Exhibit 99.1

 

July 19, 2021

 

PACWEST BANCORP ANNOUNCES RESULTS FOR THE SECOND QUARTER OF 2021

FOR IMMEDIATE RELEASE

 

SECOND QUARTER 2021 RESULTS

 

$180.5M	$1.52	$154.9M	29.25%
Net Earnings	Diluted Earnings per Share	PPNR	ROATE

 

 

 

 

FINANCIAL HIGHLIGHTS

 

`		At or For the												At or For the
		Three Months Ended												Six Months Ended
		June 30,				March 31,				Increase				June 30,								Increase
Financial Highlights (1)		2021				2021				(Decrease)				2021				2020				(Decrease)
		(Dollars in thousands, except per share data)
Net earnings (loss)		$	180,512			$	150,406			$	30,106			$	330,918			$	(1,399,907	)		$	1,730,825
Diluted earnings (loss)
per share		$	1.52			$	1.27			$	0.25			$	2.78			$	(11.98	)		$	14.76
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (2)		$	154,929			$	155,962			$	(1,033	)		$	310,891			$	327,049			$	(16,158	)
Return on average assets			2.11	%			1.94	%			0.17				2.03	%			(10.48	)%			12.51
PPNR return on average
assets (2)			1.81	%			2.01	%			(0.20	)			1.91	%			2.45	%			(0.54	)
Return on average
tangible equity (2)			29.25	%			25.67	%			3.58				27.51	%			6.64	%			20.87
Yield on average loans and
leases (tax equivalent)			5.18	%			5.20	%			(0.02	)			5.19	%			5.27	%			(0.08	)
Cost of average total
deposits			0.10	%			0.11	%			(0.01	)			0.11	%			0.41	%			(0.30	)
Net interest margin ("NIM")
(tax equivalent)			3.40	%			3.69	%			(0.29	)			3.53	%			4.26	%			(0.73	)
Efficiency ratio			47.9	%			46.4	%			1.5				47.2	%			41.8	%			5.4
Total assets		$	34,867,987			$	32,856,533			$	2,011,454			$	34,867,987			$	27,365,738			$	7,502,249
Loans and leases held
for investment,
net of deferred fees		$	19,506,257			$	18,979,228			$	527,029			$	19,506,257			$	19,694,631			$	(188,374	)
Noninterest-bearing
demand deposits		$	11,252,286			$	11,017,462			$	234,824			$	11,252,286			$	8,629,543			$	2,622,743
Core deposits		$	27,038,161			$	25,576,348			$	1,461,813			$	27,038,161			$	19,535,814			$	7,502,347
Total deposits		$	29,647,034			$	28,223,291			$	1,423,743			$	29,647,034			$	22,928,579			$	6,718,455
As percentage of total
deposits:
Noninterest-bearing
demand deposits			38	%			39	%			(1	)			38	%			38	%			-
Core deposits			91	%			91	%			-				91	%			85	%			6
Equity to assets ratio			11.03	%			11.12	%			(0.09	)			11.03	%			12.62	%			(1.59	)
Common equity tier 1
capital ratio			10.41	%			10.39	%			0.02				10.41	%			9.97	%			0.44
Total capital ratio			14.99	%			13.60	%			1.39				14.99	%			13.18	%			1.81
Tangible common equity
ratio (2)			7.80	%			7.68	%			0.12				7.80	%			8.93	%			(1.13	)
Book value per share		$	32.17			$	30.68			$	1.49			$	32.17			$	29.17			$	3.00
Tangible book value per
share (2)		$	21.95			$	20.39			$	1.56			$	21.95			$	19.80			$	2.15

 

(1) The operations of Civic are included from its February 1, 2021 acquisition date.

(2) Non-GAAP measure.

 

 

INCOME STATEMENT HIGHLIGHTS

 

NET INTEREST INCOME

 

Net interest income increased by $5.0 million to $266.3 million for the second quarter of 2021 compared to $261.3 million for the first quarter of 2021 due mainly to higher income on investment securities and loans and leases, partially offset by higher interest expense resulting from the $400 million of subordinated debt issued on April 30, 2021. The tax equivalent yield on average loans and leases was 5.18% for the second quarter of 2021 compared to 5.20% for the first quarter of 2021. The decrease in the tax equivalent yield on average loans and leases was primarily due to lower amortized loan fee income of $1.4 million and lower loan discount accretion of $0.4 million.

 

The tax equivalent NIM was 3.40% for the second quarter of 2021 compared to 3.69% for the first quarter of 2021. The decrease in the NIM was primarily due to the change in the earning assets mix driven by the increase in the investment portfolio and cash at the Federal Reserve as a percentage of earning assets. The average balance of deposits in financial institutions increased by $1.6 billion to $6.3 billion, the average balance of investment securities increased by $1.1 billion to $6.5 billion, and the average balance of loans and leases increased by $130.1 million in the second quarter of 2021. This excess liquidity had a negative impact on the second quarter tax equivalent NIM of approximately 73 basis points.

 

The cost of average total deposits decreased to 0.10% in the second quarter of 2021 from 0.11% for the first quarter of 2021. The lower cost of average total deposits was due primarily to the increased average balance of noninterest-bearing deposits.

 

PROVISION FOR CREDIT LOSSES

 

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

 

		Three Months Ended
		June 30,				March 31,				Increase
Provision for Credit Losses		2021				2021				(Decrease)
						(In thousands)
(Reduction in) addition to allowance for loan
and lease losses		$	(72,000	)		$	(53,000	)		$	(19,000	)
(Reduction in) addition to reserve for
unfunded loan commitments			(16,000	)			5,000				(21,000	)
Total provision for credit losses		$	(88,000	)		$	(48,000	)		$	(40,000	)

 

The provision for credit losses decreased by $40.0 million to a benefit of $88.0 million for the second quarter of 2021 compared to a $48.0 million benefit for the first quarter of 2021. This reduction reflected improvement in both macro-economic forecast variables and loan portfolio credit quality metrics along with decreased provisions for individually evaluated loans and leases and for unfunded commitments.

 

 

 

Noninterest Income

 

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

 

		Three Months Ended
		June 30,				March 31,				Increase
Noninterest Income		2021				2021				(Decrease)
		(In thousands)
Service charges on deposit accounts		$	3,452			$	2,934			$	518
Other commissions and fees			10,704				9,158				1,546
Leased equipment income			10,847				11,354				(507	)
Gain on sale of loans and leases			1,422				139				1,283
Gain on sale of securities			-				101				(101	)
Other income:
Dividends and gains on equity investments			5,394				10,904				(5,510	)
Warrant income			5,650				6,123				(473	)
Other			2,902				4,116				(1,214	)
Total noninterest income		$	40,371			$	44,829			$	(4,458	)

 

Noninterest income decreased by $4.5 million to $40.4 million for the second quarter of 2021 compared to $44.8 million for the first quarter of 2021 due primarily to a decrease of $5.5 million in dividends and gains on equity investments and a $1.2 million decrease in other income, offset partially by increases of $1.5 million in other commissions and fees and $1.3 million in gain on sale of loans and leases. The decrease in dividends and gains on equity investments was due primarily to a $10.1 million gain on one equity investment in the first quarter of 2021, offset partially by higher net fair value gains on equity investments still held. The decrease in other income was due primarily to lower foreign currency translation gains and negative fair value adjustments related to servicing assets. The increase in other commissions and fees was due primarily to higher foreign exchange transaction fees and customer success fees. The increase in the gain on sale of loans and leases resulted from the sales of $52.2 million of loans for gains of $1.4 million in the second quarter of 2021 compared to sales of $72.6 million for gains of $0.1 million in the first quarter of 2021. Warrant income decreased slightly in the second quarter of 2021, but remained at elevated levels and was the third highest quarter ever.

 

Noninterest Expense

 

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

 

		Three Months Ended
		June 30,				March 31,				Increase
Noninterest Expense		2021				2021				(Decrease)
		(In thousands)
Compensation		$	90,807			$	79,882			$	10,925
Occupancy			14,784				14,054				730
Data processing			7,758				6,957				801
Other professional services			5,256				5,126				130
Insurance and assessments			3,745				4,903				(1,158	)
Intangible asset amortization			2,889				3,079				(190	)
Leased equipment depreciation			8,614				8,969				(355	)
Foreclosed assets (income) expense, net			(119	)			1				(120	)
Acquisition, integration and reorganization costs			200				3,425				(3,225	)
Customer related expense			4,973				4,818				155
Loan expense			4,031				3,193				838
Other			8,812				15,729				(6,917	)
Total noninterest expense		$	151,750			$	150,136			$	1,614

 

 

Noninterest expense increased by $1.6 million to $151.8 million for the second quarter of 2021 compared to $150.1 million for the first quarter of 2021 due primarily to an increase of $10.9 million in compensation expense, offset partially by decreases of $6.9 million in other expense, $3.2 million in acquisition, integration and reorganization costs and $1.1 million in insurance and assessments expense. The increase in compensation expense was mostly due to compensation expense related to the Civic operations as a result of three months of activity in the second quarter of 2021 compared to two months of activity in the first quarter of 2021, in addition to increases in loan production across the Company which contributed to an increase in variable compensation during the second quarter of 2021. The decrease in other expense was largely due to a legal settlement accrual in the first quarter of 2021. The decrease in acquisition, integration and reorganization costs was due to lower advisory services and integration expenses related to the closed Civic acquisition and the pending acquisition of MUFG Union Bank’s Homeowners Association Services Division. The decrease in insurance and assessments expense was primarily due to lower FDIC assessment expense resulting from a lower assessment rate partially offset by a higher assessment base.

 

Income Taxes

 

The effective income tax rate was 25.7% in the second quarter of 2021 compared to 26.3% for the first quarter of 2021. The decrease in the effective tax rate is due mainly to tax benefits resulting from the vesting of restricted stock and return-to-provision adjustments recorded in the second quarter of 2021. The effective income tax rate for the full year 2021 is estimated to be in the range of 25% to 27%.

 

BALANCE SHEET HIGHLIGHTS

 

Deposits and Client Investment Funds

 

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

 

		June 30, 2021								March 31, 2021								June 30, 2020
						% of								% of								% of
Deposit Composition		Balance				Total				Balance				Total				Balance				Total
		(Dollars in thousands)
Noninterest-bearing demand		$	11,252,286				38	%		$	11,017,462				39	%		$	8,629,543				38	%
Interest checking			7,394,472				25	%			6,862,398				25	%			4,858,168				21	%
Money market			7,777,199				26	%			7,112,610				25	%			5,498,150				24	%
Savings			614,204				2	%			583,878				2	%			549,953				2	%
Total core deposits			27,038,161				91	%			25,576,348				91	%			19,535,814				85	%
Non-core non-maturity deposits			1,122,971				4	%			1,162,590				4	%			1,217,266				5	%
Total non-maturity deposits			28,161,132				95	%			26,738,938				95	%			20,753,080				90	%
Time deposits $250,000 and under			913,371				3	%			940,340				3	%			1,522,928				7	%
Time deposits over $250,000			572,531				2	%			544,013				2	%			652,571				3	%
Total time deposits			1,485,902				5	%			1,484,353				5	%			2,175,499				10	%
Total deposits		$	29,647,034				100	%		$	28,223,291				100	%		$	22,928,579				100	%

 

At June 30, 2021, core deposits totaled $27.0 billion or 91% of total deposits, including $11.3 billion of noninterest-bearing demand deposits or 38% of total deposits. Core deposits increased by $1.5 billion or 22.9% annualized in the second quarter of 2021 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 alternative options 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 June 30, 2021 were $1.3 billion, of which $1.0 billion was managed by PWAM.

 

 

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								Six Months Ended
Roll Forward of Loans and Leases Held		June 30,				March 31,				June 30,
for Investment, Net of Deferred Fees (1)		2021				2021				2021
		(Dollars in thousands)
Balance, beginning of period		$	18,979,228			$	19,083,377			$	19,083,377
Additions:
Production			1,663,151				1,612,777				3,275,928
Disbursements			1,662,644				1,022,986				2,685,630
Total production and disbursements			3,325,795				2,635,763				5,961,558
Reductions:
Payoffs			(1,969,118	)			(1,635,264	)			(3,604,382	)
Paydowns			(802,222	)			(1,067,418	)			(1,869,640	)
Total payoffs and paydowns			(2,771,340	)			(2,702,682	)			(5,474,022	)
Sales			(26,610	)			(72,641	)			(99,251	)
Transfers to foreclosed assets			-				(647	)			(647	)
Charge-offs			(816	)			(3,988	)			(4,804	)
Transfers to loans held for sale			-				(25,554	)			(25,554	)
Total reductions			(2,798,766	)			(2,805,512	)			(5,604,278	)
Loans acquired through Civic acquisition			-				65,600				65,600
Net increase (decrease)			527,029				(104,149	)			422,880
Balance, end of period		$	19,506,257			$	18,979,228			$	19,506,257
Weighted average rate on production (2)			4.55	%			4.36	%			4.46	%

 

(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 41 basis points to loan yields in 2021.

 

Loans and leases held for investment, net of deferred fees, increased by $527.0 million or 11.1% annualized in the second quarter of 2021 to $19.5 billion at June 30, 2021. Excluding PPP loan activity, loans grew by $997.1 million or 22.3% annualized. The increase in the loans and leases balance for the second quarter of 2021 was primarily due to increases in the income producing and other residential, asset-based and venture capital portfolios partially offset by a reduction in the other commercial portfolio due to increased PPP loan forgiveness. The PPP forgiveness in the second quarter of 2021 was $506 million, up from $354 million in the first quarter of 2021. Remaining PPP loans total $609 million as of June 30, 2021 with $15.6 million of net fees to amortize over the remaining life of the loans. The weighted average rate on the $1.7 billion of new production for the second quarter of 2021 increased to 4.55% from 4.36% in the first quarter of 2021 due mainly to a lower amount of PPP loan originations in the second quarter compared to the first quarter.

 

 

 

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:

 

		June 30, 2021								March 31, 2021								June 30, 2020
						% of								% of								% of
Loan and Lease Portfolio		Balance				Total				Balance				Total				Balance				Total
		(In thousands)
Real estate mortgage:
Commercial		$	3,792,198				19	%		$	3,941,610				21	%		$	4,222,075				22	%
Income producing and other residential			4,620,822				24	%			4,045,603				21	%			3,733,659				19	%
Total real estate mortgage			8,413,020				43	%			7,987,213				42	%			7,955,734				41	%
Real estate construction and land:
Commercial			930,785				5	%			990,035				5	%			1,167,609				6	%
Residential			2,574,799				13	%			2,575,788				14	%			2,172,919				11	%
Total real estate construction and land			3,505,584				18	%			3,565,823				19	%			3,340,528				17	%
Total real estate			11,918,604				61	%			11,553,036				61	%			11,296,262				58	%
Commercial:
Asset-based			3,550,903				18	%			3,383,403				18	%			3,412,431				17	%
Venture capital			1,749,432				9	%			1,495,798				8	%			1,814,341				9	%
Other commercial			1,921,909				10	%			2,206,639				11	%			2,760,278				14	%
Total commercial			7,222,244				37	%			7,085,840				37	%			7,987,050				40	%
Consumer			365,409				2	%			340,352				2	%			411,319				2	%
Total loans and leases held for investment, net of deferred fees		$	19,506,257				100	%		$	18,979,228				100	%		$	19,694,631				100	%
Total unfunded loan commitments		$	7,891,875							$	8,127,999							$	7,745,921

 

Allowance for Credit Losses

 

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

 

		Three Months Ended June 30, 2021
		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		$	292,445			$	90,571			$	383,016
Charge-offs			(816	)			-				(816	)
Recoveries			5,971				-				5,971
Net recoveries			5,155				-				5,155
Provision			(72,000	)			(16,000	)			(88,000	)
Ending balance		$	225,600			$	74,571			$	300,171

 

		Three Months Ended March 31, 2021
		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		$	348,181			$	85,571			$	433,752
Charge-offs			(3,988	)			-				(3,988	)
Recoveries			1,252				-				1,252
Net charge-offs			(2,736	)			-				(2,736	)
Provision			(53,000	)			5,000				(48,000	)
Ending balance		$	292,445			$	90,571			$	383,016

 

 

The following table presents allowance for credit losses information as of and for the dates and periods indicated:

 

		June 30,				March 31,				Increase
Allowance for Credit Losses		2021				2021				(Decrease)
		(Dollars in thousands)
Allowance for loan and lease losses		$	225,600			$	292,445			$	(66,845	)
Reserve for unfunded loan commitments			74,571				90,571				(16,000	)
Allowance for credit losses		$	300,171			$	383,016			$	(82,845	)
Provision for credit losses (for the quarter)		$	(88,000	)		$	(48,000	)		$	(40,000	)
Net (recoveries) charge-offs (for the quarter)		$	(5,155	)		$	2,736			$	(7,891	)
Net (recoveries) charge-offs to average loans and leases (for the quarter)			(0.11	)%			0.06	%
Allowance for loan and lease losses to loans and leases held for investment			1.16	%			1.54	%
Allowance for loan and lease losses to loans and leases held for investment, excluding PPP loans			1.19	%			1.63	%
Allowance for credit losses to loans and leases held for investment			1.54	%			2.02	%
Allowance for credit losses to loans and leases held for investment, excluding PPP loans			1.59	%			2.14	%

 

The allowance for credit losses decreased by $82.8 million in the second quarter of 2021 to $300.2 million at June 30, 2021. The decrease in the allowance for credit losses during the second quarter of 2021 was attributable to a provision for credit losses benefit of $88.0 million partially offset by $5.2 million in net recoveries. The allowance for credit losses ratio, excluding PPP loans, of 1.59% remains robust and significantly higher than the pre-pandemic level of 0.97% as of the January 1, 2020 CECL adoption date.

 

Net recoveries were $5.2 million for the second quarter of 2021. Gross charge-offs of $0.8 million were reduced by recoveries of $6.0 million.

 

Net charge-offs were $2.7 million for the first quarter of 2021. Gross charge-offs of $4.0 million were reduced by recoveries of $1.3 million.

 

 

CREDIT QUALITY

 

The following table presents loan and lease credit quality metrics as of the dates indicated:

 

		June 30,				March 31,				Increase
Credit Quality Metrics		2021				2021				(Decrease)
		(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)		$	56,803			$	67,652			$	(10,849	)
Accruing loans contractually past due 90 days or more			-				-				-
Foreclosed assets, net			13,227				14,298				(1,071	)
Total nonperforming assets ("NPAs")		$	70,030			$	81,950			$	(11,920	)
Performing TDRs held for investment		$	40,129			$	27,999			$	12,130
Nonaccrual loans and leases held for investment to loans and leases held for investment			0.29	%			0.36	%
Nonperforming assets to loans and leases held for investment and foreclosed assets			0.36	%			0.43	%
Allowance for credit losses to nonaccrual loans and leases held for investment			528.4	%			566.2	%
Loan and Lease Credit Risk Ratings:
Pass		$	18,822,938			$	18,183,114			$	639,824
Special mention			536,052				632,997				(96,945	)
Classified			147,267				163,117				(15,850	)
Total loans and leases held for investment, net of deferred fees		$	19,506,257			$	18,979,228			$	527,029
Classified loans and leases held for investment to loans and leases held for investment			0.75	%			0.86	%

 

(1) Nonaccrual loans include SBA guaranteed amounts of $24.2 million at June 30, 2021 and $18.4 million at March 31, 2021.

 

Since pro-actively downgrading certain loans at the onset of the pandemic in the first quarter of 2020, special mention loans and leases have decreased $362.6 million from their peak in the first quarter of 2020, while classified loans and leases have decreased $146.0 million from their peak in the second quarter of 2020, and each have continued their steady decline in the second quarter of 2021. Classified and nonaccrual loans and leases are below their pre-pandemic levels and are at their lowest levels since December 31, 2013.

 

 

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:

 

		June 30, 2021								March 31, 2021								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		$	32,065			$	-			$	46,436			$	5			$	(14,371	)		$	(5	)
Income producing and other
residential			6,133				2,179				2,471				6,339				3,662				(4,160	)
Total real estate mortgage			38,198				2,179				48,907				6,344				(10,709	)			(4,165	)
Real estate construction and land:
Commercial			284				-				302				-				(18	)			-
Residential			1,934				22,714				416				1,241				1,518				21,473
Total real estate
construction and land			2,218				22,714				718				1,241				1,500				21,473
Commercial:
Asset-based			1,973				-				2,379				-				(406	)			-
Venture capital			2,717				-				2,432				6,750				285				(6,750	)
Other commercial			11,337				270				12,660				1,251				(1,323	)			(981	)
Total commercial			16,027				270				17,471				8,001				(1,444	)			(7,731	)
Consumer			360				1,454				556				954				(196	)			500
Total held for investment		$	56,803			$	26,617			$	67,652			$	16,540			$	(10,849	)		$	10,077

 

During the second quarter of 2021, nonaccrual loans and leases decreased by $10.8 million due primarily to the payoff of one retail commercial real estate loan.

 

CAPITAL

 

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

 

		June 30, 2021
						Excluding					March 31,
						PPP					2021
		Actual (1)				Loans (1)					Actual
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio			7.67	%			7.89	%	(3)			7.95	%
Common equity tier 1 capital ratio			10.41	%			10.41	%				10.39	%
Total capital ratio			14.99	%			14.99	%				13.60	%
Tangible common equity ratio (2)			7.80	%			7.94	%	(3)			7.68	%

 

(1) Capital information for June 30, 2021 is preliminary.

(2) Non-GAAP measure.

(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.

 

 

ABOUT PACWEST BANCORP

 

PacWest Bancorp (“PacWest”) is a bank holding company with over $34 billion in assets headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 70 full-service branches located in California, one branch located in Durham, North Carolina, and one branch located in Denver, Colorado. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

 

FORWARD LOOKING STATEMENTS

 

This communication contains certain forward-looking information about PacWest 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 has adversely affected PacWest, 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 risks from the COVID-19 pandemic have decreased as the pandemic subsides, however, new variants may continue to impact key macro-economic indicators such as unemployment and GDP and 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’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’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 PacWest 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

 

		June 30,				March 31,				June 30,
		2021				2021				2020
		(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks		$	179,505			$	177,199			$	174,059
Interest-earning deposits in financial institutions			5,678,587				5,517,667				1,747,077
Total cash and cash equivalents			5,858,092				5,694,866				1,921,136
Securities available-for-sale, at estimated fair value			7,198,608				5,941,690				3,851,141
Federal Home Loan Bank stock, at cost			17,250				17,250				17,250
Total investment securities			7,215,858				5,958,940				3,868,391
Loans held for sale			-				25,554				-
Gross loans and leases held for investment			19,580,731				19,055,165				19,780,476
Deferred fees, net			(74,474	)			(75,937	)			(85,845	)
Total loans and leases held for investment, net of deferred fees			19,506,257				18,979,228				19,694,631
Allowance for loan and lease losses			(225,600	)			(292,445	)			(301,050	)
Total loans and leases held for investment, net			19,280,657				18,686,783				19,393,581
Equipment leased to others under operating leases			313,574				327,413				295,191
Premises and equipment, net			39,541				39,622				42,299
Foreclosed assets, net			13,227				14,298				1,449
Goodwill			1,204,118				1,204,092				1,078,670
Core deposit and customer relationship intangibles, net			18,423				21,312				30,564
Other assets			924,497				883,653				734,457
Total assets		$	34,867,987			$	32,856,533			$	27,365,738
LIABILITIES:
Noninterest-bearing deposits		$	11,252,286			$	11,017,462			$	8,629,543
Interest-bearing deposits			18,394,748				17,205,829				14,299,036
Total deposits			29,647,034				28,223,291				22,928,579
Borrowings			6,625				19,750				60,000
Subordinated debentures			861,788				465,814				460,772
Accrued interest payable and other liabilities			505,859				493,541				463,489
Total liabilities			31,021,306				29,202,396				23,912,840
STOCKHOLDERS' EQUITY (1)			3,846,681				3,654,137				3,452,898
Total liabilities and stockholders’ equity		$	34,867,987			$	32,856,533			$	27,365,738
Book value per share		$	32.17			$	30.68			$	29.17
Tangible book value per share (2)		$	21.95			$	20.39			$	19.80
Shares outstanding			119,555,102				119,105,642				118,374,603
(1) Includes net unrealized gain on securities available-for-sale, net		$	145,516			$	106,381			$	145,038
(2) Non-GAAP measure.

 

 

PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
		2021				2021				2020				2021				2020
		(Dollars in thousands, except per share data)
Interest income:
Loans and leases		$	244,529			$	241,544			$	247,851			$	486,073			$	510,129
Investment securities			33,954				30,265				26,038				64,219				53,484
Deposits in financial institutions			2,022				1,528				186				3,550				1,794
Total interest income			280,505				273,337				274,075				553,842				565,407
Interest expense:
Deposits			7,269				7,500				13,075				14,769				41,322
Borrowings			265				193				1,319				458				8,097
Subordinated debentures			6,663				4,375				5,402				11,038				11,962
Total interest expense			14,197				12,068				19,796				26,265				61,381
Net interest income			266,308				261,269				254,279				527,577				504,026
Provision for credit losses			(88,000	)			(48,000	)			120,000				(136,000	)			232,000
Net interest income after provision for credit losses			354,308				309,269				134,279				663,577				272,026
Noninterest income:
Service charges on deposit accounts			3,452				2,934				2,004				6,386				4,662
Other commissions and fees			10,704				9,158				10,111				19,862				19,832
Leased equipment income			10,847				11,354				12,037				22,201				24,288
Gain on sale of loans and leases			1,422				139				346				1,561				433
Gain on sale of securities			-				101				7,715				101				7,897
Other income			13,946				21,143				6,645				35,089				10,846
Total noninterest income			40,371				44,829				38,858				85,200				67,958
Noninterest expense:
Compensation			90,807				79,882				61,910				170,689				123,192
Occupancy			14,784				14,054				14,494				28,838				28,701
Data processing			7,758				6,957				7,102				14,715				13,556
Other professional services			5,256				5,126				4,146				10,382				8,404
Insurance and assessments			3,745				4,903				9,373				8,648				13,622
Intangible asset amortization			2,889				3,079				3,882				5,968				7,830
Leased equipment depreciation			8,614				8,969				7,102				17,583				14,307
Foreclosed assets (income) expense, net			(119	)			1				(146	)			(118	)			(80	)
Acquisition, integration and reorganization costs			200				3,425				-				3,625				-
Customer related expense			4,973				4,818				4,408				9,791				8,340
Loan expense			4,031				3,193				3,379				7,224				6,029
Goodwill impairment			-				-				-				-				1,470,000
Other expense			8,812				15,729				11,315				24,541				21,034
Total noninterest expense			151,750				150,136				126,965				301,886				1,714,935
Earnings (loss) before income taxes			242,929				203,962				46,172				446,891				(1,374,951	)
Income tax expense			62,417				53,556				12,968				115,973				24,956
Net earnings (loss)		$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Basic and diluted earnings (loss) per share		$	1.52			$	1.27			$	0.28			$	2.78			$	(11.98	)
Dividends declared and paid per share		$	0.25			$	0.25			$	0.25			$	0.50			$	0.85

 

 

 

PACWEST BANCORP AND SUBSIDIARIES

NET EARNINGS (LOSS) PER SHARE CALCULATIONS

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
		2021				2021				2020				2021				2020
		(In thousands, except per share data)
Basic Earnings (Loss) Per Share:
Net earnings (loss)		$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Less: earnings allocated to  unvested restricted stock (1)			(3,172	)			(2,355	)			(362	)			(5,495	)			(1,251	)
Net earnings (loss) allocated to  common shares		$	177,340			$	148,051			$	32,842			$	325,423			$	(1,401,158	)
Weighted-average basic shares and unvested restricted stock  outstanding			119,386				118,852				118,192				119,121				118,484
Less: weighted-average unvested restricted stock outstanding			(2,356	)			(2,003	)			(1,606	)			(2,181	)			(1,551	)
Weighted-average basic shares outstanding			117,030				116,849				116,586				116,940				116,933
Basic earnings (loss) per share		$	1.52			$	1.27			$	0.28			$	2.78			$	(11.98	)
Diluted Earnings (Loss) Per Share:
Net earnings (loss) allocated to common shares		$	177,340			$	148,051			$	32,842			$	325,423			$	(1,401,158	)
Weighted-average diluted shares outstanding			117,030				116,849				116,586				116,940				116,933
Diluted earnings (loss) per share		$	1.52			$	1.27			$	0.28			$	2.78			$	(11.98	)

 

(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
		June 30, 2021												March 31, 2021												June 30, 2020
						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)		$	19,057,420			$	246,147				5.18	%		$	18,927,314			$	242,846				5.20	%		$	19,951,603			$	248,474				5.01	%
Investment securities (3)			6,492,721				36,111				2.23	%			5,383,140				32,329				2.44	%			3,846,459				27,430				2.87	%
Deposits in financial institutions			6,347,764				2,022				0.13	%			4,790,231				1,528				0.13	%			733,142				186				0.10	%
Total interest-earning assets (1)			31,897,905				284,280				3.57	%			29,100,685				276,703				3.86	%			24,531,204				276,090				4.53	%
Other assets			2,428,207												2,315,197												2,090,023
Total assets		$	34,326,112											$	31,415,882											$	26,621,227
Liabilities and Stockholders' Equity:
Interest checking		$	7,235,726				2,394				0.13	%		$	6,401,869				2,232				0.14	%		$	4,001,750				1,573				0.16	%
Money market			8,484,933				3,318				0.16	%			7,975,996				3,278				0.17	%			6,114,354				2,856				0.19	%
Savings			598,225				36				0.02	%			572,959				35				0.02	%			524,335				33				0.03	%
Time			1,498,169				1,521				0.41	%			1,493,267				1,955				0.53	%			2,475,858				8,613				1.40	%
Total interest-bearing deposits			17,817,053				7,269				0.16	%			16,444,091				7,500				0.18	%			13,116,297				13,075				0.40	%
Borrowings			225,446				265				0.47	%			226,053				193				0.35	%			871,110				1,319				0.61	%
Subordinated debentures			735,725				6,663				3.63	%			466,101				4,375				3.81	%			459,466				5,402				4.73	%
Total interest-bearing liabilities			18,778,224				14,197				0.30	%			17,136,245				12,068				0.29	%			14,446,873				19,796				0.55	%
Noninterest-bearing demand deposits			11,304,757												10,173,459												8,292,151
Other liabilities			504,089												488,930												435,353
Total liabilities			30,587,070												27,798,634												23,174,377
Stockholders' equity			3,739,042												3,617,248												3,446,850
Total liabilities and stockholders' equity		$	34,326,112											$	31,415,882											$	26,621,227
Net interest income (1)						$	270,083											$	264,635											$	256,294
Net interest spread (1)											3.27	%											3.57	%											3.98	%
Net interest margin (1)											3.40	%											3.69	%											4.20	%
Total deposits (4)		$	29,121,810			$	7,269				0.10	%		$	26,617,550			$	7,500				0.11	%		$	21,408,448			$	13,075				0.25	%

 

(1)   Tax equivalent.

(2)   Includes net loan premium amortization of $1.5 million and $1.2 million and net loan discount accretion of $1.2 million for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively.

(3)   Includes tax-equivalent adjustments of $2.2 million, $2.1 million, and $1.4 million for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020 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

 

		June 30,				March 31,				December 31,				September 30,				June 30,
		2021				2021				2020				2020				2020
		(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks		$	179,505			$	177,199			$	150,464			$	187,176			$	174,059
Interest-earning deposits in financial institutions			5,678,587				5,517,667				3,010,197				2,766,020				1,747,077
Total cash and cash equivalents			5,858,092				5,694,866				3,160,661				2,953,196				1,921,136
Securities available-for-sale			7,198,608				5,941,690				5,235,591				4,532,614				3,851,141
Federal Home Loan Bank stock			17,250				17,250				17,250				17,250				17,250
Total investment securities			7,215,858				5,958,940				5,252,841				4,549,864				3,868,391
Loans held for sale			-				25,554				-				-				-
Gross loans and leases held for investment			19,580,731				19,055,165				19,153,357				19,101,680				19,780,476
Deferred fees, net			(74,474	)			(75,937	)			(69,980	)			(75,480	)			(85,845	)
Total loans and leases held for investment, net of deferred fees			19,506,257				18,979,228				19,083,377				19,026,200				19,694,631
Allowance for loan and lease losses			(225,600	)			(292,445	)			(348,181	)			(345,966	)			(301,050	)
Total loans and leases held for investment, net			19,280,657				18,686,783				18,735,196				18,680,234				19,393,581
Equipment leased to others under  operating leases			313,574				327,413				333,846				286,425				295,191
Premises and equipment, net			39,541				39,622				39,234				40,544				42,299
Foreclosed assets, net			13,227				14,298				14,027				13,747				1,449
Goodwill			1,204,118				1,204,092				1,078,670				1,078,670				1,078,670
Core deposit and customer relationship intangibles, net			18,423				21,312				23,641				26,813				30,564
Other assets			924,497				883,653				860,326				797,223				734,457
Total assets		$	34,867,987			$	32,856,533			$	29,498,442			$	28,426,716			$	27,365,738
LIABILITIES:
Noninterest-bearing deposits		$	11,252,286			$	11,017,462			$	9,193,827			$	9,346,744			$	8,629,543
Interest-bearing deposits			18,394,748				17,205,829				15,746,890				14,618,951				14,299,036
Total deposits			29,647,034				28,223,291				24,940,717				23,965,695				22,928,579
Borrowings			6,625				19,750				5,000				60,000				60,000
Subordinated debentures			861,788				465,814				465,812				463,282				460,772
Accrued interest payable and other liabilities			505,859				493,541				491,962				451,508				463,489
Total liabilities			31,021,306				29,202,396				25,903,491				24,940,485				23,912,840
STOCKHOLDERS' EQUITY (1)			3,846,681				3,654,137				3,594,951				3,486,231				3,452,898
Total liabilities and stockholders’ equity		$	34,867,987			$	32,856,533			$	29,498,442			$	28,426,716			$	27,365,738
Book value per share		$	32.17			$	30.68			$	30.36			$	29.42			$	29.17
Tangible book value per share (2)		$	21.95			$	20.39			$	21.05			$	20.09			$	19.80
Shares outstanding			119,555,102				119,105,642				118,414,853				118,489,927				118,374,603
(1)  Includes net unrealized gain on securities available-for-sale, net		$	145,516			$	106,381			$	172,523			$	155,474			$	145,038
(2) Non-GAAP measure.

 

PACWEST BANCORP AND SUBSIDIARIES

FIVE QUARTER STATEMENT OF EARNINGS

 

		Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2021				2021				2020				2020				2020
		(Dollars in thousands, except per share data)
Interest income:
Loans and leases		$	244,529			$	241,544			$	242,198			$	240,811			$	247,851
Investment securities			33,954				30,265				28,843				24,443				26,038
Deposits in financial institutions			2,022				1,528				1,135				654				186
Total interest income			280,505				273,337				272,176				265,908				274,075
Interest expense:
Deposits			7,269				7,500				8,454				9,887				13,075
Borrowings			265				193				37				27				1,319
Subordinated debentures			6,663				4,375				4,477				4,670				5,402
Total interest expense			14,197				12,068				12,968				14,584				19,796
Net interest income			266,308				261,269				259,208				251,324				254,279
Provision for credit losses			(88,000	)			(48,000	)			10,000				97,000				120,000
Net interest income after provision for credit losses			354,308				309,269				249,208				154,324				134,279
Noninterest income:
Service charges on deposit accounts			3,452				2,934				3,119				2,570				2,004
Other commissions and fees			10,704				9,158				9,974				10,541				10,111
Leased equipment income			10,847				11,354				9,440				9,900				12,037
Gain on sale of loans and leases			1,422				139				1,671				35				346
Gain on sale of securities			-				101				4				5,270				7,715
Other income			13,946				21,143				15,642				9,936				6,645
Total noninterest income			40,371				44,829				39,850				38,252				38,858
Noninterest expense:
Compensation			90,807				79,882				73,171				75,131				61,910
Occupancy			14,784				14,054				14,083				14,771				14,494
Data processing			7,758				6,957				6,718				6,505				7,102
Other professional services			5,256				5,126				6,800				4,713				4,146
Insurance and assessments			3,745				4,903				5,064				3,939				9,373
Intangible asset amortization			2,889				3,079				3,172				3,751				3,882
Leased equipment depreciation			8,614				8,969				7,501				7,057				7,102
Foreclosed assets (income) expense, net			(119	)			1				(272	)			335				(146	)
Acquisition, integration and reorganization costs			200				3,425				1,060				-				-
Customer related expense			4,973				4,818				4,430				4,762				4,408
Loan expense			4,031				3,193				3,926				3,499				3,379
Other expense			8,812				15,729				10,029				8,939				11,315
Total noninterest expense			151,750				150,136				135,682				133,402				126,965
Earnings before income taxes			242,929				203,962				153,376				59,174				46,172
Income tax expense			62,417				53,556				36,546				13,671				12,968
Net earnings		$	180,512			$	150,406			$	116,830			$	45,503			$	33,204
Basic and diluted earnings per share		$	1.52			$	1.27			$	0.99			$	0.38			$	0.28
Dividends declared and paid per share		$	0.25			$	0.25			$	0.25			$	0.25			$	0.25

 

 

 

 

 

 

PACWEST BANCORP AND SUBSIDIARIES

FIVE QUARTER SELECTED FINANCIAL DATA

 

		At or For the Three Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,
		2021				2021				2020				2020				2020
		(Dollars in thousands)
Performance Ratios:
Return on average assets (1)			2.11	%			1.94	%			1.58	%			0.65	%			0.50	%
Pre-provision, pre-goodwill impairment, pre-tax net revenue ("PPNR") return on average assets (1)(2)			1.81	%			2.01	%			2.22	%			2.22	%			2.51	%
Return on average equity (1)			19.36	%			16.86	%			13.14	%			5.18	%			3.87	%
Return on average tangible equity (1)(2)			29.25	%			25.67	%			19.63	%			8.20	%			6.39	%
Efficiency ratio			47.9	%			46.4	%			43.6	%			45.1	%			42.9	%
Noninterest expense as a percentage of average assets (1)			1.77	%			1.94	%			1.84	%			1.90	%			1.92	%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)			5.18	%			5.20	%			5.15	%			5.01	%			5.01	%
Average investment securities (3)			2.23	%			2.44	%			2.50	%			2.52	%			2.87	%
Average interest-earning assets (3)			3.57	%			3.86	%			4.02	%			4.13	%			4.53	%
Cost of:
Average interest-bearing deposits			0.16	%			0.18	%			0.22	%			0.27	%			0.40	%
Average total deposits			0.10	%			0.11	%			0.14	%			0.17	%			0.25	%
Average interest-bearing liabilities			0.30	%			0.29	%			0.33	%			0.38	%			0.55	%
Net interest spread (3)			3.27	%			3.57	%			3.69	%			3.75	%			3.98	%
Net interest margin (3)			3.40	%			3.69	%			3.83	%			3.90	%			4.20	%
Average Balances:
Assets:
Loans and leases, net of deferred fees		$	19,057,420			$	18,927,314			$	18,769,214			$	19,195,737			$	19,951,603
Investment securities			6,492,721				5,383,140				4,888,993				4,107,915				3,846,459
Deposits in financial institutions			6,347,764				4,790,231				3,576,335				2,554,349				733,142
Interest-earning assets			31,897,905				29,100,685				27,234,542				25,858,001				24,531,204
Total assets			34,326,112				31,415,882				29,334,789				27,935,193				26,621,227
Liabilities:
Noninterest-bearing deposits			11,304,757				10,173,459				9,589,789				8,812,391				8,292,151
Interest-bearing deposits			17,817,053				16,444,091				15,045,451				14,516,923				13,116,297
Total deposits			29,121,810				26,617,550				24,635,240				23,329,314				21,408,448
Borrowings			225,446				226,053				237,098				181,315				871,110
Subordinated debentures			735,725				466,101				463,951				462,375				459,466
Interest-bearing liabilities			18,778,224				17,136,245				15,746,500				15,160,613				14,446,873
Stockholders' equity			3,739,042				3,617,248				3,536,425				3,497,869				3,446,850

 

(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
		June 30,				March 31,				December 31,				September 30,				June 30,
		2021				2021				2020				2020				2020
		(Dollars in thousands)
Credit Quality Ratios:
Nonaccrual loans and leases held for investment to loans and leases held for investment			0.29	%			0.36	%			0.48	%			0.45	%			0.84	%
Nonperforming assets to loans and leases held for investment and foreclosed assets			0.36	%			0.43	%			0.55	%			0.52	%			0.85	%
Classified loans and leases held for investment to loans and leases held for investment			0.75	%			0.86	%			1.39	%			1.44	%			1.49	%
Provision for credit losses (for the quarter) to average loans and leases held for investment (annualized)			(1.85	)%			(1.03	)%			0.21	%			2.01	%			2.42	%
Net charge-offs (for the quarter) to average loans and leases held for investment (annualized)			(0.11	)%			0.06	%			0.40	%			0.75	%			0.27	%
Trailing 12 months net charge-offs to average loans and leases held for investment			0.27	%			0.37	%			0.45	%			0.36	%			0.20	%
Allowance for loan and lease losses to loans and leases held for investment			1.16	%			1.54	%			1.82	%			1.82	%			1.53	%
Allowance for credit losses to loans and leases held for investment			1.54	%			2.02	%			2.27	%			2.33	%			1.94	%
Allowance for credit losses to nonaccrual loans and leases held for investment			528.4	%			566.2	%			475.8	%			516.9	%			229.7	%
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio (1)			7.67	%			7.95	%			8.55	%			8.66	%			8.93	%
Common equity tier 1 capital ratio (1)			10.41	%			10.39	%			10.53	%			10.45	%			9.97	%
Tier 1 capital ratio (1)			10.41	%			10.39	%			10.53	%			10.45	%			9.97	%
Total capital ratio (1)			14.99	%			13.60	%			13.76	%			13.74	%			13.18	%
Risk-weighted assets (1)		$	24,274,256			$	23,012,350			$	22,837,693			$	22,114,040			$	22,781,836
Equity to assets ratio			11.03	%			11.12	%			12.19	%			12.26	%			12.62	%
Tangible common equity ratio (2)			7.80	%			7.68	%			8.78	%			8.71	%			8.93	%
Book value per share		$	32.17			$	30.68			$	30.36			$	29.42			$	29.17
Tangible book value per share (2)		$	21.95			$	20.39			$	21.05			$	20.09			$	19.80
Pacific Western Bank:
Tier 1 leverage capital ratio (1)			8.47	%			8.83	%			9.53	%			9.70	%			10.03	%
Common equity tier 1 capital ratio (1)			11.51	%			11.54	%			11.73	%			11.70	%			11.18	%
Tier 1 capital ratio (1)			11.51	%			11.54	%			11.73	%			11.70	%			11.18	%
Total capital ratio (1)			14.22	%			12.80	%			12.99	%			12.95	%			12.44	%

 

(1) Capital information for June 30, 2021 is preliminary.

(2) Non-GAAP measure.

 

 

GAAP TO NON-GAAP RECONCILIATIONS

 

This press release contains certain non-GAAP financial disclosures for: (1) Pre-provision, pre-goodwill impairment, pre-tax net revenue (“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												Six Months Ended
PPNR and PPNR Return		June 30,				March 31,				June 30,				June 30,
on Average Assets		2021				2021				2020				2021				2020
		(Dollars in thousands)
Net earnings (loss)		$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Add: Provision for credit losses			(88,000	)			(48,000	)			120,000				(136,000	)			232,000
Add: Goodwill impairment			-				-				-				-				1,470,000
Add: Income tax expense			62,417				53,556				12,968				115,973				24,956
Pre-provision, pre-goodwill impairment, pre-tax net revenue ("PPNR")		$	154,929			$	155,962			$	166,172			$	310,891			$	327,049
Average assets		$	34,326,112			$	31,415,882			$	26,621,227			$	32,879,037			$	26,860,133
Return on average assets (1)			2.11	%			1.94	%			0.50	%			2.03	%			(10.48	)%
PPNR return on average assets (2)			1.81	%			2.01	%			2.51	%			1.91	%			2.45	%

 

(1) Annualized net earnings (loss) divided by average assets.

(2) Annualized PPNR divided by average assets.

 

		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Return on Average Tangible Equity		2021				2021				2020				2021				2020
		(Dollars in thousands)
Net earnings (loss)		$	180,512			$	150,406			$	33,204			$	330,918			$	(1,399,907	)
Add: Intangible asset amortization			2,889				3,079				3,882				5,968				7,830
Add: Goodwill impairment			-				-				-				-				1,470,000
Adjusted net earnings		$	183,401			$	153,485			$	37,086			$	336,886			$	77,923
Average stockholders' equity		$	3,739,042			$	3,617,248			$	3,446,850			$	3,678,481			$	4,201,814
Less: Average intangible assets			1,224,208				1,192,780				1,111,302				1,208,581				1,840,246
Average tangible common equity		$	2,514,834			$	2,424,468			$	2,335,548			$	2,469,900			$	2,361,568
Return on average equity (1)			19.36	%			16.86	%			3.87	%			18.14	%			(67.00	)%
Return on average tangible equity (2)			29.25	%			25.67	%			6.39	%			27.51	%			6.64	%

 

(1) Annualized net earnings divided by average stockholders' equity.

(2) Annualized adjusted net earnings divided by average tangible common equity.

 

 

Tangible Common Equity Ratio/		June 30,				March 31,				December 31,				September 30,				June 30,
Tangible Book Value Per Share		2021				2021				2020				2020				2020
		(Dollars in thousands, except per share data)
Stockholders' equity		$	3,846,681			$	3,654,137			$	3,594,951			$	3,486,231			$	3,452,898
Less: Intangible assets			1,222,541				1,225,404				1,102,311				1,105,483				1,109,234
Tangible common equity		$	2,624,140			$	2,428,733			$	2,492,640			$	2,380,748			$	2,343,664
Total assets		$	34,867,987			$	32,856,533			$	29,498,442			$	28,426,716			$	27,365,738
Less: Intangible assets			1,222,541				1,225,404				1,102,311				1,105,483				1,109,234
Tangible assets		$	33,645,446			$	31,631,129			$	28,396,131			$	27,321,233			$	26,256,504
Equity to assets ratio			11.03	%			11.12	%			12.19	%			12.26	%			12.62	%
Tangible common equity ratio (1)			7.80	%			7.68	%			8.78	%			8.71	%			8.93	%
Book value per share		$	32.17			$	30.68			$	30.36			$	29.42			$	29.17
Tangible book value per share (2)		$	21.95			$	20.39			$	21.05			$	20.09			$	19.80
Shares outstanding			119,555,102				119,105,642				118,414,853				118,489,927				118,374,603

 

(1) Tangible common equity divided by tangible assets.

(2) Tangible common equity divided by shares outstanding.

 

CONTACTS

Matthew P. Wagner President and CEO 303.802.8900

Bart R. Olson EVP and CFO 714.989.4149

William J. Black EVP Strategy and Corporate Development 919.597.7466