Highlights
  • Net Earnings of $90.5 Million, or $0.74 Per Diluted Share
  • New Loan and Lease Production of $842.1 Million for the Quarter
  • Core Deposits Increased $399 Million during the Quarter and Represented 71% of Total Deposits
  • Core Tax Equivalent Net Interest Margin of 5.10%

LOS ANGELES, April 14, 2016 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the first quarter of 2016 of $90.5 million, or $0.74 per diluted share, compared to net earnings for the fourth quarter of 2015 of $71.8 million, or $0.60 per diluted share. The $0.14 increase in diluted earnings per share was due mostly to higher accretion on acquired loans and leases ($0.06 per share), higher noninterest income from higher gain on securities and lower dividends and gains on equity investments ($0.02 per share), and lower acquisition, integration and reorganization costs ($0.09 per share), and a higher provision for credit losses ($0.03 per share) as compared to the fourth quarter of 2015.

Matt Wagner, President and CEO, commented, "We continued to deliver outstanding performance in the first quarter and demonstrate our earning power despite competitive and market challenges. Our strong first quarter results produced a return on assets of 1.72%, a return on tangible equity of 16.45% and a quarter over quarter 23% increase in diluted earnings per share. We are also pleased with the continued transformation of our deposit portfolio as core deposits were 71% of total deposits compared to 52% a year ago. With flat net loan growth for the first quarter due to the sale of Pacific Western Equipment Finance unit leases, we expect mid to upper single digit loan growth for the year."

Patrick Rusnak, Executive Vice President and CFO stated, "Our first quarter core tax equivalent net interest margin (NIM) remained steady at 5.10% and the NIM excluding all purchase accounting items increased 5 basis points to 4.93%. The first quarter NIM was helped by the combination of the 25 basis point rate hike in December and higher-yielding assets were a higher percentage of average interest-earning assets."

Mr. Rusnak continued, "We continue to control operating expenses as shown by our efficiency ratio, which declined to 38.5% in the first quarter. We are pleased with our solid start to 2016 and believe our talented teams will continue to deliver strong results."

Mr. Wagner continued, "Now that we have completed the integration of the Square 1 Bank employees and business units, we are focused on two important corporate initiatives for 2016. We will be converting our core processing systems beginning in the second quarter. Also, later this year, we will submit our first DFAST capital stress test to our regulators."

FINANCIAL HIGHLIGHTS
             
  At or For the Three Months Ended  
  March 31,   December 31,      
    2016       2015     Change  
  (Dollars in thousands, except per share data)  
Financial Highlights:              
Net Earnings $   90,456     $   71,841     $   18,615    
Diluted Earnings Per Share $   0.74     $   0.60     $   0.14    
Return on Average Assets    1.72 %     1.37 %       0.35    
Return on Average             
Tangible Equity (1)    16.45 %     13.14 %       3.31    
             
Net Interest Margin (tax equivalent)   5.53 %     5.22 %       0.31    
Core Net Interest Margin (tax equivalent) (1)   5.10 %     5.10 %       -     
Efficiency Ratio   38.5 %     39.3 %       (0.8 )  
             
Total Assets $   21,031,009     $   21,288,490     $   (257,481 )  
Loans and Leases, Net of Deferred Fees $   14,483,517     $   14,478,254     $   5,263    
Total Deposits $   15,441,375     $   15,666,182     $   (224,807 )  
             
Noninterest-Bearing Deposits as Percentage of Total Deposits   40 %     39 %       1    
Core Deposits as Percentage of Total Deposits   71 %     67 %       4    
Tangible Common Equity Ratio (1)   11.87 %     11.38 %       0.49    
Tangible Book Value Per Share (1) $   18.33     $   17.86     $   0.47    
             
(1) Non-GAAP measure.            
             

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $15.4 million to $244.6 million for the first quarter of 2016 compared to $229.2 million for the fourth quarter of 2015 due to higher accretion on acquired loans and a higher average loan and lease balance offset by a lower average investment securities balance. Total accretion on acquired loans was $27.9 million in the first quarter of 2016 (77 basis points on the loan and lease yield) compared to $16.1 million in the fourth quarter of 2015 (46 basis points on the loan and lease yield). The increase in accretion was due primarily to higher accelerated accretion from payoffs on acquired loans, including $12.1 million from the payoff of a nonaccrual purchased credit impaired ("PCI") loan. The loan and lease yield for the first quarter of 2016 was 6.57% compared to 6.21% for the fourth quarter of 2015. The increase in the loan and lease yield was due to the higher accretion on acquired loans offset by the yield on new originations being lower than the current portfolio yield. Excluding accelerated accretion, the core loan and lease yield was 6.03% in the first quarter compared to 6.05% in the fourth quarter.

The tax equivalent net interest margin ("NIM") for the first quarter of 2016 was 5.53% compared to 5.22% for the fourth quarter of 2015. The increase in the NIM was due to higher accretion on acquired loans and a higher percentage of average higher-yielding assets in the mix. Accretion on acquired loans contributed 62 basis points to the NIM in the first quarter of 2016 and 36 basis points to the NIM in the fourth quarter of 2015. Excluding accelerated accretion, the core NIM was 5.10% for both the first and fourth quarters.    

The cost of total deposits decreased to 0.23% in the first quarter of 2016 from 0.24% in the fourth quarter of 2015 due to the increased average balance of noninterest-bearing deposits and a lower level of higher-cost time deposits.

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  
    March 31, 2016   December 31, 2015  
      Loan and       Loan and    
    NIM Lease Yield   NIM Lease Yield  
Reported   5.53 %   6.57 %     5.22 %   6.21 %  
Less:  Accelerated accretion of acquisition discounts from early payoffs of acquired loans    (0.43 )%   (0.54 )%     (0.12 )%   (0.16 )%  
Core      5.10 %   6.03 %     5.10 %   6.05 %  
               

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    
  March 31, 2016   December 31, 2015    
    Impact on     Impact on    
  Amount NIM   Amount NIM    
  (Dollars in thousands)    
               
Net interest income/NIM  $   249,610     5.53 %   $   233,959     5.22 %    
Less:  Accelerated accretion of acquisition discounts from early payoffs of acquired loans      (19,465 )   (0.43 )%       (5,511 )   (0.12 )%    
  Remaining accretion of Non-PCI loan acquisition discounts     (8,403 )   (0.19 )%       (10,553 )   (0.24 )%    
  Total accretion of loan acquisition discounts     (27,868 )   (0.62 )%       (16,064 )   (0.36 )%    
  Amortization of TruPS discount     1,395     0.03 %       1,397     0.03 %    
  Accretion of time deposits premium     (270 )   (0.01 )%       (384 )   (0.01 )%    
        (26,743 )   (0.60 )%       (15,051 )   (0.34 )%    
Net interest income/NIM - excluding purchase accounting $   222,867     4.93 %   $   218,908     4.88 %    
                 

Noninterest Income

Noninterest income increased by $6.5 million to $34.5 million for the first quarter of 2016 compared to $28.1 million for the fourth quarter of 2015 due mostly to higher gains on sales of securities of $8.1 million and lower FDIC loss sharing expense of $1.9 million, offset by lower dividends and gains on equity investments of $4.6 million. The gain on securities resulted from the sale of $335 million of securities in the first quarter due to ongoing portfolio management activities. The lower FDIC loss sharing expense is due to a fewer number and decreased balance of covered assets combined with fewer asset resolutions this quarter compared to the previous quarter. Dividends and gains from equity investments decreased as this item fluctuates from period to period based upon dividends received and number of sales of equity investments. Other income in the first quarter included a loan syndication fee ($0.9 million), a death benefit received on a BOLI policy ($0.6 million) and a loss on the sale of the Pacific Western Equipment Finance ("PWEF") leasing unit ($0.7 million); there are no similar items in the other periods presented.

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

             
  Three Months Ended  
  March 31,   December 31,   Increase  
Noninterest Income   2016       2015     (Decrease)  
  (In thousands)          
             
Service charges on deposit accounts $   3,856     $   3,901     $   (45 )  
Other commissions and fees     11,489         12,691         (1,202 )  
Leased equipment income     8,244         7,791         453    
Gain on sale of loans and leases     245         183         62    
Gain on securities     8,110         -         8,110    
FDIC loss sharing expense, net     (2,415 )       (4,291 )       1,876    
Other income:            
Dividends and realized gains on equity investments     246         4,886         (4,640 )  
Foreign currency translation net gains (losses)     606         (661 )       1,267    
Income recognized on early repayment of leases     922         802         120    
Other     3,236         2,756         480    
Total noninterest income  $   34,539     $   28,058     $   6,481    
             

Noninterest Expense

Noninterest expense decreased by $11.6 million to $110.7 million for the first quarter of 2016 compared to $122.3 million for the fourth quarter of 2015. The decrease was due mostly to lower acquisition, integration and reorganization costs of $17.4 million offset by lower foreclosed assets income and higher compensation expense. Foreclosed assets income is lower by $2.6 million due to lower gains on foreclosed asset sales compared to the prior quarter. Compensation expense increased $2.1 million due to higher payroll taxes from the timing of the annual employment tax cycle and higher stock-based compensation due to awards granted in the first quarter offset partially by lower commission and incentive expense.   

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

  Three Months Ended  
  March 31,   December 31,   Increase  
Noninterest Expense   2016       2015     (Decrease)  
  (In thousands)  
             
Compensation $   61,065     $   58,992     $   2,073    
Occupancy      12,632         12,194         438    
Data processing     5,904         5,585         319    
Other professional services     3,572         3,811         (239 )  
Insurance and assessments     4,965         5,450         (485 )  
Intangible asset amortization     4,746         4,910         (164 )  
Leased equipment depreciation     5,024         4,235         789    
Foreclosed assets (income) expense, net     (561 )       (3,185 )       2,624    
Acquisition, integration and reorganization costs     200         17,600         (17,400 )  
Other expense:            
Loan expense     2,155         2,745         (590 )  
Other     10,986         9,927         1,059    
Total noninterest expense $   110,688     $   122,264     $   (11,576 )  
             

Income Taxes

Our overall effective income tax rate was 39.0% in the first quarter of 2016 and 40.7% for the fourth quarter of 2015. The first quarter effective tax rate approximates the expected effective tax rate for calendar year 2016.

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Average total loans and leases for the first quarter of 2016 increased by $440 million compared to the fourth quarter while period-end total loans and leases increased by $5.3 million in the first quarter to $14.5 billion at March 31, 2016. The loan and lease production of $842 million was largely offset by repayment activity and the sale of the PWEF leases.   

The following table presents a roll forward of the loan and lease portfolio for the periods indicated:
         
  Three Months Ended  
  March 31,   December 31,  
Loan and Lease Roll Forward (1)   2016       2015    
  (In thousands)
         
Beginning balance $   14,478,254     $   12,452,205    
New production     842,064         1,403,611    
Existing loans and leases:        
Principal repayments, net (2)     (665,281 )       (910,445 )  
Loan and lease sales (3)     (26,657 )       (19,610 )  
Transfers to foreclosed assets     (129 )       -    
Charge-offs     (5,536 )       (1,227 )  
Sale of PWEF      (139,198 )       -    
Loans acquired through Square 1 acquisition     -         1,553,720    
Ending balance $   14,483,517     $   14,478,254    
         
Weighted average yields on new production    5.29 %     5.29 %  
         
(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.  
(3) Includes $15.1 million of PWEF leases sold to third parties during the three months ended March 31, 2016.  
         

The following table presents the composition of our loan and lease portfolio as of the dates indicated:
             
  March 31,   December 31,   March 31,  
Loan and Lease Portfolio   2016       2015       2015    
  (In thousands)  
Real estate mortgage:            
Commercial $   4,640,419     $   4,642,088     $   4,851,038    
Residential     1,149,998         1,211,209         959,364    
Total real estate mortgage     5,790,417         5,853,297         5,810,402    
Real estate construction and land:            
Commercial     308,192         349,436         212,738    
Residential     269,965         184,382         122,338    
Total real estate construction and land     578,157         533,818         335,076    
Total real estate loans     6,368,574         6,387,115         6,145,478    
Commercial:            
Cash flow     3,173,424         3,073,965         3,004,304    
Asset-based     2,589,598         2,547,665         2,114,411    
Venture capital     1,507,788         1,458,013         -    
Equipment finance     733,228         890,349         914,015    
Total commercial     8,004,038         7,969,992         6,032,730    
Consumer     110,905         121,147         93,958    
Total loans and leases, net of deferred fees $   14,483,517     $   14,478,254     $   12,272,166    
             
Total unfunded loan commitments $   3,812,554     $   3,580,655     $   2,122,748    
             

Loan growth in the first quarter came primarily from the cash flow, construction and venture capital portfolios. These same portfolios also accounted for most of the growth in our unfunded commitments during the quarter.

Credit Exposure Affected by Low Oil Prices

At March 31, 2016, PacWest had 19 outstanding loan and lease relationships totaling $127.7 million to borrowers involved in the oil and gas services industry, down from $137.3 million at December 31, 2015. The collateral for this credit exposure includes primarily equipment, such as drilling equipment and transportation vehicles. The reserves related to this credit exposure total approximately 15%. At March 31, 2016, three relationships totaling $45.5 million were on nonaccrual status and were classified, down from $47.1 million at December 31, 2015. The largest of these relationships had an aggregate outstanding balance of $39.9 million at March 31, 2016.    

Deposits and Client Investment Funds

The following table presents the composition of our deposit portfolio as of the dates indicated:
  March 31,   December 31,   March 31,  
Deposit Category   2016       2015       2015    
  (Dollars in thousands)  
             
Noninterest-bearing demand deposits $   6,139,963     $   6,171,455     $   3,029,463    
Interest checking deposits     921,189         874,349         739,073    
Money market deposits     3,144,843         2,782,974         1,682,123    
Savings deposits     764,323         742,795         746,741    
Total core deposits     10,970,318         10,571,573         6,197,400    
Brokered non-maturity deposits     985,784         942,253         155,976    
Total non-maturity deposits     11,956,102         11,513,826         6,353,376    
Time deposits under $100,000     1,357,598         1,656,227         2,562,078    
Time deposits of $100,000 and over     2,127,675         2,496,129         3,018,721    
Total time deposits     3,485,273         4,152,356         5,580,799    
Total deposits $   15,441,375     $   15,666,182     $   11,934,175    
             
Noninterest-bearing demand deposits as percentage of total deposits   40 %     39 %     26 %  
Core deposits as percentage of total deposits   71 %     67 %     52 %  
             

At March 31, 2016, core deposits totaled $11.0 billion, or 71% of total deposits, including $6.1 billion of noninterest-bearing demand deposits, or 40% of total deposits. 

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients, including investments managed by Square 1 Asset Management, Inc. ("S1AM") our registered investment advisor subsidiary and third-party sweep products. Total client investment funds at March 31, 2016 were $1.6 billion, of which $1.3 billion was managed by S1AM. Approximately $184 million of client investment funds were shifted into on-balance sheet deposit products during the first quarter of 2016.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $20.1 million was recorded in the first quarter of 2016 compared to $13.8 million in the fourth quarter of 2015. The first quarter provision related almost entirely to Non-PCI loans and leases and increased due in part to additions to our oil and gas portfolio reserves. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio increased to 0.96% at March 31, 2016 from 0.85% at December 31, 2015. 

The following tables show roll forwards of the allowance for credit losses for the periods indicated:
                   
  Three Months Ended March 31, 2016
  Non-PCI                  
Allowance for Credit   Loans and     Unfunded     Total     PCI    
Losses Rollforward Leases   Commitments   Non-PCI   Loans   Total
  (In thousands)
                   
Beginning balance $   105,534     $   16,734     $   122,268     $   9,577     $   131,845  
Charge-offs     (5,373 )       -         (5,373 )       (163 )       (5,536 )
Recoveries     1,481         -         1,481         -         1,481  
Net charge-offs     (3,892 )       -         (3,892 )       (163 )       (4,055 )
Provision      19,165         835         20,000         140         20,140  
Ending balance $   120,807     $   17,569     $   138,376     $   9,554     $   147,930  
                   
  Three Months Ended December 31, 2015
  Non-PCI                  
Allowance for Credit   Loans and     Unfunded     Total     PCI    
Losses Rollforward Leases   Commitments   Non-PCI   Loans   Total
  (In thousands)
                   
Beginning balance $   92,316     $   8,374     $   100,690     $   10,955     $   111,645  
Fair value of acquired reserve for unfunded commitments     -         4,746         4,746         -         4,746  
Charge-offs     (1,153 )       -         (1,153 )       (74 )       (1,227 )
Recoveries     2,871         -         2,871         38         2,909  
Net recoveries     1,718         -         1,718         (36 )       1,682  
Provision (negative provision)     11,500         3,614         15,114         (1,342 )       13,772  
Ending balance $   105,534     $   16,734     $   122,268     $   9,577     $   131,845  
                   

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:
                 
  March 31, 2016   December 31, 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 $   14,365,915   $   138,376     0.96 %   $   14,339,070   $   122,268     0.85 %  
Acquired loans     (5,468,875 )     (34,231 (1 )             (6,030,921 )     (19,127 (1 )        
Adjusted balance $   8,897,040   $   104,145     1.17 %   $   8,308,149   $   103,141     1.24 %  
                 
Ending balance $   14,365,915   $   138,376     0.96 %   $   14,339,070   $   122,268     0.85 %  
Unamortized net discount     78,761       78,761   (2 )             92,192       92,192    (2 )        
Adjusted balance $   14,444,676   $   217,137     1.50 %   $   14,431,262   $   214,460     1.49 %  
                 
(1) Allowance attributed to $5.5 billion and $6.0 billion of acquired Non-PCI loans at March 31, 2016 and December 31, 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 $5.5 billion and $6.0 billion of acquired Non-PCI loans at March 31, 2016 and December 31, 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 $78.8 million at March 31, 2016, is expected to be substantially accreted to income by the end of 2018.    
   

Non-PCI loans and leases at March 31, 2016 included $8.9 billion of originated loans and leases that were not obtained through acquisitions. The related allowance for loan and lease losses totaled $90.5 million, or 1.02% of the outstanding balance.

CREDIT QUALITY

The following table presents Non-PCI loan and lease credit quality metrics as of the dates indicated:
         
  March 31,   December 31,  
Non-PCI Credit Quality Metrics   2016       2015    
  (Dollars in thousands)  
         
Nonaccrual loans and leases (1) $   130,418     $   129,019    
Classified loans and leases      384,698         391,754    
Performing restructured loans     66,829         40,182    
Allowance for credit losses     138,376         122,268    
Net charge-offs (recoveries) (for the quarter)     3,892         (1,718 )  
Provision for credit losses (for the quarter)     20,000         15,114    
Allowance for credit losses to loans and leases   0.96 %     0.85 %  
Allowance for credit losses to nonaccrual loans and leases (1)   106.1 %     94.8 %  
Nonaccrual loans and leases to loans and leases    0.91 %     0.90 %  
Nonperforming assets to loans and leases and foreclosed assets   1.05 %     1.06 %  
Classified loans and leases to loans and leases   2.68 %     2.73 %  
         
(1) The March 31, 2016 and December 31, 2015 amounts include $16.2 million and $85.2 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:
  Non-PCI Nonaccrual Loans and Leases   Non-PCI Accruing and  
  March 31, 2016   December 31, 2015   30-89 Days Past Due  
    % of       % of     March 31,   December 31,  
    Loan       Loan       2016       2015    
  Amount Category   Amount Category   Amount   Amount  
  (Dollars in thousands)  
Real estate mortgage:                    
Commercial $   30,357     0.7 %   $   52,363     1.2 %   $   4,968     $   1,498    
Residential     5,807     0.5 %       4,914     0.4 %       730         3,174    
Total real estate mortgage     36,164     0.6 %       57,277     1.0 %       5,698         4,672    
Real estate construction and land:                    
Commercial     -       -         -       -         -         -    
Residential     370     0.1 %       372     0.2 %       -         -    
Total real estate construction and land     370     0.1 %       372     0.1 %       -         -    
Commercial:                    
Cash flow     39,665     1.3 %       15,800     0.5 %       639         1,118    
Asset-based     2,046     0.1 %       2,505     0.1 %       -         1    
Venture capital     -       -         124       -         9,554         250    
Equipment finance (1)     51,247     7.0 %       51,410     5.8 %       1,870         360    
Total commercial     92,958     1.2 %       69,839     0.9 %       2,063         1,729    
Consumer     926     0.8 %       1,531     1.3 %       30         628    
Total Non-PCI loans and leases  $ 130,418     0.9 %   $ 129,019     0.9 %   $ 17,791     $ 7,029    
                     
(1) Includes nonaccrual leases and loans to companies involved in the oil and gas industries of $45.5 million and $47.1 million at March 31, 2016 and December 31, 2015, respectively.   
                 

The following table presents nonperforming assets as of the dates indicated:
         
  March 31,   December 31,  
Nonperforming Assets   2016       2015    
  (Dollars in thousands)  
         
Nonaccrual Non-PCI loans and leases $   130,418     $   129,019    
Nonaccrual PCI Loans (1)     3,241         4,596    
Total nonaccrual loans and leases     133,659         133,615    
Non-PCI accruing loan contractually past due 90 days or more     2,538         700    
Foreclosed assets, net     18,310         22,120    
Total nonperforming assets $   154,507     $   156,435    
         
Nonaccrual loans and leases to loans and leases   0.92 %     0.92 %  
Nonperforming assets to loans and leases and foreclosed assets   1.06 %     1.08 %  
         
(1) Represents legacy CapitalSource borrowing relationships placed on nonaccrual status as of the acquisition date.   
         

ABOUT PACWEST BANCORP

PacWest Bancorp ("PacWest") is a bank holding company with $21 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank ("Pacific Western"). The Bank has 80 full-service branches located throughout the state of California and one branch in Durham, North Carolina. 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 under the brands of its business groups, CapitalSource and Square 1 Bank. CapitalSource provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis. Square 1 Bank offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in 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 loan and lease portfolio growth, profitability, 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:
  • changes in economic or competitive market conditions could negatively impact investment or lending opportunities or product pricing and services;
  • 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 delinquencies, charge-offs, and loan losses;
  • compression of spreads on newly originated loans and leases;
  • the impact of asset/liability repricing risk and liquidity risk on net interest margin and the value of investments;
  • higher than anticipated increases in operating expenses;
  • increased costs to manage and sell foreclosed assets;
  • reduced demand for our services due to strategic or regulatory reasons;
  • our inability to grow deposits or access wholesale funding sources;
  • legislative or regulatory requirements or changes could negatively impact our business including an increase to capital requirements;
  • loan repayments higher than expected;
  • 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   
             
  March 31,   December 31,   March 31,  
    2016       2015       2015    
  (Dollars in thousands, except per share data)  
ASSETS:            
Cash and due from banks $   161,977     $   161,020     $   140,873    
Interest-earning deposits in financial institutions     357,541         235,466         250,981    
Total cash and cash equivalents       519,518         396,486         391,854    
             
Securities available-for-sale, at estimated fair value     3,240,586         3,559,437         1,595,409    
Federal Home Loan Bank stock, at cost     17,250         19,710         28,905    
Total investment securities     3,257,836         3,579,147         1,624,314    
             
Non-PCI loans and leases     14,365,915         14,339,070         12,047,946    
PCI loans     176,607         189,095         254,346    
Total gross loans and leases     14,542,522         14,528,165         12,302,292    
Deferred fees and costs     (59,005 )       (49,911 )       (30,126 )  
Total loans and leases, net of deferred fees     14,483,517         14,478,254         12,272,166    
Allowance for loan and lease losses     (130,361 )       (115,111 )       (92,378 )  
Total loans and leases, net     14,353,156         14,363,143         12,179,788    
             
Equipment leased to others under operating leases     205,163         197,452         119,959    
Premises and equipment, net     39,713         39,197         36,022    
Foreclosed assets, net     18,310         22,120         35,940    
Deferred tax asset, net     91,126         126,389         236,065    
Goodwill     2,175,791         2,176,291         1,728,380    
Core deposit and customer relationship intangibles, net     48,137         53,220         15,703    
Other assets     322,259         335,045         275,915    
Total assets $   21,031,009     $   21,288,490     $   16,643,940    
             
LIABILITIES:            
Noninterest-bearing deposits $   6,139,963     $   6,171,455     $   3,029,463    
Interest-bearing deposits     9,301,412         9,494,727         8,904,712    
Total deposits     15,441,375         15,666,182         11,934,175    
Borrowings     551,401         621,914         618,156    
Subordinated debentures     438,723         436,000         431,448    
Accrued interest payable and other liabilities     142,918         166,703         126,800    
Total liabilities     16,574,417         16,890,799         13,110,579    
STOCKHOLDERS' EQUITY (1)     4,456,592         4,397,691         3,533,361    
Total liabilities and stockholders' equity $   21,031,009     $   21,288,490     $   16,643,940    
             
(1) Includes net unrealized gain on securities available-for-sale, net $   48,479     $   27,828     $   28,744    
             
Book value per share $   36.60     $   36.22     $   34.29    
Tangible book value per share $   18.33     $   17.86     $   17.36    
             
Shares outstanding      121,771,252         121,413,727       103,044,257    
             

 
PACWEST BANCORP AND SUBSIDIARIES  
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS   
             
  Three Months Ended  
  March 31,   December 31,   March 31,  
    2016       2015       2015    
  (Dollars in thousands, except per share data)
Interest income:            
Loans and leases $   236,375     $   219,677     $   202,097    
Investment securities     22,547         23,648         12,195    
Deposits in financial institutions     308         172         22    
Total interest income     259,230         243,497         214,314    
             
Interest expense:            
Deposits     9,073         9,391         10,479    
Borrowings     581         159         235    
Subordinated debentures     4,982         4,748         4,525    
Total interest expense     14,636         14,298         15,239    
             
Net interest income     244,594         229,199         199,075    
Provision for credit losses     20,140         13,772         16,434    
Net interest income after provision  for credit losses     224,454         215,427         182,641    
             
Noninterest income:            
Service charges on deposit accounts     3,856         3,901         2,574    
Other commissions and fees     11,489         12,691         5,396    
Leased equipment income     8,244         7,791         5,382    
Gain on sale of loans and leases     245         183         -    
Gain on securities     8,110         -         3,275    
FDIC loss sharing expense, net     (2,415 )       (4,291 )       (4,399 )  
Other income     5,010         7,783         8,643    
Total noninterest income     34,539         28,058         20,871    
             
Noninterest expense:            
Compensation      61,065         58,992         47,737    
Occupancy     12,632         12,194         10,600    
Data processing     5,904         5,585         4,308    
Other professional services     3,572         3,811         3,221    
Insurance and assessments     4,965         5,450         3,025    
Intangible asset amortization     4,746         4,910         1,501    
Leased equipment depreciation     5,024         4,235         3,103    
Foreclosed assets (income) expense, net     (561 )       (3,185 )       336    
Acquisition, integration and reorganization costs      200         17,600         2,000    
Other expense     13,141         12,672         8,529    
Total noninterest expense     110,688         122,264         84,360    
             
Earnings before income taxes     148,305         121,221         119,152    
Income tax expense      (57,849 )       (49,380 )       (46,073 )  
Net earnings   $   90,456     $   71,841     $   73,079    
             
Basic and diluted earnings per share $   0.74     $   0.60     $   0.71    
             

PACWEST BANCORP AND SUBSIDIARIES 
NET EARNINGS PER SHARE CALCULATIONS 
           
  Three Months Ended
  March 31,   December 31,   March 31,
    2016       2015       2015  
  (Dollars in thousands, except per share data)
Basic Earnings Per Share:          
Net earnings  $   90,456     $   71,841     $   73,079  
Less: earnings allocated to unvested restricted stock (1)     (1,067 )       (690 )       (819 )
Net earnings allocated to common shares $   89,389     $   71,151     $   72,260  
           
Weighted-average basic shares and unvested restricted stock outstanding     121,598         120,385         103,035  
Less: weighted-average unvested restricted stock outstanding     (1,392 )       (1,133 )       (1,122 )
Weighted-average basic shares outstanding     120,206         119,252         101,913  
           
Basic earnings per share $   0.74     $   0.60     $   0.71  
           
Diluted Earnings Per Share:          
Net earnings allocated to common shares $   89,389     $   71,151     $   72,260  
           
Weighted-average basic shares outstanding     120,206         119,252         101,913  
           
Diluted earnings per share $   0.74     $   0.60     $   0.71  
           
(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.
 

PACWEST BANCORP AND SUBSIDIARIES   
AVERAGE BALANCE SHEET AND YIELD ANALYSIS   
                         
  Three Months Ended  
  March 31, 2016   December 31, 2015   March 31, 2015  
    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 $   167,626   $   20,072     48.16 %   $   169,772   $   6,345     14.83 %   $   260,648   $   10,165     15.82 %  
Non-PCI loans and leases     14,303,539       216,303     6.08 %       13,861,330       213,332     6.11 %       11,795,034       191,932     6.60 %  
Total loans and leases     14,471,165       236,375     6.57 %       14,031,102       219,677     6.21 %       12,055,682       202,097     6.80 %  
Investment securities (1)     3,460,293       27,563     3.20 %       3,492,124       28,408     3.23 %       1,613,422       13,980     3.51 %  
Deposits in financial institutions     230,293       308     0.54 %       254,308       172     0.27 %       32,761       22     0.27 %  
Total interest-earning assets     18,161,751       264,246     5.85 %       17,777,534       248,257     5.54 %       13,701,865       216,099     6.40 %  
Other assets     3,036,843             3,047,714             2,594,775        
Total assets $   21,198,594         $   20,825,248         $   16,296,640        
                         
Liabilities and   Stockholders' Equity:                        
Interest checking $   926,256       383     0.17 %   $   889,035       345     0.15 %   $   726,748       194     0.11 %  
Money market     3,848,753       2,415     0.25 %       3,557,364       1,543     0.17 %       1,836,094       945     0.21 %  
Savings     753,371       444     0.24 %       747,054       445     0.24 %       756,578       571     0.31 %  
Time     3,860,272       5,831     0.61 %       4,439,940       7,058     0.63 %       5,481,886       8,769     0.65 %  
Total interest-bearing deposits     9,388,652       9,073     0.39 %       9,633,393       9,391     0.39 %       8,801,306       10,479     0.48 %  
Borrowings     494,725       581     0.47 %       206,236       159     0.31 %       424,061       235     0.22 %  
Subordinated debentures     436,535       4,982     4.59 %       435,293       4,748     4.33 %       432,603       4,525     4.24 %  
Total interest-bearing liabilities     10,319,912       14,636     0.57 %       10,274,922       14,298     0.55 %       9,657,970       15,239     0.64 %  
Noninterest-bearing demand deposits     6,273,249             6,043,900             2,949,719        
Other liabilities     166,831             160,264             155,608        
Total liabilities     16,759,992             16,479,086             12,763,297        
Stockholders' equity     4,438,602             4,346,162             3,533,343        
Total liabilities and stockholders' equity $   21,198,594         $   20,825,248         $   16,296,640        
Net interest income (2)   $   249,610         $   233,959         $   200,860      
Net interest spread (2)       5.28 %         4.99 %         5.76 %  
Net interest margin (2)       5.53 %         5.22 %         5.95 %  
                         
Total deposits (3) $   15,661,901   $   9,073     0.23 %   $   15,677,293   $   9,391     0.24 %   $   11,751,025   $   10,479     0.36 %  
Funding sources (4) $   16,593,161   $   14,636     0.35 %   $   16,318,822   $   14,298     0.35 %   $   12,607,689   $   15,239     0.49 %  
                         
(1) Includes tax equivalent adjustments of $5.0 million, $4.8 million, and $1.8 million for the three months ended March 31, 2016, December 31, 2015, and March 31, 2015 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   
                     
  March 31,   December 31,   September 30,   June 30,   March 31,  
    2016       2015       2015       2015       2015    
  (Dollars in thousands, except per share data)  
ASSETS:                    
Cash and due from banks $   161,977     $   161,020     $   154,652     $   207,598     $   140,873    
Interest-earning deposits in financial institutions     357,541         235,466         81,642         433,033         250,981    
Total cash and cash equivalents       519,518         396,486         236,294         640,631         391,854    
                     
Securities available-for-sale     3,240,586         3,559,437         1,809,364         1,698,158         1,595,409    
Federal Home Loan Bank stock     17,250         19,710         17,250         17,250         28,905    
Total investment securities     3,257,836         3,579,147         1,826,614         1,715,408         1,624,314    
                     
Non-PCI loans and leases     14,365,915         14,339,070         12,300,057         11,846,314         12,047,946    
PCI loans     176,607         189,095         193,340         222,691         254,346    
Total gross loans and leases     14,542,522         14,528,165         12,493,397         12,069,005         12,302,292    
Deferred fees and costs     (59,005 )       (49,911 )       (41,192 )       (34,816 )       (30,126 )  
Total loans and leases, net of deferred fees     14,483,517         14,478,254         12,452,205         12,034,189         12,272,166    
Allowance for loan and lease losses     (130,361 )       (115,111 )       (103,271 )       (99,375 )       (92,378 )  
Total loans and leases, net     14,353,156         14,363,143         12,348,934         11,934,814         12,179,788    
                     
Equipment leased to others under operating leases     205,163         197,452         161,508         117,182         119,959    
Premises and equipment, net     39,713         39,197         36,475         35,984         36,022    
Foreclosed assets, net     18,310         22,120         33,216         31,668         35,940    
Deferred tax asset, net     91,126         126,389         169,760         211,556         236,065    
Goodwill     2,175,791         2,176,291         1,728,380         1,728,380         1,728,380    
Core deposit and customer relationship intangibles, net     48,137         53,220         12,704         14,201         15,703    
Other assets     322,259         335,045         260,220         267,196         275,915    
Total assets $   21,031,009     $   21,288,490     $   16,814,105     $   16,697,020     $   16,643,940    
                     
LIABILITIES:                    
Noninterest-bearing deposits $   6,139,963     $   6,171,455     $   3,508,682     $   3,396,688     $   3,029,463    
Interest-bearing deposits     9,301,412         9,494,727         8,607,081         9,185,128         8,904,712    
Total deposits     15,441,375         15,666,182         12,115,763         12,581,816         11,934,175    
Borrowings     551,401         621,914         552,497         2,751         618,156    
Subordinated debentures     438,723         436,000         435,417         433,944         431,448    
Accrued interest payable and other liabilities     142,918         166,703         128,724         127,019         126,800    
Total liabilities     16,574,417         16,890,799         13,232,401         13,145,530         13,110,579    
STOCKHOLDERS' EQUITY (1)     4,456,592         4,397,691         3,581,704         3,551,490         3,533,361    
Total liabilities and stockholders'  equity $   21,031,009     $   21,288,490     $   16,814,105     $   16,697,020     $   16,643,940    
                     
(1) Includes net unrealized gain on securities available-for-sale $   48,479     $   27,828     $   24,459     $   16,255     $   28,744    
                     
Book value per share $   36.60     $   36.22     $   34.76     $   34.46     $   34.29    
Tangible book value per share $   18.33     $   17.86     $   17.86     $   17.55     $   17.36    
                     
Shares outstanding     121,771,252         121,413,727         103,053,694         103,051,989       103,044,257    
                     

PACWEST BANCORP AND SUBSIDIARIES   
FIVE QUARTER STATEMENT OF EARNINGS   
                     
  Three Months Ended  
  March 31,   December 31,   September 30,   June 30,   March 31,  
    2016       2015       2015       2015       2015    
  (Dollars in thousands, except per share data)  
Interest income:                    
Loans and leases $   236,375     $   219,677     $   193,539     $   203,781     $   202,097    
Investment securities     22,547         23,648         13,955         14,570         12,195    
Deposits in financial institutions     308         172         178         104         22    
Total interest income     259,230         243,497         207,672         218,455         214,314    
                     
Interest expense:                    
Deposits     9,073         9,391         10,400         11,233         10,479    
Borrowings     581         159         72         88         235    
Subordinated debentures     4,982         4,748         4,680         4,582         4,525    
Total interest expense     14,636         14,298         15,152         15,903         15,239    
                     
Net interest income     244,594         229,199         192,520         202,552         199,075    
Provision for credit losses     20,140         13,772         8,746         6,529         16,434    
Net interest income after provision  for credit losses     224,454         215,427         183,774         196,023         182,641    
                     
Noninterest income:                    
Service charges on deposit accounts     3,856         3,901         2,601         2,612         2,574    
Other commissions and fees     11,489         12,691         6,376         7,123         5,396    
Leased equipment income     8,244         7,791         5,475         5,375         5,382    
Gain on sale of loans and leases     245         183         27         163         -     
Gain (loss) on securities     8,110         -         655         (186 )       3,275    
FDIC loss sharing expense, net     (2,415 )       (4,291 )       (4,449 )       (5,107 )       (4,399 )  
Other income     5,010         7,783         5,073         9,643         8,643    
Total noninterest income     34,539         28,058         15,758         19,623         20,871    
                     
Noninterest expense:                    
Compensation      61,065         58,992         48,152         49,033         47,737    
Occupancy     12,632         12,194         10,762         10,588         10,600    
Data processing     5,904         5,585         4,322         4,402         4,308    
Other professional services     3,572         3,811         3,396         3,332         3,221    
Insurance and assessments     4,965         5,450         3,805         4,716         3,025    
Intangible asset amortization     4,746         4,910         1,497         1,502         1,501    
Leased equipment depreciation     5,024         4,235         3,162         3,103         3,103    
Foreclosed assets (income) expense, net     (561 )       (3,185 )       4,521         (2,340 )       336    
Acquisition, integration and reorganization costs      200         17,600         747         900         2,000    
Other expense     13,141         12,672         9,775         10,040         8,529    
Total noninterest expense     110,688         122,264         90,139         85,276         84,360    
                     
Earnings before income taxes     148,305         121,221         109,393         130,370         119,152    
Income tax expense      (57,849 )       (49,380 )       (39,777 )       (45,287 )       (46,073 )  
Net earnings   $   90,456     $   71,841     $   69,616     $   85,083     $   73,079    
                     
Basic and diluted earnings per share $   0.74     $   0.60     $   0.68     $   0.83     $   0.71    
                     

PACWEST BANCORP AND SUBSIDIARIES   
FIVE QUARTER SELECTED FINANCIAL DATA   
                     
  At or For the Three Months Ended  
  March 31,   December 31,   September 30,   June 30,   March 31,  
    2016       2015       2015       2015       2015    
  (Dollars in thousands)  
Performance Ratios - GAAP:                    
Return on average assets (1)   1.72 %     1.37 %     1.65 %     2.07 %     1.82 %  
Return on average equity (1)   8.20 %     6.56 %     7.73 %     9.62 %     8.39 %  
Yield on average loans and leases   6.57 %     6.21 %     6.34 %     6.75 %     6.80 %  
Yield on average interest-earning assets (2)   5.85 %     5.54 %     5.88 %     6.35 %     6.40 %  
Cost of average total deposits   0.23 %     0.24 %     0.33 %     0.37 %     0.36 %  
Cost of average time deposits   0.61 %     0.63 %     0.66 %     0.68 %     0.65 %  
Cost of average interest-bearing liabilities   0.57 %     0.55 %     0.63 %     0.66 %     0.64 %  
Cost of average funding sources   0.35 %     0.35 %     0.46 %     0.50 %     0.49 %  
Net interest rate spread (2)   5.28 %     4.99 %     5.25 %     5.69 %     5.76 %  
Net interest margin (2)   5.53 %     5.22 %     5.46 %     5.89 %     5.95 %  
Noninterest expense as a percentage of average assets (1)   2.10 %     2.33 %     2.14 %     2.08 %     2.10 %  
Efficiency ratio   38.5 %     39.3 %     39.6 %     38.0 %     36.9 %  
                     
Performance Ratios - Non-GAAP:                    
Return on average tangible equity (1)   16.45 %     13.14 %     15.09 %     18.90 %     16.50 %  
Core net interest margin (2)   5.10 %     5.10 %     5.19 %     5.33 %     5.44 %  
                     
Average Balances:                    
Loans and leases $   14,471,165     $   14,031,102     $   12,112,881     $   12,108,016     $   12,055,682    
Interest-earning assets     18,161,751         17,777,534         14,198,482         13,942,289         13,701,865    
Total assets     21,198,594         20,825,248         16,690,177         16,463,311         16,296,640    
Noninterest-bearing deposits     6,273,249         6,043,900         3,486,780         3,157,129         2,949,719    
Interest-bearing deposits     9,388,652         9,633,393         8,993,681         9,107,937         8,801,306    
Total deposits     15,661,901         15,677,293         12,480,461         12,265,066         11,751,025    
Borrowings and subordinated debentures     931,260         641,529         504,591         513,820         856,664    
Interest-bearing liabilities     10,319,912         10,274,922         9,498,272         9,621,757         9,657,970    
Funding sources     16,593,161         16,318,822         12,985,052         12,778,886         12,607,689    
Stockholders' equity     4,438,602         4,346,162         3,572,765         3,548,748         3,533,343    
                     
(1) Annualized.                    
(2) Tax equivalent.                    
                     

PACWEST BANCORP AND SUBSIDIARIES   
FIVE QUARTER SELECTED FINANCIAL DATA   
                     
  At or For the Three Months Ended  
  March 31,   December 31,   September 30,   June 30,   March 31,  
    2016       2015       2015       2015       2015    
  (Dollars in thousands)  
Non-PCI Credit Quality:                    
Allowance for credit losses to loans and leases   0.96 %     0.85 %     0.82 %     0.78 %     0.72 %  
Allowance for credit losses to nonaccrual loans and leases   106 %     95 %     94 %     71 %     62 %  
Nonaccrual loans and leases to loans and leases   0.91 %     0.90 %     0.87 %     1.11 %     1.16 %  
Nonperforming assets to loans and leases and foreclosed assets   1.05 %     1.06 %     1.14 %     1.37 %     1.45 %  
Nonperforming assets to total assets   0.72 %     0.71 %     0.84 %     0.98 %     1.05 %  
Trailing twelve month net charge-offs to average loans and leases   0.10 %     0.06 %     0.04 %     0.06 %     0.07 %  
                     
PacWest Bancorp Consolidated  Capital:                    
Tier 1 leverage ratio (1)   11.58 %     11.67 %     12.04 %     11.96 %     11.74 %  
Common equity tier 1 capital ratio (1)   12.70 %     12.58 %     12.74 %     12.87 %     12.27 %  
Tier 1 capital ratio (1)   12.70 %     12.60 %     12.74 %     12.87 %     12.27 %  
Total capital ratio (1)   16.04 %     15.65 %     16.32 %     16.53 %     15.80 %  
Tangible common equity ratio (non-GAAP measure)   11.87 %     11.38 %     12.21 %     12.10 %     12.01 %  
Risk-weighted assets (1) $   17,226,658     $   17,170,292     $   14,038,839     $   13,569,369     $   13,776,106    
                     
Pacific Western Bank Capital:                    
Tier 1 leverage ratio (1)   11.10 %     11.40 %     11.56 %     11.65 %     11.53 %  
Common equity tier 1 capital ratio (1)   12.19 %     12.03 %     12.25 %     12.55 %     12.07 %  
Tier 1 capital ratio (1)   12.19 %     12.03 %     12.25 %     12.55 %     12.07 %  
Total capital ratio (1)   13.06 %     12.80 %     13.05 %     13.35 %     12.80 %  
Tangible common equity ratio (non-GAAP measure)   11.27 %     10.80 %     11.53 %     11.46 %     11.32 %  
   
(1) Capital information for March 31, 2016 is preliminary.  
                     

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP financial disclosures for return on average tangible equity, tangible common equity amounts and ratios, tangible book value per share, and core net interest margin. 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. We provide non-GAAP measures for 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.

Please refer to the following tables 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   
               
    Three Months Ended  
    March 31,   December 31,   March 31,  
Return on Average Tangible Equity   2016       2015       2015    
    (Dollars in thousands)  
               
Net earnings $   90,456     $   71,841     $   73,079    
               
Average stockholders' equity $   4,438,602     $   4,346,162     $   3,533,343    
Less:  Average intangible assets     2,227,520         2,177,631         1,737,441    
Average tangible common equity $   2,211,082     $   2,168,531     $   1,795,902    
               
Return on average equity (1)   8.20 %     6.56 %     8.39 %  
Return on average tangible equity (2)   16.45 %     13.14 %     16.50 %  
               
(1) Annualized net earnings divided by average stockholders' equity.   
(2) Annualized net earnings divided by average tangible common equity.   
               

 
PACWEST BANCORP AND SUBSIDIARIES   
GAAP TO NON-GAAP RECONCILIATION   
                     
                     
  March 31,   December 31,   September 30,   June 30,   March 31,  
Tangible Common Equity Ratio   2016       2015       2015       2015       2015    
  (Dollars in thousands)  
PacWest Bancorp Consolidated:                    
Stockholders' equity $   4,456,592     $   4,397,691     $   3,581,704     $   3,551,490     $   3,533,361    
Less: Intangible assets     2,223,928         2,229,511         1,741,084         1,742,581         1,744,083    
Tangible common equity $   2,232,664     $   2,168,180     $   1,840,620     $   1,808,909     $   1,789,278    
                     
Total assets $   21,031,009     $   21,288,490     $   16,814,105     $   16,697,020     $   16,643,940    
Less: Intangible assets     2,223,928         2,229,511         1,741,084         1,742,581         1,744,083    
Tangible assets $   18,807,081     $   19,058,979     $   15,073,021     $   14,954,439     $   14,899,857    
                     
Equity to assets ratio   21.19 %     20.66 %     21.30 %     21.27 %     21.23 %  
Tangible common equity ratio (1)   11.87 %     11.38 %     12.21 %     12.10 %     12.01 %  
                     
Book value per share $   36.60     $   36.22     $   34.76     $   34.46     $   34.29    
Tangible book value per share (2) $   18.33     $   17.86     $   17.86     $   17.55     $   17.36    
Shares outstanding     121,771,252         121,413,727         103,053,694