 Customer related expense                             4,762                          4,408                       3,539                      13,102                     9,887         
 Loan expense                                         3,499                          3,379                       3,628                      9,528                      9,964         
 Goodwill impairment                                  -                              -                           -                          1,470,000                  -             
 Other expense                                        8,939                          11,315                      7,793                      29,973                     25,775        
 Total noninterest expense                            133,402                        126,965                     126,809                    1,848,337                  378,523       
                                                                                                                                                                                     
 Earnings (loss) before income taxes                  59,174                         46,172                      151,856                    (1,315,777  )              485,873       
 Income tax expense                                   13,671                         12,968                      41,830                     38,627                     135,118       
 Net earnings (loss)                          $       45,503                   $     33,204               $      110,026               $    (1,354,404  )         $    350,755       
                                                                                                                                                                                     
 Basic and diluted earnings (loss) per share  $       0.38                     $     0.28                 $      0.92                  $    (11.60      )         $    2.91          
 Dividends declared and paid per share        $       0.25                     $     0.25                 $      0.60                  $    1.10                  $    1.80          
                                                                                                                                                                                     



 PACWEST BANCORP AND SUBSIDIARIES                                                                                                                                                                                
 NET EARNINGS (LOSS) PER SHARE CALCULATIONS                                                                                                                                                                      
                                                                                                                                                                                                                 
                                        Three Months Ended                                                                                                         Nine Months Ended                             
                                        September 30,                                   June 30,                                        September 30,              September 30,                                 
                                        2020                                            2020                                            2019                       2020                       2019               
                                                                                                                                                                                                                 
                                        (In thousands, except per share data)                                                                                                                                    
 Basic Earnings (Loss) Per Share:                                                                                                                                                                                
 Net earnings (loss)                    $           45,503                              $           33,204                              $      110,026             $    (1,354,404  )         $    350,755       
 Less: earnings allocated to unvested                                                                                                                                                                            
 restricted stock (1)                               (578        )                                   (362        )                              (1,369   )               (1,603      )              (3,725   )    
 Net earnings (loss) allocated to                                                                                                                                                                                
 common shares                          $           44,925                              $           32,842                              $      108,657             $    (1,356,007  )         $    347,030       
                                                                                                                                                                                                                 
 Weighted-average basic shares and                                                                                                                                                                               
 unvested restricted stock outstanding              118,438                                         118,192                                    119,831                  118,469                    120,691       
 Less: weighted-average unvested                                                                                                                                                                                 
 restricted stock outstanding                       (1,684      )                                   (1,606      )                              (1,622   )               (1,596      )              (1,480   )    
 Weighted-average basic shares                                                                                                                                                                                   
 outstanding                                        116,754                                         116,586                                    118,209                  116,873                    119,211       
                                                                                                                                                                                                                 
 Basic earnings (loss) per share        $           0.38                                $           0.28                                $      0.92                $    (11.60      )         $    2.91          
                                                                                                                                                                                                                 
 Diluted Earnings (Loss) Per Share:                                                                                                                                                                              
 Net earnings (loss) allocated to                                                                                                                                                                                
 common shares                          $           44,925                              $           32,842                              $      108,657             $    (1,356,007  )         $    347,030       
                                                                                                                                                                                                                 
 Weighted-average diluted shares                                                                                                                                                                                 
 outstanding                                        116,754                                         116,586                                    118,209                  116,873                    119,211       
                                                                                                                                                                                                                 
 Diluted earnings (loss) per share      $           0.38                                $           0.28                                $      0.92                $    (11.60      )         $    2.91          
                                                                                                                                                                                                                 
 (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                                                                                                                                                                                                                                                      
                            September 30, 2020                                                                         J une 30, 2020                                                                             September 30, 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)    $      19,195,737                $      241,547                       5.01   %             $      19,951,603                $      248,474                       5.01   %             $      18,539,281                $      276,309                       5.91   %    
 Investment securities (3)         4,107,915                        26,015                        2.52   %                    3,846,459                        27,430                        2.87   %                    3,809,243                        32,213                        3.36   %    
 Deposits in financial                                                                                                                                                                                                                                                                              
 institutions                      2,554,349                        654                           0.10   %                    733,142                          186                           0.10   %                    445,152                          2,424                         2.16   %    
 Total interest-earning                                                                                                                                                                                                                                                                             
 assets (1)                        25,858,001                       268,216                       4.13   %                    24,531,204                       276,090                       4.53   %                    22,793,676                       310,946                       5.41   %    
 Other assets                      2,077,192                                                                                  2,090,023                                                                                  3,612,927                                                                  
 Total assets               $      27,935,193                                                                          $      26,621,227                                                                          $      26,406,603                                                                 
                                                                                                                                                                                                                                                                                                    
 Liabilities and                                                                                                                                                                                                                                                                                    
 Stockholders' Equity:                                                                                                                                                                                                                                                                              
 Interest checking          $      4,904,614                        2,019                         0.16   %             $      4,001,750                        1,573                         0.16   %             $      3,598,698                        11,942                        1.32   %    
 Money market                      7,170,842                        3,081                         0.17   %                    6,114,354                        2,856                         0.19   %                    5,121,856                        14,807                        1.15   %    
 Savings                           565,395                          35                            0.02   %                    524,335                          33                            0.03   %                    515,649                          218                           0.17   %    
 Time                              1,876,072                        4,752                         1.01   %                    2,475,858                        8,613                         1.40   %                    2,795,573                        13,736                        1.95   %    
 Total interest-bearing                                                                                                                                                                                                                                                                             
 deposits                          14,516,923                       9,887                         0.27   %                    13,116,297                       13,075                        0.40   %                    12,031,776                       40,703                        1.34   %    
 Borrowings                        181,315                          27                            0.06   %                    871,110                          1,319                         0.61   %                    1,181,313                        6,852                         2.30   %    
 Subordinated debentures           462,375                          4,670                         4.02   %                    459,466                          5,402                         4.73   %                    456,011                          7,417                         6.45   %    
 Total interest-bearing                                                                                                                                                                                                                                                                             
 liabilities                       15,160,613                       14,584                        0.38   %                    14,446,873                       19,796                        0.55   %                    13,669,100                       54,972                        1.60   %    
 Noninterest-bearing                                                                                                                                                                                                                                                                                
 demand deposits                   8,812,391                                                                                  8,292,151                                                                                  7,487,555                                                                  
 Other liabilities                 464,320                                                                                    435,353                                                                                    359,202                                                                    
 Total liabilities                 24,437,324                                                                                 23,174,377                                                                                 21,515,857                                                                 
 Stockholders' equity              3,497,869                                                                                  3,446,850                                                                                  4,890,746                                                                  
 Total liabilities and                                                                                                                                                                                                                                                                              
 stockholders' equity       $      27,935,193                                                                          $      26,621,227                                                                          $      26,406,603                                                                 
 Net interest income (1)                                     $      253,632                                                                             $      256,294                                                                             $      255,974                                   
 Net interest spread (1)                                                                          3.75   %                                                                                   3.98   %                                                                                   3.81   %    
 Net interest margin (1)                                                                          3.90   %                                                                                   4.20   %                                                                                   4.46   %    
                                                                                                                                                                                                                                                                                                    
 Total deposits (4)         $      23,329,314                $      9,887                         0.17   %             $      21,408,448                $      13,075                        0.25   %             $      19,519,331                $      40,703                        0.83   %    
                                                                                                                                                                                                                                                                                                    
 (1) Tax equivalent.                                                                                                                                                                                                                                                                                
 (2) Includes discount accretion on acquired loans of $2.0 million, $2.5 million, and $2.6 million for the three months ended September 30, 2020,                                                                                                                                                   
 June 30, 2020, and September 30, 2019, respectively.                                                                                                                                                                                                                                               
 (3) Includes tax-equivalent adjustments of $1.6 million, $1.4 million, and $3.4 million for the three months ended September 30, 2020,                                                                                                                                                             
 June 30, 2020, and September 30, 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                                                                                                                                                                                 
                                                                                                                                                                                                            
                                             September 30,                        June 30,                         March 31,                     December 31,                    September 30,              
                                             2020                                 2020                             2020                          2019                            2019                       
                                                                                                                                                                                                            
                                                     (Dollars in thousands, except per share data)                                                                                                          
 ASSETS:                                                                                                                                                                                                    
 Cash and due from banks                     $       187,176                      $       174,059                  $     172,570                 $      172,585                  $      252,596             
 Interest-earning deposits in financial                                                                                                                                                                     
 institutions                                        2,766,020                            1,747,077                      439,690                        465,039                         483,405             
 Total cash and cash equivalents                     2,953,196                            1,921,136                      612,260                        637,624                         736,001             
                                                                                                                                                                                                            
 Securities available-for-sale                       4,532,614                            3,851,141                      3,757,663                      3,797,187                       3,817,348           
 Federal Home Loan Bank stock                        17,250                               17,250                         54,244                         40,924                          26,865              
 Total investment securities                         4,549,864                            3,868,391                      3,811,907                      3,838,111                       3,844,213           
                                                                                                                                                                                                            
 Gross loans and leases held for investment          19,101,680                           19,780,476                     19,806,394                     18,910,740                      18,796,011          
 Deferred fees, net                                  (75,480      )                       (85,845      )                 (61,089      )                 (63,868      )                  (60,468      )      
 Total loans and leases held for                                                                                                                                                                            
 investment, net of deferred fees                    19,026,200                           19,694,631                     19,745,305                     18,846,872                      18,735,543          
 Allowance for loan and lease losses                 (345,966     )                       (301,050     )                 (221,292     )                 (138,785     )                  (138,552     )      
 Total loans and leases held for                                                                                                                                                                            
 investment, net                                     18,680,234                           19,393,581                     19,524,013                     18,708,087                      18,596,991          
                                                                                                                                                                                                            
 Equipment leased to others under                                                                                                                                                                           
 operating leases                                    286,425                              295,191                        306,530                        324,084                         295,854             
 Premises and equipment, net                         40,544                               42,299                         39,799                         38,585                          37,926              
 Foreclosed assets, net                              13,747                               1,449                          1,701                          440                             1,366               
 Goodwill                                            1,078,670                            1,078,670                      1,078,670                      2,548,670                       2,548,670           
 Core deposit and customer relationship                                                                                                                                                                     
 intangibles, net                                    26,813                               30,564                         34,446                         38,394                          42,547              
 Other assets                                        797,223                              734,457                        733,941                        636,811                         621,059             
 Total assets                                $       28,426,716                   $       27,365,738               $     26,143,267              $      26,770,806               $      26,724,627          
                                                                                                                                                                                                            
 LIABILITIES:                                                                                                                                                                                               
 Noninterest-bearing deposits                        9,346,744                            8,629,543                      7,510,218                      7,243,298                       7,441,185           
 Interest-bearing deposits                           14,618,951                           14,299,036                     12,065,619                     11,989,738                      12,292,018          
 Total deposits                                      23,965,695                           22,928,579                     19,575,837                     19,233,036                      19,733,203          
 Borrowings                                          60,000                               60,000                         2,295,000                      1,759,008                       1,253,031           
 Subordinated debentures                             463,282                              460,772                        458,994                        458,209                         456,145             
 Accrued interest payable and other                                                                                                                                                                         
 liabilities                                         451,508                              463,489                        423,047                        365,856                         362,140             
 Total liabilities                                   24,940,485                           23,912,840                     22,752,878                     21,816,109                      21,804,519          
 STOCKHOLDERS' EQUITY (1)                            3,486,231                            3,452,898                      3,390,389                      4,954,697                       4,920,108           
 Total liabilities and stockholders’                                                                                                                                                                        
 equity                                      $       28,426,716                   $       27,365,738               $     26,143,267              $      26,770,806               $      26,724,627          
                                                                                                                                                                                                            
 Book value per share                        $       29.42                        $       29.17                    $     28.75                   $      41.36                    $      41.06               
 Tangible book value per share (2)           $       20.09                        $       19.80                    $     19.31                   $      19.77                    $      19.43               
 Shares outstanding                                  118,489,927                          118,374,603                    117,916,789                    119,781,605                     119,831,192         
                                                                                                                                                                                                            
 (1) Includes net unrealized gain on                                                                                                                                                                        
 securities available-for-sale, net          $       155,474                      $       145,038                  $     90,916                  $      78,658                   $      95,887              
 (2) Non-GAAP measure.                                                                                                                                                                                      
                                                                                                                                                                                                            



 PACWEST BANCORP AND SUBSIDIARIES                                                                                                                                                         
 FIVE QUARTER STATEMENT OF EARNINGS (LOSS)                                                                                                                                                
                                                                                                                                                                                          
                                              Three Months Ended                                                                                                                          
                                              September 30,                    June 30,                   March 31,                    December 31,                September 30,          
                                              2020                             2020                       2020                         2019                        2019                   
                                                                                                                                                                                          
                                              (Dollars in thousands, except per share data)                                                                                               
 Interest income:                                                                                                                                                                         
 Loans and leases                             $       240,811                  $     247,851              $     262,278                $      263,402              $      275,978         
 Investment securities                                24,443                         26,038                     27,446                        28,135                      28,806          
 Deposits in financial institutions                   654                            186                        1,608                         2,056                       2,424           
 Total interest income                                265,908                        274,075                    291,332                       293,593                     307,208         
                                                                                                                                                                                          
 Interest expense:                                                                                                                                                                        
 Deposits                                             9,887                          13,075                     28,247                        34,802                      40,703          
 Borrowings                                           27                             1,319                      6,778                         5,189                       6,852           
 Subordinated debentures                              4,670                          5,402                      6,560                         6,983                       7,417           
 Total interest expense                               14,584                         19,796                     41,585                        46,974                      54,972          
                                                                                                                                                                                          
 Net interest income                                  251,324                        254,279                    249,747                       246,619                     252,236         
 Provision for credit losses                          97,000                         120,000                    112,000                       3,000                       7,000           
 Net interest income after                                                                                                                                                                
 provision for credit losses                          154,324                        134,279                    137,747                       243,619                     245,236         
                                                                                                                                                                                          
 Noninterest income:                                                                                                                                                                      
 Service charges on deposit accounts                  2,570                          2,004                      2,658                         3,611                       3,525           
 Other commissions and fees                           10,541                         10,111                     9,721                         10,170                      10,855          
 Leased equipment income                              9,900                          12,037                     12,251                        10,648                      9,615           
 Gain on sale of loans and leases                     35                             346                        87                            23                          765             
 Gain on sale of securities                           5,270                          7,715                      182                           184                         908             
 Other income                                         9,936                          6,645                      4,201                         2,540                       7,761           
 Total noninterest income                             38,252                         38,858                     29,100                        27,176                      33,429          
                                                                                                                                                                                          
 Noninterest expense:                                                                                                                                                                     
 Compensation                                         75,131                         61,910                     61,282                        74,637                      71,424          
 Occupancy                                            14,771                         14,494                     14,207                        14,541                      14,089          
 Data processing                                      6,505                          7,102                      6,454                         6,770                       7,044           
 Other professional services                          4,713                          4,146                      4,258                         4,261                       4,400           
 Insurance and assessments                            3,939                          9,373                      4,249                         4,168                       4,100           
 Intangible asset amortization                        3,751                          3,882                      3,948                         4,153                       4,833           
 Leased equipment depreciation                        7,057                          7,102                      7,205                         6,856                       5,951           
 Foreclosed assets expense (income), net              335                            (146     )                 66                            (3,446   )                  8               
 Acquisition, integration and                                                                                                                                                             
 reorganization costs                                 -                              -                          -                             (269     )                  -               
 Customer related expense                             4,762                          4,408                      3,932                         3,952                       3,539           
 Loan expense                                         3,499                          3,379                      2,650                         2,967                       3,628           
 Goodwill impairment                                  -                              -                          1,470,000                     -                           -               
 Other expense                                        8,939                          11,315                     9,719                         5,138                       7,793           
 Total noninterest expense                            133,402                        126,965                    1,587,970                     123,728                     126,809         
                                                                                                                                                                                          
 Earnings (loss) before income taxes                  59,174                         46,172                     (1,421,123  )                 147,067                     151,856         
 Income tax expense                                   13,671                         12,968                     11,988                        29,186                      41,830          
 Net earnings (loss)                          $       45,503                   $     33,204               $     (1,433,111  )          $      117,881              $      110,026         
                                                                                                                                                                                          
 Basic and diluted earnings (loss) per share  $       0.38                     $     0.28                 $     (12.23      )          $      0.98                 $      0.92            
 Dividends declared and paid per share        $       0.25                     $     0.25                 $     0.60                   $      0.60                 $      0.60            
                                                                                                                                                                                          



 PACWEST BANCORP AND SUBSIDIARIES                                                                                                                                                                   
 FIVE QUARTER SELECTED FINANCIAL DATA                                                                                                                                                               
                                                                                                                                                                                                    
                                           At or For the Three Months Ended                                                                                                                         
                                           September 30,                       June 30,                         March 31,                   December 31,                  September 30,             
                                           2020                                2020                             2020                        2019                          2019                      
                                                                                                                                                                                                    
                                           (Dollars in thousands)                                                                                                                                   
 Performance Ratios:                                                                                                                                                                                
 Return on average assets (1)                      0.65        %                      0.50        %                   (21.27      )%               1.77        %                 1.65        %      
 Pre-provision, pre-goodwill impairment,                                                                                                                                                            
 pre-tax net revenue ("PPNR")                                                                                                                                                                       
 return on average assets (1)(2)                   2.22        %                      2.51        %                   2.39        %                2.26        %                 2.39        %      
 Return on average equity (1)                      5.18        %                      3.87        %                   (116.28     )%               9.49        %                 8.93        %      
 Return on average tangible equity (1)(2)          8.20        %                      6.39        %                   6.88        %                20.68       %                 19.84       %      
 Efficiency ratio                                  45.1        %                      42.9        %                   40.6        %                44.8        %                 42.3        %      
 Noninterest expense as a percentage                                                                                                                                                                
 of average assets (1)                             1.90        %                      1.92        %                   23.57       %                1.86        %                 1.91        %      
                                                                                                                                                                                                    
 Average Yields/Costs (1):                                                                                                                                                                          
 Yield on:                                                                                                                                                                                          
 Average loans and leases (3)                      5.01        %                      5.01        %                   5.54        %                5.67        %                 5.91        %      
 Average interest-earning assets (3)               4.13        %                      4.53        %                   5.02        %                5.14        %                 5.41        %      
 Cost of:                                                                                                                                                                                           
 Average interest-bearing deposits                 0.27        %                      0.40        %                   0.95        %                1.14        %                 1.34        %      
 Average total deposits                            0.17        %                      0.25        %                   0.59        %                0.71        %                 0.83        %      
 Average interest-bearing liabilities              0.38        %                      0.55        %                   1.16        %                1.36        %                 1.60        %      
 Net interest spread (3)                           3.75        %                      3.98        %                   3.86        %                3.78        %                 3.81        %      
 Net interest margin (3)                           3.90        %                      4.20        %                   4.31        %                4.33        %                 4.46        %      
                                                                                                                                                                                                    
 Average Balances:                                                                                                                                                                                  
 Assets:                                                                                                                                                                                            
 Loans and leases, net of deferred fees    $       19,195,737                  $      19,951,603                $     19,065,035            $      18,470,583             $      18,539,281         
 Interest-earning assets                           25,858,001                         24,531,204                      23,455,636                   22,779,867                    22,793,676         
 Total assets                                      27,935,193                         26,621,227                      27,099,040                   26,380,739                    26,406,603         
 Liabilities:                                                                                                                                                                                       
 Noninterest-bearing deposits                      8,812,391                          8,292,151                       7,357,717                    7,338,888                     7,487,555          
 Interest-bearing deposits                         14,516,923                         13,116,297                      11,896,780                   12,102,902                    12,031,776         
 Total deposits                                    23,329,314                         21,408,448                      19,254,497                   19,441,790                    19,519,331         
 Borrowings                                        181,315                            871,110                         2,026,749                    1,179,220                     1,181,313          
 Subordinated debentures                           462,375                            459,466                         458,399                      456,997                       456,011            
 Interest-bearing liabilities                      15,160,613                         14,446,873                      14,381,928                   13,739,119                    13,669,100         
 Stockholders' equity                              3,497,869                          3,446,850                       4,956,778                    4,930,182                     4,890,746          
                                                                                                                                                                                                    
 (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                                                                                                                                   
                                         September 30,                          June 30,                            March 31,                       December 31,                  September 30,             
                                         2020                                   2020                                2020                            2019                          2019                      
                                                                                                                                                                                                            
                                         (Dollars in thousands)                                                                                                                                             
 Credit Quality Ratios:                                                                                                                                                                                     
 Nonaccrual loans and leases held for                                                                                                                                                                       
 investment to loans and leases                                                                                                                                                                             
 held for investment                              0.45        %                         0.84        %                       0.48        %                  0.49        %                 0.53        %      
 Nonperforming assets to loans and                                                                                                                                                                          
 leases held for investment and                                                                                                                                                                             
 foreclosed assets                                0.52        %                         0.85        %                       0.49        %                  0.49        %                 0.54        %      
 Classified loans and leases held for                                                                                                                                                                       
 investment to loans and leases                                                                                                                                                                             
 held for investment                              1.44        %                         1.49        %                       0.75        %                  0.93        %                 1.01        %      
 Provision for credit losses (for the                                                                                                                                                                       
 quarter) to average loans and leases                                                                                                                                                                       
 held for investment (annualized)                 2.01        %                         2.42        %                       2.36        %                  0.06        %                 0.15        %      
 Net charge-offs (for the quarter) to                                                                                                                                                                       
 average loans and leases held                                                                                                                                                                              
 for investment (annualized)                      0.75        %                         0.27        %                       0.40        %                  0.02        %                 0.10        %      
 Trailing 12 months net charge-offs                                                                                                                                                                         
 to average loans and leases                                                                                                                                                                                
 held for investment                              0.36        %                         0.20        %                       0.19        %                  0.09        %                 0.20        %      
 Allowance for loan and lease losses to                                                                                                                                                                     
 loans and leases held for investment             1.82        %                         1.53        %                       1.12        %                  0.74        %                 0.74        %      
 Allowance for credit losses to loans                                                                                                                                                                       
 and leases held for investment                   2.33        %                         1.94        %                       1.39        %                  0.93        %                 0.92        %      
 Allowance for credit losses to                                                                                                                                                                             
 nonaccrual loans and leases                                                                                                                                                                                
 held for investment                              516.9       %                         229.7       %                       287.5       %                  189.1       %                 174.0       %      
                                                                                                                                                                                                            
 PacWest Bancorp Consolidated:                                                                                                                                                                              
 Tier 1 leverage capital ratio (1)                8.66        %                         8.93        %                       8.63        %                  9.74        %                 9.50        %      
 Common equity tier 1 capital ratio (1)           10.46       %                         9.97        %                       9.22        %                  9.78        %                 9.55        %      
 Tier 1 capital ratio (1)                         10.46       %                         9.97        %                       9.22        %                  9.78        %                 9.55        %      
 Total capital ratio (1)                          13.74       %                         13.18       %                       12.07       %                  12.41       %                 12.16       %      
 Risk-weighted assets (1)                $        22,109,592                    $       22,781,836                  $       24,214,209              $      23,582,495             $      23,579,614         
                                                                                                                                                                                                            
 Equity to assets ratio                           12.26       %                         12.62       %                       12.97       %                  18.51       %                 18.41       %      
 Tangible common equity ratio (2)                 8.71        %                         8.93        %                       9.10        %                  9.79        %                 9.65        %      
 Book value per share                    $        29.42                         $       29.17                       $       28.75                   $      41.36                  $      41.06              
 Tangible book value per share (2)       $        20.09                         $       19.80                       $       19.31                   $      19.77                  $      19.43              
                                                                                                                                                                                                            
 Pacific Western Bank:                                                                                                                                                                                      
 Tier 1 leverage capital ratio (1)                9.70        %                         10.03       %                       9.71        %                  10.95       %                 10.72       %      
 Common equity tier 1 capital ratio (1)           11.71       %                         11.18       %                       10.38       %                  11.00       %                 10.79       %      
 Tier 1 capital ratio (1)                         11.71       %                         11.18       %                       10.38       %                  11.00       %                 10.79       %      
 Total capital ratio (1)                          12.97       %                         12.44       %                       11.39       %                  11.74       %                 11.52       %      
                                                                                                                                                                                                            
 (1) Capital information for September 30, 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                                                                                          Nine Months Ended                                
 PPNR and PPNR Return               September 30,                          June 30,                               September 30,                 September 30,                                    
 on Average Assets                  2020                                   2020                                   2019                          2020                       2019                  
                                                                                                                                                                                                 
                                    (Dollars in thousands)                                                                                                                                       
 Net earnings (loss)                $        45,503                        $        33,204                        $      110,026                $    (1,354,404  )         $    350,755          
 Add: Provision for credit losses            97,000                                 120,000                              7,000                       329,000                    19,000           
 Add: Goodwill impairment                    -                                      -                                    -                           1,470,000                  -                
 Add: Income tax expense                     13,671                                 12,968                               41,830                      38,627                     135,118          
 Pre-provision, pre-goodwill impairment,                                                                                                                                                         
 pre-tax net revenue ("PPNR")       $        156,174                       $        166,172                       $      158,856                $    483,223               $    504,873          
                                                                                                                                                                                                 
 Average assets                     $        27,935,193                    $        26,621,227                    $      26,406,603             $    27,221,102            $    26,012,890       
                                                                                                                                                                                                 
 Return on average assets (1)                0.65        %                          0.50        %                        1.65        %               (6.65       )%             1.80        %    
 PPNR return on average assets (2)           2.22        %                          2.51        %                        2.39        %               2.37        %              2.59        %    
                                                                                                                                                                                                 
 (1) Annualized net earnings (loss) divided by average assets.                                                                                                                                   
 (2) Annualized PPNR divided by average assets.                                                                                                                                                  
                                                                                                                                                                                                 



                                        Three Months Ended                                                                                                   Nine Months Ended                               
                                        September 30,                               June 30,                                    September 30,                September 30,                                   
 Return on Average Tangible Equity      2020                                        2020                                        2019                         2020                       2019                 
                                                                                                                                                                                                             
                                        (Dollars in thousands)                                                                                                                                               
 Net earnings (loss)                    $          45,503                           $          33,204                           $      110,026               $    (1,354,404  )         $    350,755         
 Add: Intangible asset amortization                3,751                                       3,882                                   4,833                      11,581                     14,573          
 Add: Goodwill impairment                          -                                           -                                       -                          1,470,000                  -               
 Adjusted net earnings                  $          49,254                           $          37,086                           $      114,859               $    127,177               $    365,328         
                                                                                                                                                                                                             
 Average stockholders' equity           $          3,497,869                        $          3,446,850                        $      4,890,746             $    3,965,453             $    4,842,140       
 Less: Average intangible assets                   1,107,548                                   1,111,302                               2,593,925                  1,594,231                  2,598,806       
 Average tangible common equity         $          2,390,321                        $          2,335,548                        $      2,296,821             $    2,371,222             $    2,243,334       
                                                                                                                                                                                                             
 Return on average equity (1)                      5.18       %                                3.87       %                            8.93       %               (45.62      )%             9.68       %    
 Return on average tangible equity (2)             8.20       %                                6.39       %                            19.84      %               7.16        %              21.77      %    
                                                                                                                                                                                                             
 (1) Annualized net earnings divided by average stockholders' equity.                                                                                                                                        
 (2) Annualized adjusted net earnings divided by average tangible common equity.                                                                                                                             
                                                                                                                                                                                                             



 Tangible Common Equity Ratio/      September 30,                           June 30,                                March 31,                       December 31,                    September 30,              
 Tangible Book Value Per Share      2020                                    2020                                    2020                            2019                            2019                       
                                                                                                                                                                                                               
                                    (Dollars in thousands, except per share data)                                                                                                                              
 Stockholders' equity               $        3,486,231                      $        3,452,898                      $      3,390,389                $      4,954,697                $      4,920,108           
 Less: Intangible assets                     1,105,483                               1,109,234                             1,113,116                       2,587,064                       2,591,217           
 Tangible common equity             $        2,380,748                      $        2,343,664                      $      2,277,273                $      2,367,633                $      2,328,891           
                                                                                                                                                                                                               
 Total assets                       $        28,426,716                     $        27,365,738                     $      26,143,267               $      26,770,806               $      26,724,627          
 Less: Intangible assets                     1,105,483                               1,109,234                             1,113,116                       2,587,064                       2,591,217           
 Tangible assets                    $        27,321,233                     $        26,256,504                     $      25,030,151               $      24,183,742               $      24,133,410          
                                                                                                                                                                                                               
 Equity to assets ratio                      12.26        %                          12.62        %                        12.97        %                  18.51        %                  18.41        %      
 Tangible common equity ratio (1)            8.71         %                          8.93         %                        9.10         %                  9.79         %                  9.65         %      
                                                                                                                                                                                                               
 Book value per share               $        29.42                          $        29.17                          $      28.75                    $      41.36                    $      41.06               
 Tangible book value per share (2)  $        20.09                          $        19.80                          $      19.31                    $      19.77                    $      19.43               
 Shares outstanding                          118,489,927                             118,374,603                           117,916,789                     119,781,605                     119,831,192         
                                                                                                                                                                                                               
 (1) Tangible common equity divided by tangible assets.                                                                                                                                                        
 (2) Tangible common equity divided by shares outstanding.                                                                                                                                                     
                                                                                                                                                                                                               



 Contact:  Matthew P. Wagner                   Patrick J. Rusnak                     
           President and CEO                   Executive Vice President and CFO      
 Phone:    303-802-8900                        714-989-4705                          
                                                                                     
 Contact:  William J. Black                                                          
           Executive Vice President                                                  
           Strategy and Corporate Development                                        
 Phone:    919-597-7466                                                              



GlobeNewswire, Inc. 2020
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