Attached files
| file | filename |
|---|---|
| 8-K - 8-K - PACWEST BANCORP | a15-21120_18k.htm |
Exhibit 99.1
PRESS RELEASE
PacWest Bancorp
(NASDAQ: PACW)
|
Contact: |
Matthew P. Wagner |
Patrick J. Rusnak |
|
|
President and CEO |
Executive Vice President and CFO |
|
Phone: |
310-728-1020 |
714-989-4705 |
|
|
|
|
|
FOR IMMEDIATE RELEASE |
October 15, 2015 |
PACWEST BANCORP ANNOUNCES RESULTS
FOR THE THIRD QUARTER OF 2015
Highlights
· Net Earnings of $69.6 Million, or $0.68 Per Diluted Share; Adjusted Net Earnings of $65.2 Million, or $0.63 Per Diluted Share
· New Loan and Lease Production of $1.1 Billion; Annualized Growth Rate of 14%
· Core Deposits Increased $230.6 Million in the Quarter and Represent 56% of Total Deposits
· Core Tax Equivalent Net Interest Margin of 5.19%
· Square 1 Merger Closed October 6, 2015
Los Angeles, California . . . PacWest Bancorp (Nasdaq: PACW) (“PacWest”) today announced net earnings for the third quarter of 2015 of $69.6 million, or $0.68 per diluted share, compared to net earnings for the second quarter of 2015 of $85.1 million, or $0.83 per diluted share. When certain income and expense items described below are excluded, adjusted net earnings were $65.2 million, or $0.63 per diluted share, for the third quarter of 2015 compared to $73.1 million, or $0.71 per diluted share, for the second quarter of 2015. The decrease in adjusted net earnings is largely the result of higher foreclosed assets expense, lower adjusted noninterest income, and a higher provision for credit losses as compared to the second quarter.
Matt Wagner, President and CEO, commented, “As expected, the loan and lease production and growth rebounded strongly in the third quarter and will have a positive impact on revenues in the fourth quarter. We remain confident with our outlook for upper single-digits annual growth for the near term, bearing in mind there may be some volatility between quarters in the growth rate due to payoff activity.”
“The decline in our adjusted earnings on a linked-quarter basis was mostly due to a few discrete items, including an increase in foreclosed assets expense and a decline in equity investment income. Even with the noise from these items, our profitability levels remained solid with an adjusted ROA and ROTE for the third quarter of 1.55% and 14.1%.”
Mr. Wagner continued, “Our Non-PCI credit metrics improved during the third quarter, with meaningful reductions in the level of classified and nonperforming assets. In addition, our credit exposure to the oil and gas services industry also improved, with reductions in both outstandings and nonaccrual balances of 14% and 25%, respectively.”
Mr. Wagner commented on the Square 1 merger stating, “With the completion of the Square 1 merger, PacWest has a substantially improved core deposit base and a proven platform for generating profitable loan, deposit and noninterest income growth in the venture capital banking space. We welcome our new director, Mr. Paul Burke, and all of the Square 1 clients and employees.”
Patrick Rusnak, Executive Vice President and CFO stated, “Third quarter core deposit growth was very good, totaling over $230 million of which about one third was generated by the CapitalSource Division. While we have continued to make progress towards our goal of remixing the Bank’s deposit base, the Square 1 merger will significantly accelerate that process.”
Mr. Rusnak continued, “Our core tax equivalent net interest margin remains very strong at 5.19%. We continue to control operating expenses as shown by the adjusted efficiency ratio of 40.6% in the third quarter. Our focus for the remainder of 2015 will be loan and lease growth, core deposit growth, expense control and the successful integration of Square 1.”
FINANCIAL HIGHLIGHTS
|
|
|
At or For the Three Months Ended |
|
At or For the Nine Months Ended |
| ||||||||||||||
|
|
|
September 30, |
|
June 30, |
|
|
|
September 30, |
|
|
| ||||||||
|
|
|
2015 |
|
2015 |
|
Change |
|
2015 |
|
2014 |
|
Change |
| ||||||
|
|
|
(Dollars in thousands, except per share data) |
| ||||||||||||||||
|
Financial Highlights: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net Earnings |
|
$ |
69,616 |
|
$ |
85,083 |
|
$ |
(15,467 |
) |
$ |
227,778 |
|
$ |
97,906 |
|
$ |
129,872 |
|
|
Diluted Earnings Per Share |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
(0.15 |
) |
$ |
2.21 |
|
$ |
1.18 |
|
$ |
1.03 |
|
|
Return on Average Assets (1) |
|
1.65 |
% |
2.07 |
% |
(0.42 |
) |
1.85 |
% |
1.05 |
% |
0.80 |
| ||||||
|
Return on Average Tangible Equity (1) (2) |
|
15.09 |
% |
18.90 |
% |
(3.81 |
) |
16.82 |
% |
10.01 |
% |
6.81 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Adjusted Net Earnings (2) |
|
$ |
65,167 |
|
$ |
73,088 |
|
$ |
(7,921 |
) |
$ |
203,821 |
|
$ |
151,683 |
|
$ |
52,138 |
|
|
Adjusted Diluted Earnings Per Share (2) |
|
$ |
0.63 |
|
$ |
0.71 |
|
$ |
(0.08 |
) |
$ |
1.98 |
|
$ |
1.82 |
|
$ |
0.16 |
|
|
Adjusted Return on Average Assets (1) (2) |
|
1.55 |
% |
1.78 |
% |
(0.23 |
) |
1.65 |
% |
1.63 |
% |
0.02 |
| ||||||
|
Adjusted Return on Average Tangible Equity (1) (2) |
|
14.12 |
% |
16.24 |
% |
(2.12 |
) |
15.05 |
% |
15.51 |
% |
(0.46 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net Interest Margin (tax equivalent) |
|
5.46 |
% |
5.89 |
% |
(0.43 |
) |
5.76 |
% |
6.05 |
% |
(0.29 |
) | ||||||
|
Core Net Interest Margin (tax equivalent) (2) |
|
5.19 |
% |
5.33 |
% |
(0.14 |
) |
5.31 |
% |
5.70 |
% |
(0.39 |
) | ||||||
|
Efficiency Ratio |
|
39.6 |
% |
38.0 |
% |
1.6 |
|
38.1 |
% |
42.9 |
% |
(4.8 |
) | ||||||
|
Adjusted Efficiency Ratio (2) |
|
40.6 |
% |
40.5 |
% |
0.1 |
|
40.1 |
% |
42.9 |
% |
(2.8 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Total Assets |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
117,085 |
|
$ |
16,814,105 |
|
$ |
15,938,150 |
|
$ |
875,955 |
|
|
Loans and Leases, Net of Deferred Fees |
|
$ |
12,452,205 |
|
$ |
12,034,189 |
|
$ |
418,016 |
|
$ |
12,452,205 |
|
$ |
11,574,885 |
|
$ |
877,320 |
|
|
Total Deposits |
|
$ |
12,115,763 |
|
$ |
12,581,816 |
|
$ |
(466,053 |
) |
$ |
12,115,763 |
|
$ |
11,523,437 |
|
$ |
592,326 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Noninterest-Bearing Deposits as Percentage of Total Deposits |
|
29 |
% |
26 |
% |
3 |
|
29 |
% |
25 |
% |
4 |
| ||||||
|
Core Deposits as Percentage of Total Deposits |
|
56 |
% |
52 |
% |
4 |
|
56 |
% |
52 |
% |
4 |
| ||||||
|
Tangible Common Equity Ratio (2) |
|
12.21 |
% |
12.10 |
% |
0.11 |
|
12.21 |
% |
12.24 |
% |
(0.03 |
) | ||||||
|
Tangible Book Value Per Share (2) |
|
$ |
17.86 |
|
$ |
17.55 |
|
$ |
0.31 |
|
$ |
17.86 |
|
$ |
16.86 |
|
$ |
1.00 |
|
(1) Annualized.
(2) Non-GAAP measure.
ADJUSTED NET EARNINGS
In evaluating its earnings, the Company removes certain items to arrive at adjusted net earnings and adjusted diluted earnings per share, as detailed below:
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||||||
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| ||||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net earnings |
|
$ |
69,616 |
|
$ |
85,083 |
|
$ |
62,271 |
|
$ |
227,778 |
|
$ |
97,906 |
| |
|
Less: |
Tax benefit on discontinued operations |
|
— |
|
— |
|
(3 |
) |
— |
|
(1,067 |
) | |||||
|
Add: |
Tax expense on continuing operations |
|
39,777 |
|
45,287 |
|
42,911 |
|
131,137 |
|
73,744 |
| |||||
|
Pre-tax earnings |
|
109,393 |
|
130,370 |
|
105,179 |
|
358,915 |
|
170,583 |
| ||||||
|
Add: |
Acquisition, integration, and reorganization costs |
|
747 |
|
900 |
|
5,193 |
|
3,647 |
|
93,635 |
| |||||
|
Less: |
FDIC loss sharing expense, net |
|
(4,449 |
) |
(5,107 |
) |
(7,415 |
) |
(13,955 |
) |
(27,370 |
) | |||||
|
|
Gain on sale of loans and leases |
|
27 |
|
163 |
|
973 |
|
190 |
|
594 |
| |||||
|
|
Gain (loss) on securities |
|
655 |
|
(186 |
) |
— |
|
3,744 |
|
4,841 |
| |||||
|
|
Covered OREO (expense) income, net |
|
(20 |
) |
12 |
|
(452 |
) |
11 |
|
1,348 |
| |||||
|
|
Gain on sale of owned office building |
|
— |
|
— |
|
— |
|
— |
|
1,570 |
| |||||
|
Adjusted pre-tax earnings before accelerated discount accretion |
|
113,927 |
|
136,388 |
|
117,266 |
|
372,572 |
|
283,235 |
| ||||||
|
Less: |
Accelerated discount accretion from early payoffs of acquired loans |
|
9,659 |
|
19,447 |
|
4,501 |
|
46,458 |
|
27,446 |
| |||||
|
Adjusted pre-tax earnings |
|
104,268 |
|
116,941 |
|
112,765 |
|
326,114 |
|
255,789 |
| ||||||
|
|
Tax expense (1) |
|
(39,101 |
) |
(43,853 |
) |
(45,895 |
) |
(122,293 |
) |
(104,106 |
) | |||||
|
Adjusted net earnings |
|
$ |
65,167 |
|
$ |
73,088 |
|
$ |
66,870 |
|
$ |
203,821 |
|
$ |
151,683 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Adjusted diluted earnings per share |
|
$ |
0.63 |
|
$ |
0.71 |
|
$ |
0.65 |
|
$ |
1.98 |
|
$ |
1.82 |
| |
|
Adjusted return on average assets |
|
1.55 |
% |
1.78 |
% |
1.69 |
% |
1.65 |
% |
1.63 |
% | ||||||
(1) Full-year expected effective rate of 37.5% used for 2015 periods and actual effective rate of 40.7% used for 2014 periods.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income decreased $10.1 million to $192.5 million for the third quarter of 2015 compared to $202.6 million for the second quarter of 2015 due to lower discount accretion on acquired loans and lower FHLB dividends, offset by one more day in the third quarter. The loan and lease yield for the third quarter of 2015 was 6.34% compared to 6.75% for the second quarter of 2015. The decrease in the loan and lease yield was due to lower discount accretion on acquired loans and the yield on new originations being lower than the current portfolio yield. Discount accretion on acquired loans was $17.1 million in the third quarter of 2015 (57 basis points on the loan and lease yield) compared to $28.0 million in the second quarter of 2015 (92 basis points on the loan and lease yield). The decrease in discount accretion was due primarily to lower accelerated accretion from early payoffs.
The tax equivalent net interest margin (“NIM”) for the third quarter of 2015 was 5.46% compared to 5.89% for the second quarter of 2015. The decrease in the NIM was due to lower discount accretion on acquired loans, lower FHLB dividends and a higher percentage of average lower-yielding assets in the mix. Discount accretion on acquired loans contributed 48 basis points to the NIM in the third quarter of 2015 and 81 basis points in the second quarter of 2015. A $1.4 million special dividend received from the FHLB in the second quarter of 2015 contributed four basis points to the second quarter NIM.
The cost of total deposits decreased to 0.33% in the third quarter from 0.37% in the prior quarter due primarily to a lower level of higher-cost time deposits and the increased balance of noninterest-bearing deposits. The repricing of maturing time deposits at current rates and new time deposit production resulted in the decline in the weighted average contractual interest rate on time deposits to 0.67% at September 30, 2015 from 0.71% at June 30, 2015.
Net interest margin information is presented in the following table for the periods indicated:
|
|
|
Three Months Ended |
| ||||
|
|
|
September 30, |
|
June 30, |
| ||
|
Net Interest Margin - Tax Equivalent |
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
Average Assets: |
|
|
|
|
| ||
|
Loans and leases |
|
$ |
12,112,881 |
|
$ |
12,108,016 |
|
|
Investment securities |
|
1,806,628 |
|
1,672,590 |
| ||
|
Deposits in financial institutions |
|
278,973 |
|
161,683 |
| ||
|
Interest-earning assets |
|
14,198,482 |
|
13,942,289 |
| ||
|
Other assets |
|
2,491,695 |
|
2,521,022 |
| ||
|
Total assets |
|
$ |
16,690,177 |
|
$ |
16,463,311 |
|
|
|
|
|
|
|
| ||
|
Average Liabilities and Stockholders’ Equity: |
|
|
|
|
| ||
|
Interest-bearing deposits |
|
$ |
8,993,681 |
|
$ |
9,107,937 |
|
|
Borrowings |
|
70,171 |
|
81,164 |
| ||
|
Subordinated debentures |
|
434,420 |
|
432,656 |
| ||
|
Interest-bearing liabilities |
|
9,498,272 |
|
9,621,757 |
| ||
|
Noninterest-bearing demand deposits |
|
3,486,780 |
|
3,157,129 |
| ||
|
Other liabilities |
|
132,360 |
|
135,677 |
| ||
|
Total liabilities |
|
13,117,412 |
|
12,914,563 |
| ||
|
Stockholders’ equity |
|
3,572,765 |
|
3,548,748 |
| ||
|
Liabilities and stockholders’ equity |
|
$ |
16,690,177 |
|
$ |
16,463,311 |
|
|
|
|
|
|
|
| ||
|
Time deposits |
|
$ |
5,042,768 |
|
$ |
5,559,903 |
|
|
Total deposits |
|
$ |
12,480,461 |
|
$ |
12,265,066 |
|
|
Funding sources |
|
$ |
12,985,052 |
|
$ |
12,778,886 |
|
|
|
|
|
|
|
| ||
|
Yields on Average Assets: |
|
|
|
|
| ||
|
Loans and leases |
|
6.34 |
% |
6.75 |
% | ||
|
Investment securities (1) |
|
3.67 |
% |
4.01 |
% | ||
|
Interest-earning assets (1) |
|
5.88 |
% |
6.35 |
% | ||
|
|
|
|
|
|
| ||
|
Costs of Average Liabilities: |
|
|
|
|
| ||
|
Total deposits |
|
0.33 |
% |
0.37 |
% | ||
|
Time deposits |
|
0.66 |
% |
0.68 |
% | ||
|
Interest-bearing deposits |
|
0.46 |
% |
0.49 |
% | ||
|
Borrowings |
|
0.41 |
% |
0.43 |
% | ||
|
Subordinated debentures |
|
4.27 |
% |
4.25 |
% | ||
|
Interest-bearing liabilities |
|
0.63 |
% |
0.66 |
% | ||
|
Funding sources |
|
0.46 |
% |
0.50 |
% | ||
|
|
|
|
|
|
| ||
|
Net interest rate spread (1) |
|
5.25 |
% |
5.69 |
% | ||
|
Net interest margin (1) |
|
5.46 |
% |
5.89 |
% | ||
(1) Tax equivalent
The tax equivalent NIM and loan and lease yield are impacted by volatility in accelerated accretion of acquisition discounts due to the prepayment of acquired loans and leases. The effects of this item are shown in the following table for the periods indicated:
|
|
|
Three Months Ended |
|
Three Months Ended |
| ||||
|
|
|
September 30, 2015 |
|
June 30, 2015 |
| ||||
|
|
|
|
|
Loan and |
|
|
|
Loan and |
|
|
|
|
NIM |
|
Lease Yield |
|
NIM |
|
Lease Yield |
|
|
Reported |
|
5.46 |
% |
6.34 |
% |
5.89 |
% |
6.75 |
% |
|
Less: Accelerated accretion of acquisition discounts from early payoffs of acquired loans |
|
(0.27 |
)% |
(0.32 |
)% |
(0.56 |
)% |
(0.64 |
)% |
|
Core (non-GAAP measure) |
|
5.19 |
% |
6.02 |
% |
5.33 |
% |
6.11 |
% |
The impact on the tax equivalent net interest income and NIM from all purchase accounting items is set forth in the table below for the periods indicated:
|
|
|
Three Months Ended |
|
Three Months Ended |
| ||||||
|
|
|
September 30, 2015 |
|
June 30, 2015 |
| ||||||
|
|
|
|
|
Impact on |
|
|
|
Impact on |
| ||
|
|
|
Amount |
|
NIM |
|
Amount |
|
NIM |
| ||
|
|
|
(Dollars in thousands) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
| ||
|
Net interest income/NIM (TE) |
|
$ |
195,274 |
|
5.46 |
% |
$ |
204,721 |
|
5.89 |
% |
|
Less: Accelerated accretion of acquisition discounts from early payoffs of acquired loans |
|
(9,659 |
) |
(0.27 |
)% |
(19,447 |
) |
(0.56 |
)% | ||
|
Remaining accretion of Non-PCI loan acquisition discounts |
|
(7,485 |
) |
(0.21 |
)% |
(8,575 |
) |
(0.25 |
)% | ||
|
Total accretion of loan acquisition discounts |
|
(17,144 |
) |
(0.48 |
)% |
(28,022 |
) |
(0.81 |
)% | ||
|
Amortization of TruPS discount |
|
1,399 |
|
0.04 |
% |
1,400 |
|
0.04 |
% | ||
|
Accretion of time deposits premium |
|
(576 |
) |
(0.02 |
)% |
(799 |
) |
(0.02 |
)% | ||
|
|
|
(16,321 |
) |
(0.46 |
)% |
(27,421 |
) |
(0.79 |
)% | ||
|
Net interest income/NIM - excluding purchase accounting (non-GAAP measure) |
|
$ |
178,953 |
|
5.00 |
% |
$ |
177,300 |
|
5.10 |
% |
Noninterest Income
Noninterest income decreased by $3.8 million to $15.8 million for the third quarter of 2015 compared to $19.6 million for the second quarter of 2015 due mostly to lower realized gains and dividends on equity investments and lower income recognized as a result of loan and lease prepayments, offset by lower foreign currency translation net losses and higher net gains on sale of securities. Realized gains and dividends on equity investments tend to fluctuate from period to period based upon sales activity and actual dividends received. The second quarter of 2015 included the sale of three equity investments at a net gain of $6.0 million compared to one sale in the third quarter at a gain of $0.1 million and dividends on equity investments increased $2.2 million in the third quarter. Foreign currency translation net losses decreased $1.0 million from the prior quarter as the result of movement of the U.S. Dollar against various foreign currencies, principally the Euro. In June 2015, PacWest hedged its Euro-denominated trust preferred issuance with a cross currency swap to reduce the related foreign currency translation volatility.
The following table presents details of noninterest income for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
September 30, |
|
June 30, |
|
Increase |
| |||
|
Noninterest Income |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
(In thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Service charges on deposit accounts |
|
$ |
2,601 |
|
$ |
2,612 |
|
$ |
(11 |
) |
|
Other commissions and fees |
|
6,376 |
|
7,123 |
|
(747 |
) | |||
|
Leased equipment income |
|
5,475 |
|
5,375 |
|
100 |
| |||
|
Gain on sale of loans and leases |
|
27 |
|
163 |
|
(136 |
) | |||
|
Gain (loss) on securities |
|
655 |
|
(186 |
) |
841 |
| |||
|
FDIC loss sharing expense, net |
|
(4,449 |
) |
(5,107 |
) |
658 |
| |||
|
Other income: |
|
|
|
|
|
|
| |||
|
Dividends and realized gains on equity investments |
|
4,357 |
|
8,169 |
|
(3,812 |
) | |||
|
Foreign currency translation net losses |
|
(373 |
) |
(1,377 |
) |
1,004 |
| |||
|
Income recognized on early repayment of leases |
|
12 |
|
1,648 |
|
(1,636 |
) | |||
|
Other |
|
1,077 |
|
1,203 |
|
(126 |
) | |||
|
Total noninterest income |
|
$ |
15,758 |
|
$ |
19,623 |
|
$ |
(3,865 |
) |
The following table presents the details of FDIC loss sharing expense for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
September 30, |
|
June 30, |
|
Increase |
| |||
|
FDIC Loss Sharing Expense, Net |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
(In thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Loss on FDIC loss sharing asset |
|
$ |
(846 |
) |
$ |
(725 |
) |
$ |
(121 |
) |
|
FDIC loss sharing asset amortization, net |
|
(3,484 |
) |
(4,286 |
) |
802 |
| |||
|
Net reimbursement from (to) FDIC for covered OREOs |
|
(11 |
) |
7 |
|
(18 |
) | |||
|
Other |
|
(108 |
) |
(103 |
) |
(5 |
) | |||
|
FDIC loss sharing expense, net |
|
$ |
(4,449 |
) |
$ |
(5,107 |
) |
$ |
658 |
|
Noninterest Expense
Noninterest expense increased by $4.8 million to $90.1 million for the third quarter of 2015 compared to $85.3 million for the second quarter of 2015. The increase was due mostly to higher foreclosed assets expense of $6.9 million, offset by lower insurance and assessments expense of $0.9 million and lower compensation expense of $0.9 million. The increase in foreclosed assets expense was due mostly to a write-down of $4.6 million on an existing foreclosed property in the third quarter, while the second quarter included gains related to foreclosed asset sales of $2.8 million. Insurance and assessments expense decreased due to lower FDIC insurance assessment expense. The reduction in compensation expense was principally due to lower stock-based compensation expense.
The following table presents details of noninterest expense for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
September 30, |
|
June 30, |
|
Increase |
| |||
|
Noninterest Expense |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
(In thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Compensation |
|
$ |
48,152 |
|
$ |
49,033 |
|
$ |
(881 |
) |
|
Occupancy |
|
10,762 |
|
10,588 |
|
174 |
| |||
|
Data processing |
|
4,322 |
|
4,402 |
|
(80 |
) | |||
|
Other professional services |
|
3,396 |
|
3,332 |
|
64 |
| |||
|
Insurance and assessments |
|
3,805 |
|
4,716 |
|
(911 |
) | |||
|
Intangible asset amortization |
|
1,497 |
|
1,502 |
|
(5 |
) | |||
|
Leased equipment depreciation |
|
3,162 |
|
3,103 |
|
59 |
| |||
|
Foreclosed assets expense (income), net |
|
4,521 |
|
(2,340 |
) |
6,861 |
| |||
|
Acquisition, integration and reorganization costs |
|
747 |
|
900 |
|
(153 |
) | |||
|
Other expense: |
|
|
|
|
|
|
| |||
|
Loan expense |
|
1,494 |
|
1,486 |
|
8 |
| |||
|
Other |
|
8,281 |
|
8,554 |
|
(273 |
) | |||
|
Total noninterest expense |
|
$ |
90,139 |
|
$ |
85,276 |
|
$ |
4,863 |
|
Income Taxes
Our overall effective income tax rate was 36.4% for the third quarter of 2015 and 34.7% for the second quarter of 2015. The effective rate for the second quarter was lower due to the utilization of a portion of the capital loss carryforward and adjustments to certain deferred tax assets. The effective tax rate for calendar year 2015 is expected to be 37.5%.
BALANCE SHEET HIGHLIGHTS
Loans and Leases
Total loans and leases increased $418.0 million in the third quarter to $12.5 billion at September 30, 2015. The net increase was driven by third quarter originations and purchases of $1.1 billion, offset partially by principal repayments of $630.3 million. For the twelve months ended September 30, 2015, total loans and leases increased $877 million, or approximately 8%.
The following table presents a roll forward of the loan and lease portfolio for the periods indicated:
|
|
|
Three Months Ended |
| ||||
|
|
|
September 30, |
|
June 30, |
| ||
|
Loan and Lease Roll Forward (1) |
|
2015 |
|
2015 |
| ||
|
|
|
(In thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Beginning balance |
|
$ |
12,034,189 |
|
$ |
12,272,166 |
|
|
New production |
|
1,070,986 |
|
658,669 |
| ||
|
Existing loans and leases: |
|
|
|
|
| ||
|
Principal repayments, net (2) |
|
(630,292 |
) |
(889,708 |
) | ||
|
Loan and lease sales |
|
(6,864 |
) |
(3,621 |
) | ||
|
Transfers to foreclosed assets |
|
(10,383 |
) |
(2,694 |
) | ||
|
Charge-offs |
|
(5,431 |
) |
(623 |
) | ||
|
Ending balance |
|
$ |
12,452,205 |
|
$ |
12,034,189 |
|
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), loan participation sales and other changes within the loan portfolio.
The following table presents a roll forward of the loan and lease portfolio by business division for the period indicated:
|
|
|
Three Months Ended September 30, 2015 |
| |||||||
|
|
|
Community |
|
National |
|
|
| |||
|
Loan and Lease Roll Forward by Division |
|
Banking |
|
Lending |
|
Total |
| |||
|
|
|
(In thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Beginning balance |
|
$ |
3,101,834 |
|
$ |
8,932,355 |
|
$ |
12,034,189 |
|
|
New production |
|
267,560 |
|
803,426 |
|
1,070,986 |
| |||
|
Existing loans and leases: |
|
|
|
|
|
|
| |||
|
Principal repayments, net |
|
(226,451 |
) |
(403,841 |
) |
(630,292 |
) | |||
|
Loan and lease sales |
|
— |
|
(6,864 |
) |
(6,864 |
) | |||
|
Transfers to foreclosed assets |
|
(378 |
) |
(10,005 |
) |
(10,383 |
) | |||
|
Charge-offs |
|
(989 |
) |
(4,442 |
) |
(5,431 |
) | |||
|
Ending balance |
|
$ |
3,141,576 |
|
$ |
9,310,629 |
|
$ |
12,452,205 |
|
|
|
|
|
|
|
|
|
| |||
|
Weighted average yields on new production for the quarters ended: |
|
|
|
|
|
|
| |||
|
September 30, 2015 |
|
4.33 |
% |
5.47 |
% |
5.16 |
% | |||
|
June 30, 2015 |
|
5.17 |
% |
6.00 |
% |
5.89 |
% | |||
|
March 31, 2015 |
|
5.28 |
% |
5.84 |
% |
5.76 |
% | |||
|
December 31, 2014 |
|
5.09 |
% |
5.76 |
% |
5.67 |
% | |||
The Company identified an $82 million group of multi-family loans during the third quarter and re-underwrote and acquired them in anticipation of launching a multi-family loan origination group later this year that will initially focus on the Los Angeles, Orange County and Bay Area metropolitan markets. The Company expects this initiative will reduce its overall portfolio credit risk, especially in an adverse economic environment.
The Company’s portfolio of student loans has repaid rapidly. In order to replace such runoff and to further diversify the loan and lease portfolio by product and geography, the Company purchased a $50 million pool of student loans in the third quarter. These multi-family and student loans, which are included under “Community Banking” in the above table, reduced the third quarter new production yield by 23 basis points.
The following table presents the composition of our loan and lease portfolio as of the dates indicated:
|
|
|
September 30, |
|
June 30, |
|
December 31, |
|
September 30, |
| ||||
|
Loan and Lease Portfolio |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
| ||||
|
|
|
(In thousands) |
| ||||||||||
|
Real estate mortgage: |
|
|
|
|
|
|
|
|
| ||||
|
Hospitality |
|
$ |
635,160 |
|
$ |
619,510 |
|
$ |
570,634 |
|
$ |
530,628 |
|
|
SBA |
|
402,382 |
|
401,832 |
|
380,890 |
|
357,923 |
| ||||
|
Commercial real estate |
|
2,334,497 |
|
2,414,464 |
|
2,583,965 |
|
2,649,503 |
| ||||
|
Healthcare real estate |
|
1,140,450 |
|
1,127,111 |
|
1,051,491 |
|
1,024,474 |
| ||||
|
Multi-family |
|
992,325 |
|
883,083 |
|
789,271 |
|
906,528 |
| ||||
|
Other |
|
184,977 |
|
193,821 |
|
220,751 |
|
244,059 |
| ||||
|
Total real estate mortgage |
|
5,689,791 |
|
5,639,821 |
|
5,597,002 |
|
5,713,115 |
| ||||
|
Real estate construction and land: |
|
|
|
|
|
|
|
|
| ||||
|
Residential |
|
145,262 |
|
119,825 |
|
96,749 |
|
72,881 |
| ||||
|
Commercial |
|
229,904 |
|
213,091 |
|
217,297 |
|
218,389 |
| ||||
|
Total real estate construction and land |
|
375,166 |
|
332,916 |
|
314,046 |
|
291,270 |
| ||||
|
Total real estate loans |
|
6,064,957 |
|
5,972,737 |
|
5,911,048 |
|
6,004,385 |
| ||||
|
Commercial: |
|
|
|
|
|
|
|
|
| ||||
|
Collateralized |
|
359,214 |
|
371,954 |
|
439,567 |
|
429,011 |
| ||||
|
Unsecured |
|
126,726 |
|
120,415 |
|
131,939 |
|
127,150 |
| ||||
|
Asset-based |
|
2,022,492 |
|
1,840,514 |
|
1,794,907 |
|
1,594,488 |
| ||||
|
Cash flow |
|
2,805,817 |
|
2,691,743 |
|
2,486,411 |
|
2,341,511 |
| ||||
|
Equipment finance |
|
894,777 |
|
904,488 |
|
969,489 |
|
928,460 |
| ||||
|
SBA |
|
48,107 |
|
45,769 |
|
47,304 |
|
41,129 |
| ||||
|
Total commercial |
|
6,257,133 |
|
5,974,883 |
|
5,869,617 |
|
5,461,749 |
| ||||
|
Consumer |
|
130,115 |
|
86,569 |
|
101,767 |
|
108,751 |
| ||||
|
Total loans and leases, net of deferred fees |
|
$ |
12,452,205 |
|
$ |
12,034,189 |
|
$ |
11,882,432 |
|
$ |
11,574,885 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Total unfunded loan commitments |
|
$ |
2,022,046 |
|
$ |
2,111,637 |
|
$ |
1,921,067 |
|
$ |
1,818,694 |
|
Credit Exposure Affected by Low Oil Prices
At September 30, 2015, PacWest had 27 outstanding loan and lease relationships totaling $152.3 million to borrowers involved in the oil and gas services industry, down from $177.2 million at June 30, 2015. The collateral for these loans and leases primarily includes equipment, such as drilling equipment and transportation vehicles. At September 30, 2015, four relationships totaling $47.9 million were on nonaccrual status and were classified, down from $64.2 million at June 30, 2015. The largest of these relationships had an aggregate outstanding balance of $40 million at September 30, 2015, for which a current collateral appraisal indicated a liquidation value significantly in excess of the carrying value.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
|
|
|
September 30, |
|
June 30, |
|
December 31, |
|
September 30, |
| ||||
|
Deposit Category |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
| ||||
|
|
|
(Dollars in thousands) |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Noninterest-bearing demand deposits |
|
$ |
3,508,682 |
|
$ |
3,396,688 |
|
$ |
2,931,352 |
|
$ |
2,842,488 |
|
|
Interest checking deposits |
|
693,632 |
|
722,231 |
|
732,196 |
|
683,014 |
| ||||
|
Money market deposits |
|
1,860,983 |
|
1,722,633 |
|
1,709,068 |
|
1,721,563 |
| ||||
|
Savings deposits |
|
751,955 |
|
743,054 |
|
762,961 |
|
759,893 |
| ||||
|
Total core deposits |
|
6,815,252 |
|
6,584,606 |
|
6,135,577 |
|
6,006,958 |
| ||||
|
Brokered non-maturity deposits |
|
713,215 |
|
651,925 |
|
120,613 |
|
— |
| ||||
|
Total non-maturity deposits |
|
7,528,467 |
|
7,236,531 |
|
6,256,190 |
|
6,006,958 |
| ||||
|
Time deposits under $100,000 |
|
1,951,938 |
|
2,328,109 |
|
2,467,338 |
|
2,267,013 |
| ||||
|
Time deposits of $100,000 and over |
|
2,635,358 |
|
3,017,176 |
|
3,031,600 |
|
3,249,466 |
| ||||
|
Total time deposits |
|
4,587,296 |
|
5,345,285 |
|
5,498,938 |
|
5,516,479 |
| ||||
|
Total deposits |
|
$ |
12,115,763 |
|
$ |
12,581,816 |
|
$ |
11,755,128 |
|
$ |
11,523,437 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Noninterest-bearing demand deposits as percentage of total deposits |
|
29 |
% |
26 |
% |
25 |
% |
25 |
% | ||||
|
Core deposits as percentage of total deposits |
|
56 |
% |
52 |
% |
52 |
% |
52 |
% | ||||
At September 30, 2015, core deposits totaled $6.8 billion, or 56% of total deposits, including $3.5 billion of noninterest-bearing demand deposits, or 29% of total deposits. Deposits obtained from the CapitalSource Division totaled $527.8 million at September 30, 2015, of which $514.1 million were core deposits.
The following table summarizes the maturities of our time deposits as of the date indicated:
|
|
|
September 30, 2015 |
| |||||||||||
|
|
|
Time Deposits |
|
Time Deposits |
|
Total |
|
|
|
Estimated |
| |||
|
|
|
Under |
|
$100,000 |
|
Time |
|
Contractual |
|
Effective |
| |||
|
Time Deposit Maturities |
|
$100,000 |
|
or More |
|
Deposits |
|
Rate |
|
Rate |
| |||
|
|
|
(Dollars in thousands) |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Due in three months or less |
|
$ |
456,408 |
|
$ |
394,312 |
|
$ |
850,720 |
|
0.54 |
% |
0.49 |
% |
|
Due in over three months through six months |
|
572,782 |
|
757,604 |
|
1,330,386 |
|
0.63 |
% |
0.61 |
% | |||
|
Due in over six months through twelve months |
|
745,563 |
|
1,258,958 |
|
2,004,521 |
|
0.74 |
% |
0.72 |
% | |||
|
Due in over 12 months through 24 months |
|
136,844 |
|
195,105 |
|
331,949 |
|
0.72 |
% |
0.64 |
% | |||
|
Due in over 24 months |
|
40,341 |
|
29,379 |
|
69,720 |
|
1.03 |
% |
0.81 |
% | |||
|
Total |
|
$ |
1,951,938 |
|
$ |
2,635,358 |
|
$ |
4,587,296 |
|
0.67 |
% |
0.65 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
At June 30, 2015 |
|
$ |
2,328,109 |
|
$ |
3,017,176 |
|
$ |
5,345,285 |
|
0.71 |
% |
0.69 |
% |
The remaining purchase accounting premium on acquired CapitalSource time deposits was $1.2 million at September 30, 2015, of which $0.4 million will be recognized as a reduction of interest expense during the fourth quarter of 2015.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
A provision for credit losses of $8.7 million was recorded in the third quarter of 2015 as compared to $6.5 million in the second quarter of 2015. The third quarter provision was comprised of an $11.0 million provision for Non-PCI loans and leases and a negative provision of $2.3 million for PCI loans. For the Non-PCI portfolio, the $11.0 million provision, combined with net charge-offs of $3.2 million, resulted in an increase in the allowance for credit losses of $7.8 million. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio increased to 0.82% at September 30 from 0.78% at June 30. The negative provision for PCI loans resulted from increases in expected cash flows on such loans, mostly due to payoffs.
The following tables show roll forwards of the allowance for credit losses for the periods indicated:
|
|
|
Three Months Ended September 30, 2015 |
| |||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
|
|
|
| |||||
|
Allowance for Credit |
|
Loans and |
|
Unfunded |
|
Total |
|
PCI |
|
|
| |||||
|
Losses Rollforward |
|
Leases |
|
Commitments |
|
Non-PCI |
|
Loans |
|
Total |
| |||||
|
|
|
(In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Beginning balance |
|
$ |
85,047 |
|
$ |
7,874 |
|
$ |
92,921 |
|
$ |
14,328 |
|
$ |
107,249 |
|
|
Charge-offs |
|
(4,312 |
) |
— |
|
(4,312 |
) |
(1,119 |
) |
(5,431 |
) | |||||
|
Recoveries |
|
1,081 |
|
— |
|
1,081 |
|
— |
|
1,081 |
| |||||
|
Net charge-offs |
|
(3,231 |
) |
— |
|
(3,231 |
) |
(1,119 |
) |
(4,350 |
) | |||||
|
Provision (negative provision) |
|
10,500 |
|
500 |
|
11,000 |
|
(2,254 |
) |
8,746 |
| |||||
|
Ending balance |
|
$ |
92,316 |
|
$ |
8,374 |
|
$ |
100,690 |
|
$ |
10,955 |
|
$ |
111,645 |
|
|
|
|
Three Months Ended June 30, 2015 |
| |||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
|
|
|
| |||||
|
Allowance for Credit |
|
Loans and |
|
Unfunded |
|
Total |
|
PCI |
|
|
| |||||
|
Losses Rollforward |
|
Leases |
|
Commitments |
|
Non-PCI |
|
Loans |
|
Total |
| |||||
|
|
|
(In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Beginning balance |
|
$ |
79,680 |
|
$ |
6,874 |
|
$ |
86,554 |
|
$ |
12,698 |
|
$ |
99,252 |
|
|
Charge-offs |
|
(623 |
) |
— |
|
(623 |
) |
— |
|
(623 |
) | |||||
|
Recoveries |
|
1,990 |
|
— |
|
1,990 |
|
101 |
|
2,091 |
| |||||
|
Net recoveries |
|
1,367 |
|
— |
|
1,367 |
|
101 |
|
1,468 |
| |||||
|
Provision |
|
4,000 |
|
1,000 |
|
5,000 |
|
1,529 |
|
6,529 |
| |||||
|
Ending balance |
|
$ |
85,047 |
|
$ |
7,874 |
|
$ |
92,921 |
|
$ |
14,328 |
|
$ |
107,249 |
|
Non-PCI loans and leases at September 30, 2015 included $7.1 billion of originated loans and leases that were not obtained through acquisitions. The allowance for loan and lease losses related to these loans and leases totaled $80.1 million, or 1.13% of the outstanding balance.
All acquired loans are recorded initially at their estimated fair value including an estimate of credit losses. The table below presents two alternative views of credit risk coverage ratios for Non-PCI loans reflecting adjustments for acquired loans and associated purchase accounting discounts:
|
|
|
September 30, 2015 |
|
June 30, 2015 |
| ||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
Non-PCI |
|
|
|
|
| ||||
|
|
|
Loans and |
|
Allowance/ |
|
Coverage |
|
Loans and |
|
Allowance/ |
|
Coverage |
| ||||
|
Credit Risk Coverage Ratios |
|
Leases |
|
Discount |
|
Ratio |
|
Leases |
|
Discount |
|
Ratio |
| ||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Ending balance |
|
$ |
12,300,057 |
|
$ |
100,690 |
|
0.82% |
|
$ |
11,846,314 |
|
$ |
92,921 |
|
0.78% |
|
|
Acquired loans |
|
(5,180,808 |
) |
(12,173 |
) |
(1) |
|
(5,587,662 |
) |
(12,697 |
)(1) |
|
| ||||
|
Adjusted balance |
|
$ |
7,119,249 |
|
$ |
88,517 |
|
1.24% |
|
$ |
6,258,652 |
|
$ |
80,224 |
|
1.28% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Ending balance |
|
$ |
12,300,057 |
|
$ |
100,690 |
|
0.82% |
|
$ |
11,846,314 |
|
$ |
92,921 |
|
0.78% |
|
|
Unamortized net discount |
|
88,690 |
|
88,690 |
|
(2) |
|
103,302 |
|
103,302 |
(2) |
|
| ||||
|
Adjusted balance |
|
$ |
12,388,747 |
|
$ |
189,380 |
|
1.53% |
|
$ |
11,949,616 |
|
$ |
196,223 |
|
1.64% |
|
(1) Allowance attributed to $5.2 billion and $5.6 billion of acquired Non-PCI loans at September 30, 2015 and June 30, 2015,
based on the allowance calculation that includes an amount for credit deterioration on acquired loans and leases since their
acquisition dates.
(2) Unamortized net discount relates to $5.2 billion and $5.6 billion of acquired Non-PCI loans at September 30, 2015 and June 30, 2015, and is assigned specifically to those loans only. Such discount represents the acquisition date fair value adjustment based on market, liquidity, interest rate risk and credit risk and is being accreted to interest income over the remaining life of the respective loans using the interest method. Use of the interest method results in steadily declining amounts being taken into income in each reporting period. The remaining discount of $88.7 million at September 30, 2015, is expected to be substantially accreted to income by the end of 2018.
The decrease in adjusted coverage ratios reflected in the table above resulted from the combination of newly originated loans being provided for at a rate lower than the current coverage ratio and normal and accelerated accretion of unamortized discount.
CREDIT QUALITY
The following table presents Non-PCI loan and lease credit quality metrics as of the dates indicated:
|
|
|
September 30, |
|
June 30, |
| ||
|
Non-PCI Credit Quality Metrics |
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Allowance for credit losses |
|
$ |
100,690 |
|
$ |
92,921 |
|
|
Nonaccrual loans and leases (1) |
|
107,190 |
|
131,178 |
| ||
|
Classified loans and leases |
|
328,038 |
|
379,988 |
| ||
|
Performing restructured loans |
|
39,956 |
|
38,203 |
| ||
|
Net charge-offs (recoveries) (for the quarter) |
|
3,231 |
|
(1,367 |
) | ||
|
Provision for credit losses (for the quarter) |
|
11,000 |
|
5,000 |
| ||
|
Allowance for credit losses to loans and leases |
|
0.82 |
% |
0.78 |
% | ||
|
Allowance for credit losses to nonaccrual loans and leases (1) |
|
93.9 |
% |
70.8 |
% | ||
|
Nonaccrual loans and leases to loans and leases |
|
0.87 |
% |
1.11 |
% | ||
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.14 |
% |
1.37 |
% | ||
|
Classified loans and leases to loans and leases |
|
2.67 |
% |
3.21 |
% | ||
(1) At September 30, 2015 and June 30, 2015 includes $54.9 million and $56.1 million of acquired loans and leases with no allowance due to the effects of fair value accounting.
The following table presents Non-PCI nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated:
|
|
|
Nonaccrual Loans and Leases |
|
Accruing and |
| ||||||||||||
|
|
|
September 30, 2015 |
|
June 30, 2015 |
|
30-89 Days Past Due |
| ||||||||||
|
|
|
|
|
% of |
|
|
|
% of |
|
September 30, |
|
June 30, |
| ||||
|
|
|
|
|
Loan |
|
|
|
Loan |
|
2015 |
|
2015 |
| ||||
|
|
|
Amount |
|
Category |
|
Amount |
|
Category |
|
Amount |
|
Amount |
| ||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
Real estate mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Hospitality |
|
$ |
1,845 |
|
— |
|
$ |
7,894 |
|
1% |
|
$ |
779 |
|
$ |
— |
|
|
SBA |
|
11,682 |
|
3% |
|
10,141 |
|
3% |
|
233 |
|
2,272 |
| ||||
|
Other |
|
18,294 |
|
— |
|
16,213 |
|
— |
|
2,090 |
|
2,482 |
| ||||
|
Total real estate mortgage |
|
31,821 |
|
1% |
|
34,248 |
|
1% |
|
3,102 |
|
4,754 |
| ||||
|
Real estate construction and land: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Residential |
|
374 |
|
— |
|
377 |
|
— |
|
— |
|
— |
| ||||
|
Commercial |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
| ||||
|
Total real estate construction and land |
|
374 |
|
— |
|
377 |
|
— |
|
— |
|
— |
| ||||
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Collateralized |
|
2,771 |
|
1% |
|
3,761 |
|
1% |
|
82 |
|
131 |
| ||||
|
Unsecured |
|
923 |
|
1% |
|
537 |
|
— |
|
11 |
|
— |
| ||||
|
Asset-based |
|
90 |
|
— |
|
40 |
|
— |
|
— |
|
— |
| ||||
|
Cash flow |
|
11,761 |
|
— |
|
14,605 |
|
1% |
|
— |
|
— |
| ||||
|
Equipment finance (1) |
|
53,153 |
|
6% |
|
71,130 |
|
8% |
|
— |
|
915 |
| ||||
|
SBA |
|
2,918 |
|
6% |
|
3,068 |
|
7% |
|
— |
|
— |
| ||||
|
Total commercial |
|
71,616 |
|
1% |
|
93,141 |
|
2% |
|
93 |
|
1,046 |
| ||||
|
Consumer |
|
3,379 |
|
3% |
|
3,412 |
|
4% |
|
88 |
|
1 |
| ||||
|
Total Non-PCI loans and leases |
|
$ |
107,190 |
|
1% |
|
$ |
131,178 |
|
1% |
|
$ |
3,283 |
|
$ |
5,801 |
|
(1) Includes nonaccrual leases and loans to companies involved in the oil and gas industries of $47.9 million and $64.2 million at September 30, 2015 and June 30, 2015, respectively.
The following table presents nonperforming assets as of the dates indicated:
|
|
|
September 30, |
|
June 30, |
| ||
|
Nonperforming Assets |
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Nonaccrual Non-PCI loans and leases |
|
$ |
107,190 |
|
$ |
131,178 |
|
|
Nonaccrual PCI Loans (1) |
|
4,823 |
|
6,016 |
| ||
|
Total nonaccrual loans and leases |
|
112,013 |
|
137,194 |
| ||
|
Foreclosed assets, net |
|
33,216 |
|
31,668 |
| ||
|
Total nonperforming assets |
|
$ |
145,229 |
|
$ |
168,862 |
|
|
|
|
|
|
|
| ||
|
Nonaccrual loans and leases to loans and leases |
|
0.90% |
|
1.14% |
| ||
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.16% |
|
1.40% |
| ||
(1) Represents legacy CapitalSource borrowing relationships placed on nonaccrual status as of the acquisition date.
SQUARE 1 FINANCIAL, INC. MERGER
On October 6, 2015, PacWest completed the merger with Square 1 Financial, Inc. (“Square 1”) in a transaction valued at approximately $815 million. The combined company is called PacWest Bancorp and the combined subsidiary bank is called Pacific Western Bank, with the banking operations of Square 1 conducted under the trade name of Square 1 Bank, a division of Pacific Western Bank.
Under the terms of the merger agreement, Square 1 stockholders received 0.5997 shares of PacWest common stock for each share of Square 1 common stock and holders of stock options and restricted stock units received cash consideration as described in the merger agreement. The total value of the per share merger consideration was $26.37, based on the closing price of PacWest common stock of $43.97 on October 6, 2015.
As of September 30, 2015, on a pro forma combined basis with Square 1 and excluding purchase accounting adjustments, PacWest would have had approximately $21 billion in assets with 80 branches throughout California and one in North Carolina.
Summary unaudited financial information for Square 1 for the third quarter of 2015 follows:
|
|
|
At or For the |
| |
|
|
|
Three Months Ended |
| |
|
|
|
September 30, 2015 |
| |
|
|
|
(Dollars in thousands) |
| |
|
Net interest income |
|
$ |
34,079 |
|
|
Provision for loan and lease losses |
|
4,564 |
| |
|
Noninterest income |
|
7,313 |
| |
|
Noninterest expense |
|
20,638 |
| |
|
Pre-tax earnings |
|
$ |
16,190 |
|
|
|
|
|
| |
|
Loans receivable, net (at quarter-end) |
|
$ |
1,574,357 |
|
|
Deposits (at quarter-end) |
|
$ |
3,675,805 |
|
|
Client investment funds (at quarter-end) |
|
$ |
2,264,096 |
|
|
|
|
|
| |
|
Loan yield |
|
5.81 |
% | |
|
Deposit cost |
|
0.02 |
% | |
|
Net interest margin |
|
3.54 |
% | |
ABOUT PACWEST BANCORP
PacWest Bancorp (“PacWest”) is a bank holding company with over $21 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (“Pacific Western”). With 80 full-service branches located throughout the state of California, Pacific Western provides commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses. Pacific Western offers additional products and services through its CapitalSource and Square 1 Bank divisions. The CapitalSource Division provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis. The Square 1 Bank Division, headquartered at Pacific Western’s Durham, North Carolina branch, offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in all key innovation hubs across the United States. For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.
FORWARD LOOKING STATEMENTS
This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, strategies, goals, and projections and including statements about our expectations regarding our merger with Square 1, credit loss exposure, profitability, deposit growth, loan and lease portfolio growth, operating expenses, intentions to expand Pacific Western’s lending business, and effective tax rates. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such forward-looking statements for a variety of factors, including without limitation:
· the Company’s ability to complete future acquisitions and to successfully integrate such acquired entities or achieve expected benefits, synergies and/or operating efficiencies within expected time frames or at all;
· business disruption following the Square 1 merger;
· the reaction to the Square 1 merger of the companies’ customers, employees and counterparties;
· credit quality deterioration or pronounced and sustained reduction in market values or other economic factors which adversely affect our borrowers’ ability to repay loans and leases;
· higher than anticipated loan losses;
· continued or worsening credit losses or charge-offs;
· higher than anticipated delinquencies and reserves;
· compression of spreads on newly originated loans;
· asset/liability repricing risks and liquidity risks reduces interest margins and the value of investments;
· increased costs to manage and sell foreclosed assets;
· changes in economic or competitive market conditions could negatively impact investment or lending opportunities or product pricing and services;
· reduced demand for our services due to strategic or regulatory reasons;
· our ability to grow deposits and access wholesale funding sources;
· legislative or regulatory requirements or changes adversely affected the Company’s business including an increase to capital requirements;
· loan repayments higher than expected;
· higher than anticipated increases in operating expenses;
· increased litigation;
· increased asset workout or loan servicing expenses;
· higher compensation costs and professional fees to retain and/or incent employees;
· inability to attract qualified professionals;
· the success and timing of other business strategies;
· changes in tax laws or regulations affecting our business;
· our inability to generate sufficient earnings;
· tax planning or disallowance of tax benefits by tax authorities;
· changes in tax filing jurisdictions or entity classifications; and
· other risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission (“SEC”).
All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (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, |
|
December 31, |
| |||
|
|
|
2015 |
|
2015 |
|
2014 |
| |||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||
|
ASSETS: |
|
|
|
|
|
|
| |||
|
Cash and due from banks |
|
$ |
154,652 |
|
$ |
207,598 |
|
$ |
164,757 |
|
|
Interest-earning deposits in financial institutions |
|
81,642 |
|
433,033 |
|
148,469 |
| |||
|
Total cash and cash equivalents |
|
236,294 |
|
640,631 |
|
313,226 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Securities available-for-sale, at estimated fair value |
|
1,809,364 |
|
1,698,158 |
|
1,567,177 |
| |||
|
Federal Home Loan Bank stock, at cost |
|
17,250 |
|
17,250 |
|
40,609 |
| |||
|
Total investment securities |
|
1,826,614 |
|
1,715,408 |
|
1,607,786 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Non-PCI loans and leases |
|
12,300,057 |
|
11,846,314 |
|
11,613,832 |
| |||
|
PCI loans |
|
193,340 |
|
222,691 |
|
290,852 |
| |||
|
Total gross loans and leases |
|
12,493,397 |
|
12,069,005 |
|
11,904,684 |
| |||
|
Deferred fees and costs |
|
(41,192 |
) |
(34,816 |
) |
(22,252 |
) | |||
|
Total loans and leases, net of deferred fees |
|
12,452,205 |
|
12,034,189 |
|
11,882,432 |
| |||
|
Allowance for loan and lease losses |
|
(103,271 |
) |
(99,375 |
) |
(84,455 |
) | |||
|
Total loans and leases, net |
|
12,348,934 |
|
11,934,814 |
|
11,797,977 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Equipment leased to others under operating leases |
|
161,508 |
|
117,182 |
|
122,506 |
| |||
|
Premises and equipment, net |
|
36,475 |
|
35,984 |
|
36,551 |
| |||
|
Foreclosed assets, net |
|
33,216 |
|
31,668 |
|
43,721 |
| |||
|
Deferred tax asset, net |
|
169,760 |
|
211,556 |
|
284,411 |
| |||
|
Goodwill |
|
1,728,380 |
|
1,728,380 |
|
1,720,479 |
| |||
|
Core deposit and customer relationship intangibles, net |
|
12,704 |
|
14,201 |
|
17,204 |
| |||
|
Other assets |
|
260,220 |
|
267,196 |
|
290,744 |
| |||
|
Total assets |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,234,605 |
|
|
|
|
|
|
|
|
|
| |||
|
LIABILITIES: |
|
|
|
|
|
|
| |||
|
Noninterest-bearing deposits |
|
$ |
3,508,682 |
|
$ |
3,396,688 |
|
$ |
2,931,352 |
|
|
Interest-bearing deposits |
|
8,607,081 |
|
9,185,128 |
|
8,823,776 |
| |||
|
Total deposits |
|
12,115,763 |
|
12,581,816 |
|
11,755,128 |
| |||
|
Borrowings |
|
552,497 |
|
2,751 |
|
383,402 |
| |||
|
Subordinated debentures |
|
435,417 |
|
433,944 |
|
433,583 |
| |||
|
Accrued interest payable and other liabilities |
|
128,724 |
|
127,019 |
|
156,262 |
| |||
|
Total liabilities |
|
13,232,401 |
|
13,145,530 |
|
12,728,375 |
| |||
|
STOCKHOLDERS’ EQUITY (1) |
|
3,581,704 |
|
3,551,490 |
|
3,506,230 |
| |||
|
Total liabilities and stockholders’ equity |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,234,605 |
|
|
|
|
|
|
|
|
|
| |||
| |
| |||||||||
|
(1) Includes net unrealized gain on securities available-for-sale, net |
|
$ |
24,459 |
|
$ |
16,255 |
|
$ |
26,380 |
|
|
|
|
|
|
|
|
|
| |||
|
Book value per share |
|
$ |
34.76 |
|
$ |
34.46 |
|
$ |
34.03 |
|
|
Tangible book value per share |
|
$ |
17.86 |
|
$ |
17.55 |
|
$ |
17.17 |
|
|
|
|
|
|
|
|
|
| |||
|
Shares outstanding (includes unvested restricted shares of 988,825 at September 30, 2015, 990,259 at June 30, 2015, and 1,108,505 at December 31, 2014) |
|
103,053,694 |
|
103,051,989 |
|
103,022,017 |
| |||
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
|
|
|
Three Months Ended |
|
Nine Months Ended |
| |||||||||||
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
193,539 |
|
$ |
203,781 |
|
$ |
189,961 |
|
$ |
599,417 |
|
$ |
459,625 |
|
|
Investment securities |
|
13,955 |
|
14,570 |
|
12,331 |
|
40,720 |
|
35,140 |
| |||||
|
Deposits in financial institutions |
|
178 |
|
104 |
|
64 |
|
304 |
|
314 |
| |||||
|
Total interest income |
|
207,672 |
|
218,455 |
|
202,356 |
|
640,441 |
|
495,079 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Deposits |
|
10,400 |
|
11,233 |
|
8,822 |
|
32,112 |
|
17,360 |
| |||||
|
Borrowings |
|
72 |
|
88 |
|
74 |
|
395 |
|
352 |
| |||||
|
Subordinated debentures |
|
4,680 |
|
4,582 |
|
4,614 |
|
13,787 |
|
9,973 |
| |||||
|
Total interest expense |
|
15,152 |
|
15,903 |
|
13,510 |
|
46,294 |
|
27,685 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net interest income |
|
192,520 |
|
202,552 |
|
188,846 |
|
594,147 |
|
467,394 |
| |||||
|
Provision for credit losses |
|
8,746 |
|
6,529 |
|
5,050 |
|
31,709 |
|
9,436 |
| |||||
|
Net interest income after provision for credit losses |
|
183,774 |
|
196,023 |
|
183,796 |
|
562,438 |
|
457,958 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service charges on deposit accounts |
|
2,601 |
|
2,612 |
|
2,725 |
|
7,787 |
|
8,446 |
| |||||
|
Other commissions and fees |
|
6,376 |
|
7,123 |
|
6,371 |
|
18,895 |
|
14,046 |
| |||||
|
Leased equipment income |
|
5,475 |
|
5,375 |
|
5,615 |
|
16,232 |
|
11,287 |
| |||||
|
Gain on sale of loans and leases |
|
27 |
|
163 |
|
973 |
|
190 |
|
594 |
| |||||
|
Gain (loss) on securities |
|
655 |
|
(186 |
) |
— |
|
3,744 |
|
4,841 |
| |||||
|
FDIC loss sharing expense, net |
|
(4,449 |
) |
(5,107 |
) |
(7,415 |
) |
(13,955 |
) |
(27,370 |
) | |||||
|
Other income |
|
5,073 |
|
9,643 |
|
8,045 |
|
23,359 |
|
17,640 |
| |||||
|
Total noninterest income |
|
15,758 |
|
19,623 |
|
16,314 |
|
56,252 |
|
29,484 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Compensation |
|
48,152 |
|
49,033 |
|
45,861 |
|
144,922 |
|
119,569 |
| |||||
|
Occupancy |
|
10,762 |
|
10,588 |
|
11,188 |
|
31,950 |
|
29,861 |
| |||||
|
Data processing |
|
4,322 |
|
4,402 |
|
3,929 |
|
13,032 |
|
10,568 |
| |||||
|
Other professional services |
|
3,396 |
|
3,332 |
|
3,687 |
|
9,949 |
|
8,053 |
| |||||
|
Insurance and assessments |
|
3,805 |
|
4,716 |
|
3,020 |
|
11,546 |
|
7,792 |
| |||||
|
Intangible asset amortization |
|
1,497 |
|
1,502 |
|
1,608 |
|
4,500 |
|
4,649 |
| |||||
|
Leased equipment depreciation |
|
3,162 |
|
3,103 |
|
2,961 |
|
9,368 |
|
6,056 |
| |||||
|
Foreclosed assets expense (income), net |
|
4,521 |
|
(2,340 |
) |
4,827 |
|
2,517 |
|
3,463 |
| |||||
|
Acquisition, integration and reorganization costs |
|
747 |
|
900 |
|
5,193 |
|
3,647 |
|
93,635 |
| |||||
|
Other expense |
|
9,775 |
|
10,040 |
|
12,649 |
|
28,344 |
|
30,641 |
| |||||
|
Total noninterest expense |
|
90,139 |
|
85,276 |
|
94,923 |
|
259,775 |
|
314,287 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Earnings from continuing operations before taxes |
|
109,393 |
|
130,370 |
|
105,187 |
|
358,915 |
|
173,155 |
| |||||
|
Income tax expense |
|
(39,777 |
) |
(45,287 |
) |
(42,911 |
) |
(131,137 |
) |
(73,744 |
) | |||||
|
Net earnings from continuing operations |
|
69,616 |
|
85,083 |
|
62,276 |
|
227,778 |
|
99,411 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loss from discontinued operations before taxes |
|
— |
|
— |
|
(8 |
) |
— |
|
(2,572 |
) | |||||
|
Income tax benefit |
|
— |
|
— |
|
3 |
|
— |
|
1,067 |
| |||||
|
Net loss from discontinued operations |
|
— |
|
— |
|
(5 |
) |
— |
|
(1,505 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings |
|
$ |
69,616 |
|
$ |
85,083 |
|
$ |
62,271 |
|
$ |
227,778 |
|
$ |
97,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.60 |
|
$ |
2.21 |
|
$ |
1.20 |
|
|
Net earnings |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.60 |
|
$ |
2.21 |
|
$ |
1.18 |
|
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
|
|
|
Three Months Ended |
| ||||||||||||||||||||||
|
|
|
September 30, 2015 |
|
June 30, 2015 |
|
September 30, 2014 |
| ||||||||||||||||||
|
|
|
|
|
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: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
PCI loans |
|
$ |
193,094 |
|
$ |
7,505 |
|
15.42 |
% |
$ |
228,217 |
|
$ |
7,894 |
|
13.87 |
% |
$ |
363,049 |
|
$ |
13,490 |
|
14.74 |
% |
|
Non-PCI loans and leases |
|
11,919,787 |
|
186,034 |
|
6.19 |
% |
11,879,799 |
|
195,887 |
|
6.61 |
% |
10,922,640 |
|
176,471 |
|
6.41 |
% | ||||||
|
Total loans and leases |
|
12,112,881 |
|
193,539 |
|
6.34 |
% |
12,108,016 |
|
203,781 |
|
6.75 |
% |
11,285,689 |
|
189,961 |
|
6.68 |
% | ||||||
|
Investment securities (1) |
|
1,806,628 |
|
16,709 |
|
3.67 |
% |
1,672,590 |
|
16,739 |
|
4.01 |
% |
1,584,811 |
|
13,858 |
|
3.47 |
% | ||||||
|
Deposits in financial institutions |
|
278,973 |
|
178 |
|
0.25 |
% |
161,683 |
|
104 |
|
0.26 |
% |
99,276 |
|
64 |
|
0.26 |
% | ||||||
|
Total interest-earning assets |
|
14,198,482 |
|
210,426 |
|
5.88 |
% |
13,942,289 |
|
220,624 |
|
6.35 |
% |
12,969,776 |
|
203,883 |
|
6.24 |
% | ||||||
|
Other assets |
|
2,491,695 |
|
|
|
|
|
2,521,022 |
|
|
|
|
|
2,746,763 |
|
|
|
|
| ||||||
|
Total assets |
|
$ |
16,690,177 |
|
|
|
|
|
$ |
16,463,311 |
|
|
|
|
|
$ |
15,716,539 |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Interest checking |
|
$ |
787,271 |
|
300 |
|
0.15 |
% |
$ |
741,966 |
|
202 |
|
0.11 |
% |
$ |
605,288 |
|
86 |
|
0.06 |
% | |||
|
Money market |
|
2,417,280 |
|
1,218 |
|
0.20 |
% |
2,065,190 |
|
1,088 |
|
0.21 |
% |
1,733,445 |
|
908 |
|
0.21 |
% | ||||||
|
Savings |
|
746,362 |
|
449 |
|
0.24 |
% |
740,878 |
|
555 |
|
0.30 |
% |
759,177 |
|
575 |
|
0.30 |
% | ||||||
|
Time |
|
5,042,768 |
|
8,433 |
|
0.66 |
% |
5,559,903 |
|
9,388 |
|
0.68 |
% |
5,680,732 |
|
7,253 |
|
0.51 |
% | ||||||
|
Total interest-bearing deposits |
|
8,993,681 |
|
10,400 |
|
0.46 |
% |
9,107,937 |
|
11,233 |
|
0.49 |
% |
8,778,642 |
|
8,822 |
|
0.40 |
% | ||||||
|
Borrowings |
|
70,171 |
|
72 |
|
0.41 |
% |
81,164 |
|
88 |
|
0.43 |
% |
96,711 |
|
74 |
|
0.30 |
% | ||||||
|
Subordinated debentures |
|
434,420 |
|
4,680 |
|
4.27 |
% |
432,656 |
|
4,582 |
|
4.25 |
% |
434,625 |
|
4,614 |
|
4.21 |
% | ||||||
|
Total interest-bearing liabilities |
|
9,498,272 |
|
15,152 |
|
0.63 |
% |
9,621,757 |
|
15,903 |
|
0.66 |
% |
9,309,978 |
|
13,510 |
|
0.58 |
% | ||||||
|
Noninterest-bearing demand deposits |
|
3,486,780 |
|
|
|
|
|
3,157,129 |
|
|
|
|
|
2,778,260 |
|
|
|
|
| ||||||
|
Other liabilities |
|
132,360 |
|
|
|
|
|
135,677 |
|
|
|
|
|
163,182 |
|
|
|
|
| ||||||
|
Total liabilities |
|
13,117,412 |
|
|
|
|
|
12,914,563 |
|
|
|
|
|
12,251,420 |
|
|
|
|
| ||||||
|
Stockholders’ equity |
|
3,572,765 |
|
|
|
|
|
3,548,748 |
|
|
|
|
|
3,465,119 |
|
|
|
|
| ||||||
|
Total liabilities and stockholders’ equity |
|
$ |
16,690,177 |
|
|
|
|
|
$ |
16,463,311 |
|
|
|
|
|
$ |
15,716,539 |
|
|
|
|
| |||
|
Net interest income (2) |
|
|
|
$ |
195,274 |
|
|
|
|
|
$ |
204,721 |
|
|
|
|
|
$ |
190,373 |
|
|
| |||
|
Net interest spread (2) |
|
|
|
|
|
5.25 |
% |
|
|
|
|
5.69 |
% |
|
|
|
|
5.66 |
% | ||||||
|
Net interest margin (2) |
|
|
|
|
|
5.46 |
% |
|
|
|
|
5.89 |
% |
|
|
|
|
5.82 |
% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Total deposits (3) |
|
$ |
12,480,461 |
|
$ |
10,400 |
|
0.33 |
% |
$ |
12,265,066 |
|
$ |
11,233 |
|
0.37 |
% |
$ |
11,556,902 |
|
$ |
8,822 |
|
0.30 |
% |
|
Funding sources (4) |
|
$ |
12,985,052 |
|
$ |
15,152 |
|
0.46 |
% |
$ |
12,778,886 |
|
$ |
15,903 |
|
0.50 |
% |
$ |
12,088,238 |
|
$ |
13,510 |
|
0.44 |
% |
(1) Includes tax equivalent adjustments of $2.8 million, $2.2 million, and $1.5 million for the three months ended September 30, 2015, June 30, 2015, and September 30, 2014 related to tax exempt income on municipal securities. The federal statutory tax rate utilized was 35% for the periods.
(2) Tax equivalent.
(3) Total deposits is the sum of interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(4) Funding sources is the sum of interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated as annualized total interest expense divided by average funding sources.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
|
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
| |||||
|
|
|
2015 |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
ASSETS: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Cash and due from banks |
|
$ |
154,652 |
|
$ |
207,598 |
|
$ |
140,873 |
|
$ |
164,757 |
|
$ |
145,463 |
|
|
Interest-earning deposits in financial institutions |
|
81,642 |
|
433,033 |
|
250,981 |
|
148,469 |
|
115,399 |
| |||||
|
Total cash and cash equivalents |
|
236,294 |
|
640,631 |
|
391,854 |
|
313,226 |
|
260,862 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Securities available-for-sale |
|
1,809,364 |
|
1,698,158 |
|
1,595,409 |
|
1,567,177 |
|
1,539,681 |
| |||||
|
Federal Home Loan Bank stock, at cost |
|
17,250 |
|
17,250 |
|
28,905 |
|
40,609 |
|
45,602 |
| |||||
|
Total investment securities |
|
1,826,614 |
|
1,715,408 |
|
1,624,314 |
|
1,607,786 |
|
1,585,283 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Non-PCI loans and leases |
|
12,300,057 |
|
11,846,314 |
|
12,047,946 |
|
11,613,832 |
|
11,239,964 |
| |||||
|
PCI loans |
|
193,340 |
|
222,691 |
|
254,346 |
|
290,852 |
|
351,431 |
| |||||
|
Total gross loans and leases |
|
12,493,397 |
|
12,069,005 |
|
12,302,292 |
|
11,904,684 |
|
11,591,395 |
| |||||
|
Deferred fees and costs |
|
(41,192 |
) |
(34,816 |
) |
(30,126 |
) |
(22,252 |
) |
(16,510 |
) | |||||
|
Total loans and leases, net of deferred fees |
|
12,452,205 |
|
12,034,189 |
|
12,272,166 |
|
11,882,432 |
|
11,574,885 |
| |||||
|
Allowance for loan and lease losses |
|
(103,271 |
) |
(99,375 |
) |
(92,378 |
) |
(84,455 |
) |
(81,899 |
) | |||||
|
Total loans and leases, net |
|
12,348,934 |
|
11,934,814 |
|
12,179,788 |
|
11,797,977 |
|
11,492,986 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equipment leased to others under operating leases |
|
161,508 |
|
117,182 |
|
119,959 |
|
122,506 |
|
125,119 |
| |||||
|
Premises and equipment, net |
|
36,475 |
|
35,984 |
|
36,022 |
|
36,551 |
|
38,368 |
| |||||
|
Foreclosed assets, net |
|
33,216 |
|
31,668 |
|
35,940 |
|
43,721 |
|
40,524 |
| |||||
|
Deferred tax asset, net |
|
169,760 |
|
211,556 |
|
236,065 |
|
284,411 |
|
331,176 |
| |||||
|
Goodwill |
|
1,728,380 |
|
1,728,380 |
|
1,728,380 |
|
1,720,479 |
|
1,722,129 |
| |||||
|
Core deposit and customer relationship intangibles, net |
|
12,704 |
|
14,201 |
|
15,703 |
|
17,204 |
|
18,823 |
| |||||
|
Other assets |
|
260,220 |
|
267,196 |
|
275,915 |
|
290,744 |
|
322,880 |
| |||||
|
Total assets |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
$ |
15,938,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest-bearing deposits |
|
$ |
3,508,682 |
|
$ |
3,396,688 |
|
$ |
3,029,463 |
|
$ |
2,931,352 |
|
$ |
2,842,488 |
|
|
Interest-bearing deposits |
|
8,607,081 |
|
9,185,128 |
|
8,904,712 |
|
8,823,776 |
|
8,680,949 |
| |||||
|
Total deposits |
|
12,115,763 |
|
12,581,816 |
|
11,934,175 |
|
11,755,128 |
|
11,523,437 |
| |||||
|
Borrowings |
|
552,497 |
|
2,751 |
|
618,156 |
|
383,402 |
|
363,672 |
| |||||
|
Subordinated debentures |
|
435,417 |
|
433,944 |
|
431,448 |
|
433,583 |
|
433,545 |
| |||||
|
Accrued interest payable and other liabilities |
|
128,724 |
|
127,019 |
|
126,800 |
|
156,262 |
|
139,445 |
| |||||
|
Total liabilities |
|
13,232,401 |
|
13,145,530 |
|
13,110,579 |
|
12,728,375 |
|
12,460,099 |
| |||||
|
STOCKHOLDERS’ EQUITY (1) |
|
3,581,704 |
|
3,551,490 |
|
3,533,361 |
|
3,506,230 |
|
3,478,051 |
| |||||
|
Total liabilities and stockholders’ equity |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
$ |
15,938,150 |
|
|
(1) Includes net unrealized gain on securities available-for-sale, net |
|
$ |
24,459 |
|
$ |
16,255 |
|
$ |
28,744 |
|
$ |
26,380 |
|
$ |
20,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Book value per share |
|
$ |
34.76 |
|
$ |
34.46 |
|
$ |
34.29 |
|
$ |
34.03 |
|
$ |
33.76 |
|
|
Tangible book value per share |
|
$ |
17.86 |
|
$ |
17.55 |
|
$ |
17.36 |
|
$ |
17.17 |
|
$ |
16.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Shares outstanding (includes unvested restricted shares) |
|
103,053,694 |
|
103,051,989 |
|
103,044,257 |
|
103,022,017 |
|
103,027,830 |
| |||||
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
|
|
|
Three Months Ended |
| |||||||||||||
|
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
| |||||
|
|
|
2015 |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
193,539 |
|
$ |
203,781 |
|
$ |
202,097 |
|
$ |
197,472 |
|
$ |
189,961 |
|
|
Investment securities |
|
13,955 |
|
14,570 |
|
12,195 |
|
12,205 |
|
12,331 |
| |||||
|
Deposits in financial institutions |
|
178 |
|
104 |
|
22 |
|
19 |
|
64 |
| |||||
|
Total interest income |
|
207,672 |
|
218,455 |
|
214,314 |
|
209,696 |
|
202,356 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Deposits |
|
10,400 |
|
11,233 |
|
10,479 |
|
9,972 |
|
8,822 |
| |||||
|
Borrowings |
|
72 |
|
88 |
|
235 |
|
144 |
|
74 |
| |||||
|
Subordinated debentures |
|
4,680 |
|
4,582 |
|
4,525 |
|
4,597 |
|
4,614 |
| |||||
|
Total interest expense |
|
15,152 |
|
15,903 |
|
15,239 |
|
14,713 |
|
13,510 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net interest income |
|
192,520 |
|
202,552 |
|
199,075 |
|
194,983 |
|
188,846 |
| |||||
|
Provision for credit losses |
|
8,746 |
|
6,529 |
|
16,434 |
|
2,063 |
|
5,050 |
| |||||
|
Net interest income after provision for credit losses |
|
183,774 |
|
196,023 |
|
182,641 |
|
192,920 |
|
183,796 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service charges on deposit accounts |
|
2,601 |
|
2,612 |
|
2,574 |
|
2,787 |
|
2,725 |
| |||||
|
Other commissions and fees |
|
6,376 |
|
7,123 |
|
5,396 |
|
4,556 |
|
6,371 |
| |||||
|
Leased equipment income |
|
5,475 |
|
5,375 |
|
5,382 |
|
5,382 |
|
5,615 |
| |||||
|
Gain on sale of loans and leases |
|
27 |
|
163 |
|
— |
|
7 |
|
973 |
| |||||
|
Gain (loss) on securities |
|
655 |
|
(186 |
) |
3,275 |
|
— |
|
— |
| |||||
|
FDIC loss sharing expense, net |
|
(4,449 |
) |
(5,107 |
) |
(4,399 |
) |
(4,360 |
) |
(7,415 |
) | |||||
|
Other income |
|
5,073 |
|
9,643 |
|
8,643 |
|
4,331 |
|
8,045 |
| |||||
|
Total noninterest income |
|
15,758 |
|
19,623 |
|
20,871 |
|
12,703 |
|
16,314 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Compensation |
|
48,152 |
|
49,033 |
|
47,737 |
|
45,930 |
|
45,861 |
| |||||
|
Occupancy |
|
10,762 |
|
10,588 |
|
10,600 |
|
10,745 |
|
11,188 |
| |||||
|
Data processing |
|
4,322 |
|
4,402 |
|
4,308 |
|
4,050 |
|
3,929 |
| |||||
|
Other professional services |
|
3,396 |
|
3,332 |
|
3,221 |
|
3,181 |
|
3,687 |
| |||||
|
Insurance and assessments |
|
3,805 |
|
4,716 |
|
3,025 |
|
3,115 |
|
3,020 |
| |||||
|
Intangible asset amortization |
|
1,497 |
|
1,502 |
|
1,501 |
|
1,619 |
|
1,608 |
| |||||
|
Leased equipment depreciation |
|
3,162 |
|
3,103 |
|
3,103 |
|
3,103 |
|
2,961 |
| |||||
|
Foreclosed assets expense (income), net |
|
4,521 |
|
(2,340 |
) |
336 |
|
1,938 |
|
4,827 |
| |||||
|
Acquisition, integration and reorganization costs |
|
747 |
|
900 |
|
2,000 |
|
7,381 |
|
5,193 |
| |||||
|
Other expense |
|
9,775 |
|
10,040 |
|
8,529 |
|
10,243 |
|
12,649 |
| |||||
|
Total noninterest expense |
|
90,139 |
|
85,276 |
|
84,360 |
|
91,305 |
|
94,923 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Earnings from continuing operations before taxes |
|
109,393 |
|
130,370 |
|
119,152 |
|
114,318 |
|
105,187 |
| |||||
|
Income tax expense |
|
(39,777 |
) |
(45,287 |
) |
(46,073 |
) |
(43,261 |
) |
(42,911 |
) | |||||
|
Net earnings from continuing operations |
|
69,616 |
|
85,083 |
|
73,079 |
|
71,057 |
|
62,276 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loss from discontinued operations before taxes |
|
— |
|
— |
|
— |
|
(105 |
) |
(8 |
) | |||||
|
Income tax benefit |
|
— |
|
— |
|
— |
|
47 |
|
3 |
| |||||
|
Net loss from discontinued operations |
|
— |
|
— |
|
— |
|
(58 |
) |
(5 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings |
|
$ |
69,616 |
|
$ |
85,083 |
|
$ |
73,079 |
|
$ |
70,999 |
|
$ |
62,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.69 |
|
$ |
0.60 |
|
|
Net earnings |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.69 |
|
$ |
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, |
| |||||
|
|
|
2015 |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) | ||||||||||||||
|
Performance Ratios - GAAP: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Return on average assets (1) |
|
1.65 |
% |
2.07 |
% |
1.82 |
% |
1.77 |
% |
1.57 |
% | |||||
|
Return on average equity (1) |
|
7.73 |
% |
9.62 |
% |
8.39 |
% |
8.05 |
% |
7.13 |
% | |||||
|
Yield on average loans and leases |
|
6.34 |
% |
6.75 |
% |
6.80 |
% |
6.76 |
% |
6.68 |
% | |||||
|
Yield on average interest-earning assets (2) |
|
5.88 |
% |
6.35 |
% |
6.40 |
% |
6.35 |
% |
6.24 |
% | |||||
|
Cost of average total deposits |
|
0.33 |
% |
0.37 |
% |
0.36 |
% |
0.34 |
% |
0.30 |
% | |||||
|
Cost of average time deposits |
|
0.66 |
% |
0.68 |
% |
0.65 |
% |
0.60 |
% |
0.51 |
% | |||||
|
Cost of average interest-bearing liabilities |
|
0.63 |
% |
0.66 |
% |
0.64 |
% |
0.63 |
% |
0.58 |
% | |||||
|
Cost of average funding sources |
|
0.46 |
% |
0.50 |
% |
0.49 |
% |
0.48 |
% |
0.44 |
% | |||||
|
Net interest rate spread (2) |
|
5.25 |
% |
5.69 |
% |
5.76 |
% |
5.72 |
% |
5.66 |
% | |||||
|
Net interest margin (2) |
|
5.46 |
% |
5.89 |
% |
5.95 |
% |
5.91 |
% |
5.82 |
% | |||||
|
Noninterest expense as a percentage of average assets (1) |
|
2.14 |
% |
2.08 |
% |
2.10 |
% |
2.28 |
% |
2.40 |
% | |||||
|
Efficiency ratio |
|
39.6 |
% |
38.0 |
% |
36.9 |
% |
38.4 |
% |
40.3 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Performance Ratios - Non-GAAP: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Adjusted return on average assets (1) |
|
1.55 |
% |
1.78 |
% |
1.62 |
% |
1.70 |
% |
1.69 |
% | |||||
|
Adjusted return on average equity (1) |
|
7.24 |
% |
8.26 |
% |
7.47 |
% |
7.71 |
% |
7.66 |
% | |||||
|
Return on average tangible equity (1) |
|
15.09 |
% |
18.90 |
% |
16.50 |
% |
16.00 |
% |
14.36 |
% | |||||
|
Adjusted return on average tangible equity (1) |
|
14.12 |
% |
16.24 |
% |
14.69 |
% |
15.33 |
% |
15.42 |
% | |||||
|
Core net interest margin (2) |
|
5.19 |
% |
5.33 |
% |
5.44 |
% |
5.57 |
% |
5.68 |
% | |||||
|
Adjusted efficiency ratio |
|
40.6 |
% |
40.5 |
% |
39.2 |
% |
39.7 |
% |
39.7 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Average Balances: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
12,112,881 |
|
$ |
12,108,016 |
|
$ |
12,055,682 |
|
$ |
11,586,573 |
|
$ |
11,285,689 |
|
|
Interest-earning assets |
|
14,198,482 |
|
13,942,289 |
|
13,701,865 |
|
13,205,383 |
|
12,969,776 |
| |||||
|
Total assets |
|
16,690,177 |
|
16,463,311 |
|
16,296,640 |
|
15,892,761 |
|
15,716,539 |
| |||||
|
Noninterest-bearing deposits |
|
3,486,780 |
|
3,157,129 |
|
2,949,719 |
|
2,900,388 |
|
2,778,260 |
| |||||
|
Interest-bearing deposits |
|
8,993,681 |
|
9,107,937 |
|
8,801,306 |
|
8,679,599 |
|
8,778,642 |
| |||||
|
Total deposits |
|
12,480,461 |
|
12,265,066 |
|
11,751,025 |
|
11,579,987 |
|
11,556,902 |
| |||||
|
Borrowings and subordinated debentures |
|
504,591 |
|
513,820 |
|
856,664 |
|
647,912 |
|
531,336 |
| |||||
|
Interest-bearing liabilities |
|
9,498,272 |
|
9,621,757 |
|
9,657,970 |
|
9,327,511 |
|
9,309,978 |
| |||||
|
Funding sources |
|
12,985,052 |
|
12,778,886 |
|
12,607,689 |
|
12,227,899 |
|
12,088,238 |
| |||||
|
Stockholders’ equity |
|
3,572,765 |
|
3,548,748 |
|
3,533,343 |
|
3,500,291 |
|
3,465,119 |
| |||||
(1) Annualized.
(2) 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, |
|
|
|
|
2015 |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
|
|
|
|
(Dollars in thousands) |
| ||||||||
|
Non-PCI Credit Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses to loans and leases |
|
0.82 |
% |
0.78 |
% |
0.72 |
% |
0.66 |
% |
0.61 |
% |
|
Allowance for credit losses to nonaccrual loans and leases |
|
94 |
% |
71 |
% |
62 |
% |
92 |
% |
78 |
% |
|
Nonaccrual loans and leases to loans and leases |
|
0.87 |
% |
1.11 |
% |
1.16 |
% |
0.72 |
% |
0.79 |
% |
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.14 |
% |
1.37 |
% |
1.45 |
% |
1.09 |
% |
1.15 |
% |
|
Nonperforming assets to total assets |
|
0.84 |
% |
0.98 |
% |
1.05 |
% |
0.78 |
% |
0.81 |
% |
|
Trailing twelve month net charge-offs to average loans and leases |
|
0.04 |
% |
0.06 |
% |
0.07 |
% |
0.02 |
% |
0.09 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PacWest Bancorp Consolidated Capital Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio (1) |
|
12.08 |
% |
11.96 |
% |
11.74 |
% |
12.34 |
% |
12.17 |
% |
|
Common equity tier 1 capital ratio (1) |
|
12.75 |
% |
12.87 |
% |
12.27 |
% |
N/A |
|
N/A |
|
|
Tier 1 risk-based capital ratio (1) |
|
12.75 |
% |
12.87 |
% |
12.27 |
% |
13.16 |
% |
13.24 |
% |
|
Total risk-based capital ratio (1) |
|
16.33 |
% |
16.53 |
% |
15.80 |
% |
16.07 |
% |
16.24 |
% |
|
Tangible common equity ratio (non-GAAP measure) |
|
12.21 |
% |
12.10 |
% |
12.01 |
% |
12.20 |
% |
12.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Western Bank Capital Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio (1) |
|
11.56 |
% |
11.65 |
% |
11.53 |
% |
11.70 |
% |
11.74 |
% |
|
Common equity tier 1 capital ratio (1) |
|
12.26 |
% |
12.55 |
% |
12.07 |
% |
N/A |
|
N/A |
|
|
Tier 1 risk-based capital ratio (1) |
|
12.26 |
% |
12.55 |
% |
12.07 |
% |
12.46 |
% |
12.74 |
% |
|
Total risk-based capital ratio (1) |
|
13.06 |
% |
13.35 |
% |
12.80 |
% |
13.16 |
% |
13.44 |
% |
|
Tangible common equity ratio (non-GAAP measure) |
|
11.53 |
% |
11.46 |
% |
11.32 |
% |
11.51 |
% |
11.60 |
% |
(1) Capital ratios for September 30, 2015 are preliminary.
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
|
|
|
Three Months Ended |
|
Nine Months Ended |
| |||||||||||
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Basic Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
69,616 |
|
$ |
85,083 |
|
$ |
62,276 |
|
$ |
227,778 |
|
$ |
99,411 |
|
|
Less: earnings allocated to unvested restricted stock (1) |
|
(649 |
) |
(807 |
) |
(685 |
) |
(2,213 |
) |
(1,147 |
) | |||||
|
Net earnings from continuing operations allocated to common shares |
|
68,967 |
|
84,276 |
|
61,591 |
|
225,565 |
|
98,264 |
| |||||
|
Net earnings from discontinued operations allocated to common shares |
|
— |
|
— |
|
(5 |
) |
— |
|
(1,487 |
) | |||||
|
Net earnings allocated to common shares |
|
$ |
68,967 |
|
$ |
84,276 |
|
$ |
61,586 |
|
$ |
225,565 |
|
$ |
96,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average basic shares and unvested restricted stock outstanding |
|
103,048 |
|
103,030 |
|
103,029 |
|
103,038 |
|
82,758 |
| |||||
|
Less: weighted-average unvested restricted stock outstanding |
|
(985 |
) |
(1,060 |
) |
(1,117 |
) |
(1,055 |
) |
(981 |
) | |||||
|
Weighted-average basic shares outstanding |
|
102,063 |
|
101,970 |
|
101,912 |
|
101,983 |
|
81,777 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.60 |
|
$ |
2.21 |
|
$ |
1.20 |
|
|
Net earnings from discontinued operations |
|
— |
|
— |
|
— |
|
— |
|
(0.02 |
) | |||||
|
Net earnings |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.60 |
|
$ |
2.21 |
|
$ |
1.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations allocated to common shares |
|
$ |
68,967 |
|
$ |
84,276 |
|
$ |
61,591 |
|
$ |
225,565 |
|
$ |
98,264 |
|
|
Net earnings from discontinued operations allocated to common shares |
|
— |
|
— |
|
(5 |
) |
— |
|
(1,487 |
) | |||||
|
Net earnings allocated to common shares |
|
$ |
68,967 |
|
$ |
84,276 |
|
$ |
61,586 |
|
$ |
225,565 |
|
$ |
96,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average basic shares outstanding |
|
102,063 |
|
101,970 |
|
101,912 |
|
101,983 |
|
81,777 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.60 |
|
$ |
2.21 |
|
$ |
1.20 |
|
|
Net earnings from discontinued operations |
|
— |
|
— |
|
— |
|
— |
|
(0.02 |
) | |||||
|
Net earnings |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.60 |
|
$ |
2.21 |
|
$ |
1.18 |
|
(1) Represents cash dividends paid to holders of unvested stock, net of estimated forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.
GAAP TO NON-GAAP RECONCILIATION
This press release contains certain non-GAAP financial disclosures for adjusted net earnings, adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted return on average tangible equity, tangible common equity amounts and ratios, tangible book value per share, adjusted efficiency ratio, core net interest margin, and operating expense as a percentage of average assets. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance:
· Adjusted net earnings: To calculate adjusted net earnings, we exclude from net earnings primarily income statement items for which the related assets or liabilities have been completely resolved and are no longer on the balance sheet. As analysts and investors view this measure as an indicator of the Company’s ability to generate recurring earnings, we disclose this amount in addition to net earnings.
· Adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted return on average tangible equity, tangible common equity amounts and ratios, and tangible book value per share: Given that the use of these measures is prevalent among banking regulators, investors and analysts, we disclose them in addition to return on average assets, return on average equity, equity-to-assets ratio, and book value per share, respectively.
· Adjusted efficiency ratio: We disclose this measure in addition to efficiency ratio as it shows the trend in recurring overhead-related noninterest expense relative to recurring net revenues.
Please refer to the tables on the following pages for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
|
|
|
Three Months Ended |
|
Nine Months Ended |
| |||||||||||
|
Adjusted Net Earnings and |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |||||||
|
Related Ratios |
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings |
|
$ |
69,616 |
|
$ |
85,083 |
|
$ |
62,271 |
|
$ |
227,778 |
|
$ |
97,906 |
|
|
Less: Tax benefit on discontinued operations |
|
— |
|
— |
|
(3 |
) |
— |
|
(1,067 |
) | |||||
|
Add: Tax expense on continuing operations |
|
39,777 |
|
45,287 |
|
42,911 |
|
131,137 |
|
73,744 |
| |||||
|
Pre-tax earnings |
|
109,393 |
|
130,370 |
|
105,179 |
|
358,915 |
|
170,583 |
| |||||
|
Add: Acquisition, integration and reorganization costs |
|
747 |
|
900 |
|
5,193 |
|
3,647 |
|
93,635 |
| |||||
|
Less: FDIC loss sharing expense, net |
|
(4,449 |
) |
(5,107 |
) |
(7,415 |
) |
(13,955 |
) |
(27,370 |
) | |||||
|
Gain on sale of loans and leases |
|
27 |
|
163 |
|
973 |
|
190 |
|
594 |
| |||||
|
Gain (loss) on securities |
|
655 |
|
(186 |
) |
— |
|
3,744 |
|
4,841 |
| |||||
|
Covered OREO (expense) income, net |
|
(20 |
) |
12 |
|
(452 |
) |
11 |
|
1,348 |
| |||||
|
Gain on sale of owned office building |
|
— |
|
— |
|
— |
|
— |
|
1,570 |
| |||||
|
Adjusted pre-tax earnings before accelerated discount accretion |
|
113,927 |
|
136,388 |
|
117,266 |
|
372,572 |
|
283,235 |
| |||||
|
Less: Accelerated discount accretion from early payoffs of acquired loans |
|
9,659 |
|
19,447 |
|
4,501 |
|
46,458 |
|
27,446 |
| |||||
|
Adjusted pre-tax earnings |
|
104,268 |
|
116,941 |
|
112,765 |
|
326,114 |
|
255,789 |
| |||||
|
Tax expense (1) |
|
(39,101 |
) |
(43,853 |
) |
(45,895 |
) |
(122,293 |
) |
(104,106 |
) | |||||
|
Adjusted net earnings |
|
$ |
65,167 |
|
$ |
73,088 |
|
$ |
66,870 |
|
$ |
203,821 |
|
$ |
151,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Average assets |
|
$ |
16,690,177 |
|
$ |
16,463,311 |
|
$ |
15,716,539 |
|
$ |
16,484,817 |
|
$ |
12,456,182 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Average stockholders’ equity |
|
$ |
3,572,765 |
|
$ |
3,548,748 |
|
$ |
3,465,119 |
|
$ |
3,551,763 |
|
$ |
2,515,506 |
|
|
Less: Average intangible assets |
|
1,741,902 |
|
1,743,340 |
|
1,744,542 |
|
1,740,911 |
|
1,208,266 |
| |||||
|
Average tangible common equity |
|
$ |
1,830,863 |
|
$ |
1,805,408 |
|
$ |
1,720,577 |
|
$ |
1,810,852 |
|
$ |
1,307,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Return on average assets (2) |
|
1.65 |
% |
2.07 |
% |
1.57 |
% |
1.85 |
% |
1.05 |
% | |||||
|
Return on average equity (3) |
|
7.73 |
% |
9.62 |
% |
7.13 |
% |
8.57 |
% |
5.20 |
% | |||||
|
Return on average tangible equity (4) |
|
15.09 |
% |
18.90 |
% |
14.36 |
% |
16.82 |
% |
10.01 |
% | |||||
|
Adjusted return on average assets (5) |
|
1.55 |
% |
1.78 |
% |
1.69 |
% |
1.65 |
% |
1.63 |
% | |||||
|
Adjusted return on average equity (6) |
|
7.24 |
% |
8.26 |
% |
7.66 |
% |
7.67 |
% |
8.06 |
% | |||||
|
Adjusted return on average tangible equity (7) |
|
14.12 |
% |
16.24 |
% |
15.42 |
% |
15.05 |
% |
15.51 |
% | |||||
(1) Full-year expected effective rate of 37.5% used for 2015 periods and actual effective rate of 40.7% used for 2014 periods.
(2) Annualized net earnings divided by average assets.
(3) Annualized net earnings divided by average stockholders’ equity.
(4) Annualized net earnings divided by average tangible common equity.
(5) Annualized adjusted net earnings divided by average assets.
(6) Annualized adjusted net earnings divided by average stockholders’ equity.
(7) Annualized adjusted net earnings divided by average tangible common equity.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
|
|
|
Three Months Ended |
|
Nine Months Ended |
| |||||||||||
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
| |||||||
|
Adjusted Efficiency Ratio |
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest expense |
|
$ |
90,139 |
|
$ |
85,276 |
|
$ |
94,923 |
|
$ |
259,775 |
|
$ |
314,287 |
|
|
Less: Intangible asset amortization |
|
1,497 |
|
1,502 |
|
1,608 |
|
4,500 |
|
4,649 |
| |||||
|
Foreclosed assets expense (income), net |
|
4,521 |
|
(2,340 |
) |
4,827 |
|
2,517 |
|
3,463 |
| |||||
|
Acquisition, integration, and reorganization costs |
|
747 |
|
900 |
|
5,193 |
|
3,647 |
|
93,635 |
| |||||
|
Noninterest expense used for efficiency ratio |
|
$ |
83,374 |
|
$ |
85,214 |
|
$ |
83,295 |
|
$ |
249,111 |
|
$ |
212,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net interest income (TE) |
|
$ |
195,274 |
|
$ |
204,721 |
|
$ |
190,373 |
|
$ |
600,855 |
|
$ |
472,151 |
|
|
Noninterest income |
|
15,758 |
|
19,623 |
|
16,314 |
|
56,252 |
|
29,484 |
| |||||
|
Net revenues |
|
211,032 |
|
224,344 |
|
206,687 |
|
657,107 |
|
501,635 |
| |||||
|
Less: Gain (loss) on securities |
|
655 |
|
(186 |
) |
— |
|
3,744 |
|
4,841 |
| |||||
|
Gain on sale of owned office building |
|
— |
|
— |
|
— |
|
— |
|
1,570 |
| |||||
|
Net revenues used for efficiency ratio |
|
210,377 |
|
224,530 |
|
206,687 |
|
653,363 |
|
495,224 |
| |||||
|
Less: Accelerated discount accretion from early payoffs of acquired loans |
|
9,659 |
|
19,447 |
|
4,501 |
|
46,458 |
|
27,446 |
| |||||
|
FDIC loss sharing expense, net |
|
(4,449 |
) |
(5,107 |
) |
(7,415 |
) |
(13,955 |
) |
(27,370 |
) | |||||
|
Adjusted net revenues |
|
$ |
205,167 |
|
$ |
210,190 |
|
$ |
209,601 |
|
$ |
620,860 |
|
$ |
495,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Efficiency ratio (1) |
|
39.6 |
% |
38.0 |
% |
40.3 |
% |
38.1 |
% |
42.9 |
% | |||||
|
Adjusted efficiency ratio (2) |
|
40.6 |
% |
40.5 |
% |
39.7 |
% |
40.1 |
% |
42.9 |
% | |||||
(1) Noninterest expense used for efficiency ratio divided by net revenues used for efficiency ratio.
(2) Noninterest expense used for efficiency ratio divided by adjusted net revenues.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
|
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
| |||||
|
Tangible Common Equity Ratio |
|
2015 |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
PacWest Bancorp Consolidated: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Stockholders’ equity |
|
$ |
3,581,704 |
|
$ |
3,551,490 |
|
$ |
3,533,361 |
|
$ |
3,506,230 |
|
$ |
3,478,051 |
|
|
Less: Intangible assets |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,952 |
| |||||
|
Tangible common equity |
|
$ |
1,840,620 |
|
$ |
1,808,909 |
|
$ |
1,789,278 |
|
$ |
1,768,547 |
|
$ |
1,737,099 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Total assets |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
$ |
15,938,150 |
|
|
Less: Intangible assets |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,952 |
| |||||
|
Tangible assets |
|
$ |
15,073,021 |
|
$ |
14,954,439 |
|
$ |
14,899,857 |
|
$ |
14,496,922 |
|
$ |
14,197,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equity to assets ratio |
|
21.30 |
% |
21.27 |
% |
21.23 |
% |
21.60 |
% |
21.82 |
% | |||||
|
Tangible common equity ratio (1) |
|
12.21 |
% |
12.10 |
% |
12.01 |
% |
12.20 |
% |
12.24 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Book value per share |
|
$ |
34.76 |
|
$ |
34.46 |
|
$ |
34.29 |
|
$ |
34.03 |
|
$ |
33.76 |
|
|
Tangible book value per share (2) |
|
$ |
17.86 |
|
$ |
17.55 |
|
$ |
17.36 |
|
$ |
17.17 |
|
$ |
16.86 |
|
|
Shares outstanding |
|
103,053,694 |
|
103,051,989 |
|
103,044,257 |
|
103,022,017 |
|
103,027,830 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Pacific Western Bank: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Stockholders’ equity |
|
$ |
3,466,817 |
|
$ |
3,440,715 |
|
$ |
3,410,276 |
|
$ |
3,378,879 |
|
$ |
3,356,943 |
|
|
Less: Intangible assets |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,952 |
| |||||
|
Tangible common equity |
|
$ |
1,725,733 |
|
$ |
1,698,134 |
|
$ |
1,666,193 |
|
$ |
1,641,196 |
|
$ |
1,615,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Total assets |
|
$ |
16,707,072 |
|
$ |
16,555,610 |
|
$ |
16,458,591 |
|
$ |
15,995,719 |
|
$ |
15,675,291 |
|
|
Less: Intangible assets |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,952 |
| |||||
|
Tangible assets |
|
$ |
14,965,988 |
|
$ |
14,813,029 |
|
$ |
14,714,508 |
|
$ |
14,258,036 |
|
$ |
13,934,339 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equity to assets ratio |
|
20.75 |
% |
20.78 |
% |
20.72 |
% |
21.12 |
% |
21.42 |
% | |||||
|
Tangible common equity ratio |
|
11.53 |
% |
11.46 |
% |
11.32 |
% |
11.51 |
% |
11.60 |
% | |||||
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.