PACW - PacWest Bancorp News Story
$39.97 0.5 1.3%
Last Trade - 09/04/21
| 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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