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PacWest Bancorp Announces Results For The Third Quarter Of 2013

Highlights

  • Net Earnings of $24.2 Million or $0.53 Per Diluted Share
  • Net Interest Margin at 5.46%
  • Noncovered Loans and Leases Grow $34.2 Million
  • Credit Loss Reserve at 1.72% of Loans and Leases and 133% of Nonaccrual Loans and Leases (excludes purchased credit impaired loans)
  • Demand Deposits Increase $37.4 Million and Reach 43% of Total Deposits
  • Core Deposits Increase to 87% of Total Deposits

LOS ANGELES, Oct. 23, 2013 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the third quarter of 2013 of $24.2 million, or $0.53 per diluted share, an increase of $19.8 million from net earnings for the second quarter of 2013 of $4.3 million, or $0.11 per diluted share. Third quarter of 2013 net earnings included a non-taxable securities gain from the First California Financial Group, Inc. ("FCAL") acquisition of $5.2 million, or $0.12 per diluted share, and after-tax acquisition and integration costs primarily associated with the proposed CapitalSource Inc. transaction of $3.5 million, or $0.08 per diluted share. Second quarter of 2013 net earnings included $10.8 million, or $0.28 per diluted share, of after-tax acquisition and integration costs associated with the FCAL acquisition which was consummated on May 31, 2013.

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, adjusted efficiency ratio, and adjusted allowance for credit losses to loans and leases. 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.

THIRD QUARTER RESULTS    
     
  Three Months Ended
  September 30, 2013 June 30, 2013
  (Dollars in thousands, except per share data)
Financial Highlights:    
Net earnings from continuing operations  $ 24,140  $ 4,396
Net earnings   $ 24,163  $ 4,349
Diluted earnings per share from continuing     
operations  $ 0.53  $ 0.11
Diluted earnings per share   $ 0.53  $ 0.11
Adjusted earnings from continuing operations     
before income taxes (1)  $ 38,056  $ 27,853
Annualized return on average assets 1.44% 0.30%
Annualized return on average equity 12.02% 2.62%
Annualized return on average tangible equity (2) 16.85% 3.25%
Net interest margin 5.46% 5.22%
Efficiency ratio 64.3% 93.5%
Adjusted efficiency ratio (3) 57.3% 62.4%
     
At Quarter End:    
Allowance for credit losses to loans and leases     
(excludes PCI loans) (4) 1.72% 1.78%
Allowance for credit losses to nonaccrual    
loans and leases (excludes PCI loans) (4)  133% 135%
Equity to assets ratios:    
PacWest Bancorp Consolidated 12.34% 11.95%
Pacific Western Bank 13.71% 13.29%
Tangible common equity ratios:    
PacWest Bancorp Consolidated 9.12% 8.83%
Pacific Western Bank 10.54% 10.22%
     
(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 expense, securities gains, OREO expenses, and acquisition and integration costs. See GAAP to Non-GAAP Reconciliation table.
(4) PCI refers to purchased credit impaired loans, which includes acquired loans that are impaired on the purchase date. 

The quarter-over-quarter increase in net earnings of $19.8 million was due mostly to: (a) the $12.5 million ($7.3 million after tax) decrease in acquisition and integration costs, (b) the $12.0 million ($7.0 million after tax) increase in interest income on loans and leases, (c) the $5.2 million non-taxable acquisition-related securities gain, (d) the $1.5 million ($845,000 after tax) increase in interest income on investment securities, and (e) the $1.1 million ($643,000 after tax) decrease in net credit costs (provision for credit losses, FDIC loss sharing expense, and OREO expense). These items were offset by the increases in compensation expense of $1.9 million ($1.1 million after tax), other professional services of $590,000 ($342,000 after tax) and other expense of $1.3 million ($775,000 after tax).    

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