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Net Earnings of $4.3 Million or $0.11 Per Diluted Share, Including After-tax Acquisition and Integration Costs of $10.8 million, or $0.28 Per Diluted Share
Net Interest Margin at 5.22%
Credit Loss Reserve at 1.78% of Loans and Leases and 135% of Nonaccrual Loans and Leases (excludes purchased credit impaired loans)
Noninterest-Bearing Deposits at 41% and Core Deposits at 85% of Total Deposits
First California Financial Group, Inc. Acquisition Closed May 31, 2013 and IT Systems Converted on June 15, 2013
LOS ANGELES, July 23, 2013 (GLOBE NEWSWIRE) --
PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the second quarter of 2013 of $4.3 million, or $0.11 per diluted share, a decrease of $9.2 million from net earnings for the first quarter of 2013 of $13.5 million, or $0.37 per diluted share. Second quarter of 2013 net earnings includes after-tax acquisition and integration costs associated with the First California Financial Group, Inc. ("FCAL") transaction of $10.8 million, or $0.28 per diluted share. Net earnings from continuing operations were $4.4 million for the second quarter compared to $13.5 million for the first quarter. The operating results of Electronic Payment Systems, a division acquired in the FCAL acquisition, have been reported as discontinued operations because it is being wound down.
This press release contains certain non-GAAP financial disclosures for tangible common equity, return on average tangible equity, adjusted earnings from continuing operations before income taxes, and adjusted efficiency ratio. 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. Given that the use of tangible common equity amounts and ratios and return on average tangible equity is prevalent among banking regulators, investors and analysts, we disclose our tangible common equity ratio in addition to equity-to-assets ratio, and our return on average tangible equity in addition to return on average equity. Also, as analysts and investors view adjusted earnings from continuing operations before income taxes as an indicator of the Company's ability to absorb credit losses, we disclose this amount in addition to pre-tax earnings. We disclose the adjusted efficiency ratio as it shows the trend in recurring overhead-related noninterest expense relative to recurring net revenues. Please refer to the tables at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.
SECOND QUARTER RESULTS
Three Months Ended
(Dollars in thousands, except per share data)
Net earnings from continuing operations
Diluted earnings per share from continuing operations
Diluted earnings per share
Adjusted earnings from continuing operations before income taxes (1)
Annualized return on average assets
Annualized return on average equity
Annualized return on average tangible equity (2)
Net interest margin
Adjusted efficiency ratio (3)
At Quarter End:
Allowance for credit losses to loans and leases (excludes PCI loans) (4)
Allowance for credit losses to nonaccrual loans and leases (excludes PCI loans) (4)
Equity to assets ratios:
PacWest Bancorp Consolidated
Pacific Western Bank
Tangible common equity ratios:
PacWest Bancorp Consolidated
Pacific Western Bank
(1) Represents pre-tax earnings from continuing operations excluding net credit costs, securities gains and losses, and acquisition and integration costs. See GAAP to Non-GAAP Reconciliation table.
(2) Calculation reduces average equity by average intangible assets. See GAAP to Non-GAAP Reconciliation table.
(3) Excludes FDIC loss sharing income, securities gains, OREO expenses, and acquisition and integration costs. See GAAP to Non-GAAP Reconciliation table.
(4) Purchased credit-impaired loans ("PCI" loans) include acquired loans that are impaired on the purchase date. Loans and leases (excluding PCI loans) include (a) originated loans and leases, and (b) acquired loans and leases that were not impaired on the purchase date, which we may refer to as "Non-PCI" loans and leases.
The quarter-over-quarter decline in net earnings of $9.1 million was due mostly to: (a) the $17.3 million ($10.0 million after tax) increase in acquisition and integration costs, (b) the $882,000 ($512,000 after tax) increase in occupancy costs, (c) the $707,000 ($410,000 after tax) increase in compensation expense, and (d) the $409,000 ($237,000 after tax) decline in gain on sale of securities. These items were offset partially by (a) the $2.2 million ($1.3 million after tax) increase in interest income on loans and (b) the $2.2 million ($1.3 million after tax) decrease in net credit costs (provisions, FDIC loss sharing expense, and OREO expense). The increases in acquisition and integration costs, occupancy costs, compensation expense, and interest income on loans were attributable primarily to the acquisition of FCAL on May 31, 2013.