Highlights
  • Net Earnings of $101.5 Million, or $0.84 Per Diluted Share
  • New Loan and Lease Production of $1.0 Billion
  • Core Deposits Increase of $314 Million and Represent 81% of Total Deposits
  • Tax Equivalent Net Interest Margin of 5.08%
  • All Approvals Received for CUB Acquisition; Expected to Close October 20

LOS ANGELES, Oct. 17, 2017 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the third quarter of 2017 of $101.5 million, or $0.84 per diluted share, compared to net earnings for the second quarter of 2017 of $93.6 million, or $0.77 per diluted share. The increase in net earnings from the prior quarter was primarily due to lower income tax expense partially offset by lower noninterest income and a higher provision for credit losses. Income tax expense for the third quarter was lower due to a $13.6 million reversal of a valuation allowance related to tax credits which, based on our latest analysis, are more likely than not to be utilized before they expire.  

Matt Wagner, President and CEO, commented, "We delivered solid performance in the third quarter and continue to demonstrate our earning power. Our strong third quarter results produced a return on assets of 1.82% and a return on tangible equity of 16.85%."

Mr. Wagner continued, "All required approvals have been received and we look forward to closing the CU Bancorp acquisition this week. We are excited about the exceptional core deposit franchise and opportunities for increased operating efficiencies provided by this transaction."

FINANCIAL HIGHLIGHTS
                       
  At or For the Three Months Ended   At or For the Nine Months Ended
  September 30,   June 30,       September 30,    
Financial Highlights   2017       2017     Change     2017       2016     Change
                                               
  (Dollars in thousands, except per share data)
Net earnings $ 101,466     $ 93,647     $ 7,819     $ 273,781     $ 266,519     $ 7,262  
Diluted earnings per share $ 0.84     $ 0.77     $ 0.07     $ 2.26     $ 2.19     $ 0.07  
Return on average assets   1.82 %     1.71 %     0.11       1.67 %     1.69 %     (0.02 )
Return on average                      
tangible equity (1)   16.85 %     16.06 %     0.79       15.63 %     15.74 %     (0.11 )
                       
Net interest margin                      
(tax equivalent)   5.08 %     5.21 %     (0.13 )     5.15 %     5.37 %     (0.22 )
Efficiency ratio   40.4 %     40.3 %     0.1       40.7 %     39.7 %     1.0  
                       
Total assets $ 22,242,932     $ 22,246,877     $ (3,945 )   $ 22,242,932     $ 21,315,291     $ 927,641  
Loans and leases held                      
for investment, net of                      
deferred fees $ 15,690,517     $ 15,543,457     $ 147,060     $ 15,690,517     $ 14,742,846     $ 947,671  
Noninterest-bearing                      
deposits $ 6,911,874     $ 6,701,039     $ 210,835     $ 6,911,874     $ 6,521,946     $ 389,928  
Core deposits $ 13,531,300     $ 13,217,574     $ 313,726     $ 13,531,300     $ 12,010,639     $ 1,520,661  
Total deposits $ 16,773,245     $ 16,874,977     $ (101,732 )   $ 16,773,245     $ 15,645,668     $ 1,127,577  
                       
Noninterest-bearing                      
deposits as percentage                      
of total deposits   41 %     40 %     1       41 %     42 %     (1 )
Core deposits as                      
percentage of total                      
deposits   81 %     78 %     3       81 %     77 %     4  
                       
Equity to assets ratio   20.73 %     20.50 %     0.23       20.73 %     21.31 %     (0.58 )
Tangible common equity                      
ratio (1)   12.02 %     11.75 %     0.27       12.02 %     12.19 %     (0.17 )
Book value per share $ 37.96     $ 37.55     $ 0.41     $ 37.96     $ 37.29     $ 0.67  
Tangible book value per                      
share (1) $ 19.84     $ 19.40     $ 0.44     $ 19.84     $ 19.12     $ 0.72  
                       
(1) Non-GAAP measure.                      

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income decreased by $0.8 million to $241.7 million for the third quarter of 2017 compared to $242.5 million for the second quarter of 2017 due mainly to interest expense growth exceeding interest income growth for the quarter. The loan and lease yield was 6.01% for the third quarter of 2017 compared to 6.07% for the second quarter of 2017.  The decrease in the loan and lease yield was principally due to the decrease in discount accretion on acquired loans and lower loan fee income.  Total discount accretion on acquired loans was $5.5 million in the third quarter of 2017 compared to $7.5 million in the second quarter of 2017.

The tax equivalent NIM was 5.08% for the third quarter of 2017 compared to 5.21% for the second quarter of 2017.  The decrease in the NIM was mostly due to the decrease in discount accretion on acquired loans and loan fee income and a higher cost of average interest-bearing liabilities. Total discount accretion on acquired loans contributed 11 basis points to the NIM for the third quarter of 2017 and 16 basis points for the second quarter of 2017.

The cost of average total deposits increased to 0.31% for the third quarter of 2017 from 0.25% for the second quarter of 2017 due to higher rates paid for non-core deposits and select large-balance deposit customers.

Noninterest Income

Noninterest income decreased by $3.9 million to $31.4 million for the third quarter of 2017 compared to $35.3 million for the second quarter of 2017 due mainly to a $3.3 million decrease in leased equipment income due to lower gains on early lease terminations and a $1.9 million decrease in other income as the second quarter included a BOLI death benefit and higher recoveries from third parties, offset by an increase in gain on sale of loans and leases of $2.2 million.   

The following table presents details of noninterest income for the periods indicated:   
  Three Months Ended
  September 30,   June 30,   Increase
Noninterest Income 2017     2017   (Decrease)
           
  (In thousands)
Service charges on deposit accounts $ 3,465   $ 3,510   $ (45 )
Other commissions and fees   9,944     10,583     (639 )
Leased equipment income   8,332     11,635     (3,303 )
Gain on sale of loans and leases   2,848     649     2,199  
Gain on sale of securities   1,236     1,651     (415 )
Other income:          
Dividends and realized gains on equity investments   1,845     1,587     258  
Warrant income   731     815     (84 )
Other   2,981     4,852     (1,871 )
Total noninterest income $ 31,382   $ 35,282   $ (3,900 )
           

Noninterest Expense

Noninterest expense increased by $0.8 million to $118.5 million for the third quarter of 2017 compared to $117.7 million for the second quarter of 2017 due mostly to a $2.3 million increase in foreclosed assets expense offset by decreases in several expense categories. The increase in foreclosed assets expense was due to a write-down of $2.1 million on foreclosed property.   

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

  Three Months Ended
  September 30,   June 30,   Increase
Noninterest Expense 2017     2017     (Decrease)
           
  (In thousands)
Compensation $ 64,413   $ 65,288     $ (875 )
Occupancy   12,729     11,811       918  
Data processing   6,459     6,337       122  
Other professional services   4,213     3,976       237  
Insurance and assessments   4,702     4,856       (154 )
Intangible asset amortization   3,049     3,065       (16 )
Leased equipment depreciation   4,862     5,232       (370 )
Foreclosed assets expense (income), net   2,191     (157 )     2,348  
Acquisition, integration and reorganization costs   1,450     1,700       (250 )
Loan expense   3,421     3,884       (463 )
Other   11,053     11,715       (662 )
Total noninterest expense $ 118,542   $ 117,707     $ 835  
           

Income Taxes

The overall effective income tax rate was 27.2% for the third quarter of 2017 and 37.0% for the second quarter of 2017.  The effective rate for the third quarter was lower due to the $13.6 million reversal of a valuation allowance related to tax credits which, based on our latest analysis, are more likely than not to be utilized before they expire. The estimated effective tax rate for the full year 2017 is approximately 35%. 

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Total loans and leases held for investment, net of deferred fees, increased by $147.1 million in the third quarter to $15.7 billion at September 30, 2017.  The net increase was driven mainly by third quarter new production of $1.0 billion and disbursements of $722.8 million, offset partially by payoffs of $903.4 million and paydowns of $637.7 million.    The following table presents a roll forward of loans and leases held for investment, net of deferred fees, for the periods indicated:
  Three Months Ended
Loans and Leases September 30,   June 30,
Held for Investment Roll Forward (1)   2017       2017  
               
  (Dollars in thousands)
Balance, beginning of period $ 15,543,457     $ 15,556,689  
New production   1,002,887       1,077,929  
Existing loans and leases:      
Payoffs   (903,395 )     (956,322 )
Paydowns   (637,674 )     (587,000 )
Disbursements   722,777       700,207  
Sales (2)   (31,528 )     (45,976 )
Transfers to foreclosed assets   -       (502 )
Charge-offs   (6,007 )     (26,410 )
Transfers to loans held for sale   -       (175,158 )
Balance, end of period $ 15,690,517     $ 15,543,457  
       
Weighted average rate on new production   5.04 %     4.93 %
       
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) Sales for the three months ended September 30, 2017 exclude sales of loans that were classified
as loans held for sale at June 30, 2017.      

The following table presents the composition of loans and leases held for investment, net of deferred fees, as of the dates indicated:
  September 30,   June 30,   March 31,   September 30,
Loan and Lease Portfolio   2017     2017     2017     2016
                       
  (In thousands)
Real estate mortgage:              
Commercial $ 4,338,933   $ 4,418,463   $ 4,420,923   $ 4,327,565
Residential   1,850,324     1,719,269     1,554,946     1,242,254
Total real estate mortgage   6,189,257     6,137,732     5,975,869     5,569,819
Real estate construction and land:              
Commercial   680,950     691,828     668,510     510,831
Residential   568,273     473,282     442,051     323,104
Total real estate construction and land   1,249,223     1,165,110     1,110,561     833,935
Total real estate   7,438,480     7,302,842     7,086,430     6,403,754
Commercial:              
Cash flow   2,734,454     2,834,966     3,138,196     3,071,606
Asset-based   2,577,470     2,392,203     2,391,161     2,573,437
Venture capital   1,959,489     2,001,427     1,934,949     1,766,509
Equipment finance   594,473     613,550     623,237     670,783
Total commercial   7,865,886     7,842,146     8,087,543     8,082,335
Consumer   386,151     398,469     382,716     256,757
Total loans and leases held for              
investment, net of deferred fees (1) $ 15,690,517   $ 15,543,457   $ 15,556,689   $ 14,742,846
               
Total unfunded loan commitments $ 5,037,084   $ 4,926,743   $ 4,497,373   $ 4,156,147
               
(1) Excludes loans held for sale carried at lower of cost or fair value at June 30, 2017.

Deposits and Client Investment Funds

The following table presents the composition of our deposit portfolio as of the dates indicated:
  September 30,   June 30,   March 31,   September 30,
Deposit Category   2017       2017       2017       2016  
                               
  (Dollars in thousands)
Noninterest-bearing demand deposits $ 6,911,874     $ 6,701,039     $ 6,789,808     $ 6,521,946  
Interest checking deposits   1,957,485       1,762,016       1,509,902       1,184,350  
Money market deposits   3,967,224       4,033,471       3,758,962       3,532,050  
Savings deposits   694,717       721,048       710,401       772,293  
Total core deposits   13,531,300       13,217,574       12,769,073       12,010,639  
Non-core non-maturity deposits   1,118,694       1,329,324       1,154,070       1,082,114  
Total non-maturity deposits   14,649,994       14,546,898       13,923,143       13,092,753  
Time deposits $250,000 and under   1,770,439       1,940,872       1,998,597       2,091,747  
Time deposits over $250,000   352,812       387,207       409,268       461,168  
Total time deposits   2,123,251       2,328,079       2,407,865       2,552,915  
Total deposits $ 16,773,245     $ 16,874,977     $ 16,331,008     $ 15,645,668  
               
Noninterest-bearing demand deposits              
as percentage of total deposits   41 %     40 %     42 %     42 %
Core deposits as percentage of total deposits   81 %     78 %     78 %     77 %

At September 30, 2017, core deposits totaled $13.5 billion, or 81% of total deposits, including $6.9 billion of noninterest-bearing demand deposits, or 41% of total deposits. 

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Square 1 Asset Management, Inc. ("S1AM"), our registered investment advisor subsidiary, and third-party sweep products.  Total off-balance sheet client investment funds at September 30, 2017 were $1.9 billion, of which $1.6 billion was managed by S1AM.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $15.1 million was recorded in the third quarter of 2017 compared to $11.5 million in the second quarter of 2017.  The third quarter provision consisted of $15.5 million for non-purchased credit impaired ("Non-PCI") loans and leases and a $0.4 million negative provision for PCI loans; this compares to a provision of $12.5 million and a negative provision of $1.0 million, respectively, for the second quarter of 2017.  The higher provision for the third quarter of 2017 was due mainly to loan risk rating downgrades combined with net portfolio growth.  The allowance for Non-PCI credit losses to Non-PCI loans and leases held for investment coverage ratio was 1.11% and 1.02% at September 30, 2017 and June 30, 2017. 

The following tables show roll forwards of the allowance for credit losses for the periods indicated:
  Three Months Ended September 30, 2017
  Non-PCI                
Allowance for Credit Loans and   Unfunded   Total   PCI    
Losses Rollforward Leases   Commitments   Non-PCI   Loans   Total
                                     
  (In thousands)
Beginning balance $ 138,879     $ 20,263   $ 159,142     $ 7,079     $ 166,221  
Charge-offs   (5,928 )     -     (5,928 )     (79 )     (6,007 )
Recoveries   4,865       -     4,865       217       5,082  
Net charge-offs   (1,063 )     -     (1,063 )     138       (925 )
Provision   14,954       546     15,500       (381 )     15,119  
Ending balance $ 152,770     $ 20,809   $ 173,579     $ 6,836     $ 180,415  
                   
                   
  Three Months Ended June 30, 2017
  Non-PCI                
Allowance for Credit Loans and   Unfunded   Total   PCI    
Losses Rollforward Leases   Commitments   Non-PCI   Loans   Total
                                     
  (In thousands)
Beginning balance $ 149,826     $ 17,763   $ 167,589     $ 11,481     $ 179,070  
Charge-offs   (22,951 )     -     (22,951 )     (3,459 )     (26,410 )
Recoveries   2,004       -     2,004       58       2,062  
Net charge-offs   (20,947 )     -     (20,947 )     (3,401 )     (24,348 )
Provision   10,000       2,500     12,500       (1,001 )     11,499  
Ending balance $ 138,879     $ 20,263   $ 159,142     $ 7,079     $ 166,221  
                   

The gross charge-offs for the third quarter of 2017 included $3.4 million for venture capital loans. Recoveries for the quarter included $2.6 million related to venture capital loans previously charged off in 2017. The annualized ratio of total net charge-offs to total average loans was 0.02% for the quarter ended September 30, 2017 and 0.40% for the nine months ended September 30, 2017.   

CREDIT QUALITY

The following table presents Non-PCI loan and lease credit quality metrics as of the dates indicated:
  September 30,   June 30,   Increase
Non-PCI Credit Quality Metrics   2017       2017     (Decrease)
                       
  (Dollars in thousands)
Nonaccrual loans and leases held for investment (1) $ 157,697     $ 172,576     $ (14,879 )
Classified loans and leases held for investment (1)   344,777       339,977       4,800  
Performing troubled debt restructured loans          
held for investment   56,552       55,910       642  
Allowance for credit losses   173,579       159,142       14,437  
Net charge-offs (for the quarter)   1,063       20,947       (19,884 )
Provision for credit losses (for the quarter)   15,500       12,500       3,000  
Allowance for credit losses to loans and leases          
held for investment   1.11 %     1.02 %    
Allowance for credit losses to nonaccrual loans          
and leases held for investment   110.1 %     92.2 %    
Nonaccrual loans and leases held for investment          
to loans and leases held for investment   1.00 %     1.11 %    
Nonperforming assets to loans and leases          
held for investment and foreclosed assets   1.08 %     1.20 %    
Classified loans and leases held for investment          
to loans and leases held for investment   2.20 %     2.19 %    
           
(1) Excludes loans held for sale carried at lower of cost or fair value at June 30, 2017.

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
  September 30, 2017   June 30, 2017   30-89 Days Past Due
    % of     % of   September 30,   June 30,
    Loan     Loan     2017     2017
  Amount Category   Amount Category   Amount   Amount
                               
  (Dollars in thousands)
Real estate mortgage:                  
Commercial $ 63,096 1.5 %   $ 65,599 1.5 %   $ 1,446   $ 3,734
Residential   3,186 0.2 %     5,229 0.3 %     282     46
Total real estate mortgage   66,282 1.1 %     70,828 1.2 %     1,728     3,780
Real estate construction and land:                  
Commercial   - 0.0 %     - 0.0 %     -     -
Residential   - 0.0 %     - 0.0 %     -     -
Total real estate                  
   construction and land   - 0.0 %     - 0.0 %     -     -
Commercial:                  
Cash flow   33,514 1.2 %     43,169 1.5 %     72     201
Asset-based   3,977 0.2 %     1,718 0.1 %     -     -
Venture capital   22,686 1.2 %     25,278 1.3 %     2,720     23,171
Equipment finance   30,942 5.2 %     31,111 5.1 %     -     -
Total commercial   91,119 1.2 %     101,276 1.3 %     2,792     23,372
Consumer   296 0.1 %     472 0.1 %     286     -
Total held for investment (1) $ 157,697 1.0 %   $ 172,576 1.1 %   $ 4,806   $ 27,152
                   
(1) Excludes loans held for sale carried at lower of cost or fair value at June 30, 2017.

The following table presents nonperforming assets as of the dates indicated:
  September 30,   June 30,   Increase
Nonperforming Assets   2017       2017     (Decrease)
                       
  (Dollars in thousands)
Nonaccrual Non-PCI loans and leases          
held for investment (1) $ 157,697     $ 172,576     $ (14,879 )
Nonaccrual PCI loans held for investment   1,761       1,980       (219 )
Total nonaccrual loans and leases   159,458       174,556       (15,098 )
Foreclosed assets, net   11,630       13,278       (1,648 )
Total nonperforming assets $ 171,088     $ 187,834     $ (16,746 )
           
Nonaccrual loans and leases held for investment          
to loans and leases held for investment   1.01 %     1.12 %    
Nonperforming assets to loans and leases          
held for investment and foreclosed assets   1.09 %     1.20 %    
           
(1) Excludes loans held for sale carried at lower of cost or fair value at June 30, 2017.

CU BANCORP MERGER ANNOUNCEMENT

On April 6, 2017, PacWest announced the signing of a definitive agreement and plan of merger (the "Agreement") whereby PacWest will acquire CU Bancorp ("CUB") in a transaction valued at approximately $705 million as of the announcement date. 

CUB, headquartered in Los Angeles, California, is the parent of California United Bank ("CU Bank"), a California state-chartered non-member bank, with approximately $3.0 billion in assets and nine branches located in Los Angeles, Orange, Ventura, and San Bernardino counties at June 30, 2017. In connection with the acquisition, CU Bank will be merged into Pacific Western Bank, the principal operating subsidiary of PacWest.

The acquisition, which has been approved by the PacWest and CUB boards of directors and bank regulatory authorities, is expected to close on October 20, 2017.

ABOUT PACWEST BANCORP

PacWest Bancorp ("PacWest") is a bank holding company with over $22 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the "Bank"). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. We provide commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses.  We offer additional products and services through our CapitalSource and Square 1 Bank divisions. Our CapitalSource Division provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis.  Our Square 1 Bank Division 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 forward-looking statements relating to the Company's current business plans and expectations regarding future operating results and metrics and including statements about our expectations regarding our pending merger between the Company and CUB. 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. These risks and uncertainties include, but are not limited to, our ability to compete effectively against other financial institutions in our banking markets; the impact of changes in interest rates or levels of market activity, especially on our loan and investment portfolios; deterioration, weaker than expected improvement, or other changes in the state of the economy or the markets in which we conduct business (including the levels of IPOs and M&A activities); changes in credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and leases losses; our ability to attract deposits and other sources of funding or liquidity; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the impact of adverse judgments or settlements in litigation, the initiation and resolution of regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; the Company's ability to complete the pending CUB acquisition, or any future acquisition, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies, in each case within expected timeframes or at all; and our success at managing the risks involved in the foregoing items and all other factors set forth in the Company's public reports, including the Annual Report on Form 10-K for the year ended December 31, 2016, and particularly the discussion of risk factors within that document.

All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.

PACWEST BANCORP AND SUBSIDIARIES          
CONDENSED CONSOLIDATED BALANCE SHEET          
           
  September 30,   June 30,   December 31,
    2017       2017       2016  
                       
  (Dollars in thousands, except per share data)
ASSETS:          
Cash and due from banks $ 147,579     $ 180,330     $ 337,965  
Interest-earning deposits in financial institutions   122,439       107,150       81,705  
Total cash and cash equivalents   270,018       287,480       419,670  
           
Securities available-for-sale, at estimated fair value   3,532,230       3,474,560       3,223,830  
Federal Home Loan Bank stock, at cost   17,250       22,059       21,870  
Total investment securities   3,549,480       3,496,619       3,245,700  
           
Loans held for sale   -       175,158       -  
           
Non-PCI loans and leases   15,693,776       15,536,735       15,412,092  
PCI loans   62,509       72,445       108,445  
Total gross loans and leases held for investment   15,756,285       15,609,180       15,520,537  
Deferred fees, net   (65,768 )     (65,723 )     (64,583 )
Total loans and leases held for investment,          
net of deferred fees   15,690,517       15,543,457       15,455,954  
Allowance for loan and lease losses   (159,606 )     (145,958 )     (157,238 )
Total loans and leases held for investment, net   15,530,911       15,397,499       15,298,716  
           
Equipment leased to others under operating leases   233,866       203,212       229,905  
Premises and equipment, net   28,910       29,108       38,594  
Foreclosed assets, net   11,630       13,278       12,976  
Deferred tax asset, net   65,321       70,354       94,112  
Goodwill   2,173,949       2,173,949       2,173,949  
Core deposit and customer          
relationship intangibles, net   27,188       30,237       36,366  
Other assets   351,659       369,983       319,779  
Total assets $ 22,242,932     $ 22,246,877     $ 21,869,767  
           
LIABILITIES:          
Noninterest-bearing deposits $ 6,911,874     $ 6,701,039     $ 6,659,016  
Interest-bearing deposits   9,861,371       10,173,938       9,211,595  
Total deposits   16,773,245       16,874,977       15,870,611  
Borrowings   250,399       217,454       905,812  
Subordinated debentures   448,126       445,743       440,744  
Accrued interest payable and other liabilities   160,494       148,798       173,545  
Total liabilities   17,632,264       17,686,972       17,390,712  
STOCKHOLDERS' EQUITY (1)   4,610,668       4,559,905       4,479,055  
Total liabilities and stockholders' equity $ 22,242,932     $ 22,246,877     $ 21,869,767  
           
Book value per share $ 37.96     $ 37.55     $ 36.93  
Tangible book value per share (2) $ 19.84     $ 19.40     $ 18.71  
Shares outstanding   121,449,794       121,448,321       121,283,669  
           
(1) Includes net unrealized gain on securities          
available-for-sale, net $ 33,613     $ 29,729     $ 5,982  
(2) Non-GAAP measure.          
           

PACWEST BANCORP AND SUBSIDIARIES                  
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS              
                     
  Three Months Ended   Nine Months Ended  
  September 30,   June 30,   September 30,   September 30,  
    2017       2017       2016       2017       2016    
                                               
  (Dollars in thousands, except per share data)          
Interest income:                          
Loans and leases $ 235,666     $ 234,618     $ 225,370     $ 694,462     $ 686,071          
Investment securities   24,762       24,689       22,187       72,490       67,154          
Deposits in financial institutions   538       237       298       967       914          
Total interest income   260,966       259,544       247,855       767,919       754,139          
                           
Interest expense:                          
Deposits   13,071       10,205       7,247       31,653       24,143          
Borrowings   188       1,066       695       2,272       1,628          
Subordinated debentures   6,017       5,800       5,278       17,379       15,382          
Total interest expense   19,276       17,071       13,220       51,304       41,153          
                           
Net interest income   241,690       242,473       234,635       716,615       712,986          
Provision for credit losses   15,119       11,499       8,471       51,346       42,514          
Net interest income after provision                          
for credit losses   226,571       230,974       226,164       665,269       670,472          
                           
Noninterest income:                          
Service charges on deposit accounts   3,465       3,510       3,488       10,733       10,977          
Other commissions and fees   9,944       10,583       12,528       30,917       35,090          
Leased equipment income   8,332       11,635       8,538       29,442       25,305          
Gain on sale of loans and leases   2,848       649       157       4,209       790          
Gain on sale of securities   1,236       1,651       382       2,788       8,970          
FDIC loss sharing expense, net   -       -       -       -       (8,917 )        
Other income   5,557       7,254       1,827       23,689       11,365          
Total noninterest income   31,382       35,282       26,920       101,778       83,580          
                           
Noninterest expense:                          
Compensation   64,413       65,288       62,661       194,581       185,900          
Occupancy   12,729       11,811       12,010       36,148       36,835          
Data processing   6,459       6,337       6,234       19,811       17,782          
Other professional services   4,213       3,976       4,625       11,567       11,598          
Insurance and assessments   4,702       4,856       4,324       14,349       14,240          
Intangible asset amortization   3,049       3,065       4,224       9,178       13,341          
Leased equipment depreciation   4,862       5,232       5,298       15,719       15,608          
Foreclosed assets expense (income), net   2,191       (157 )     (248 )     2,177       (812 )        
Acquisition, integration and                          
reorganization costs   1,450       1,700       -       3,650       200          
Loan expense   3,421       3,884       1,931       10,692       6,231          
Other expense   11,053       11,715       9,651       34,921       30,556          
Total noninterest expense   118,542       117,707       110,710       352,793       331,479          
                           
Earnings before income taxes   139,411       148,549       142,374       414,254       422,573          
Income tax expense   (37,945 )     (54,902 )     (48,479 )     (140,473 )     (156,054 )        
Net earnings $ 101,466     $ 93,647     $ 93,895     $ 273,781     $ 266,519          
                           
Basic and diluted earnings per share $ 0.84     $ 0.77     $ 0.77     $ 2.26     $ 2.19          
                           

PACWEST BANCORP AND SUBSIDIARIES                  
NET EARNINGS PER SHARE CALCULATIONS                  
                     
  Three Months Ended   Nine Months Ended    
  September 30,   June 30,   September 30,   September 30,        
    2017       2017       2016       2017       2016          
                                               
  (In thousands, except per share data)          
Basic Earnings Per Share:                          
Net earnings $ 101,466     $ 93,647     $ 93,895     $ 273,781     $ 266,519          
Less: earnings allocated to unvested                          
restricted stock (1)   (1,149 )     (1,080 )     (1,048 )     (3,239 )     (2,983 )        
Net earnings allocated to common                          
shares $ 100,317     $ 92,567     $ 92,847     $ 270,542     $ 263,536          
                           
Weighted-average basic shares and                          
unvested restricted stock outstanding   121,447       121,422       121,818       121,405       121,739          
Less: weighted-average unvested                          
restricted stock outstanding   (1,394 )     (1,455 )     (1,401 )     (1,450 )     (1,425 )        
Weighted-average basic shares                          
outstanding   120,053       119,967       120,417       119,955       120,314          
                           
Basic earnings per share $ 0.84     $ 0.77     $ 0.77     $ 2.26     $ 2.19          
                           
Diluted Earnings Per Share:                          
Net earnings allocated to common                          
shares $ 100,317     $ 92,567     $ 92,847     $ 270,542     $ 263,536          
                           
Weighted-average basic shares                          
outstanding   120,053       119,967       120,417       119,955       120,314          
                           
Diluted earnings per share $ 0.84     $ 0.77     $ 0.77     $ 2.26     $ 2.19          
                           
(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
  September 30, 2017   June 30, 2017   September 30, 2016
    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 $ 60,126 $ 3,308 21.83 %   $ 68,759 $ 4,643 27.08 %   $ 117,781 $ 5,868 19.82 %
Non-PCI loans and leases   15,514,904   232,510 5.95 %     15,429,162   229,975 5.98 %     14,417,170   219,502 6.06 %
Total loans and leases (1)   15,575,030   235,818 6.01 %     15,497,921   234,618 6.07 %     14,534,951   225,370 6.17 %
Investment securities (2)   3,510,956   29,495 3.33 %     3,436,785   29,538 3.45 %     3,338,209   27,025 3.22 %
Deposits in financial                      
institutions   171,455   538 1.24 %     96,087   237 0.99 %     238,425   298 0.50 %
Total interest-earning                      
assets   19,257,441   265,851 5.48 %     19,030,793   264,393 5.57 %     18,111,585   252,693 5.55 %
Other assets   2,880,433         2,905,809         2,960,468    
Total assets $ 22,137,874       $ 21,936,602       $ 21,072,053    
                       
Liabilities and                      
Stockholders' Equity:                    
Interest checking $ 2,146,125   2,960 0.55 %   $ 1,709,699   1,697 0.40 %   $ 1,161,931   604 0.21 %
Money market   4,914,803   6,307 0.51 %     4,907,865   4,993 0.41 %     4,514,525   3,303 0.29 %
Savings   707,367   289 0.16 %     708,389   296 0.17 %     764,415   341 0.18 %
Time   2,256,259   3,515 0.62 %     2,366,399   3,219 0.55 %     2,666,434   2,999 0.45 %
Total interest-bearing                      
deposits   10,024,554   13,071 0.52 %     9,692,352   10,205 0.42 %     9,107,305   7,247 0.32 %
Borrowings   61,071   188 1.22 %     457,774   1,066 0.93 %     583,982   695 0.47 %
Subordinated debentures   447,012   6,017 5.34 %     443,756   5,800 5.24 %     439,970   5,278 4.77 %
Total interest-bearing                      
liabilities   10,532,637   19,276 0.73 %     10,593,882   17,071 0.65 %     10,131,257   13,220 0.52 %
Noninterest-bearing                      
demand deposits   6,858,816         6,646,349         6,274,294    
Other liabilities   153,932         151,095         135,801    
Total liabilities   17,545,385         17,391,326         16,541,352    
Stockholders' equity   4,592,489         4,545,276         4,530,701    
Total liabilities and                      
stockholders' equity $ 22,137,874       $ 21,936,602       $ 21,072,053    
Net interest income (3)   $ 246,575       $ 247,322       $ 239,473  
Net interest spread (3)     4.75 %       4.92 %       5.03 %
Net interest margin (3)     5.08 %       5.21 %       5.26 %
                       
Total deposits (4) $ 16,883,370 $ 13,071 0.31 %   $ 16,338,701 $ 10,205 0.25 %   $ 15,381,599 $ 7,247 0.19 %
Funding sources (5) $ 17,391,453 $ 19,276 0.44 %   $ 17,240,231 $ 17,071 0.40 %   $ 16,405,551 $ 13,220 0.32 %
                       
(1) Starting with the third quarter of 2017, includes tax-equivalent adjustments related to tax-exempt interest on loans.    
(2) Includes tax-equivalent adjustments of $4.7 million, $4.8 million, and $4.8 million for the three months ended September 30, 2017, June 30, 2017,  
and September 30, 2016 related to tax-exempt income on municipal securities.  The federal statutory tax rate utilized was 35% for the periods.  
(3) Tax equivalent.                      
(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 deposits divided by average total deposits.            
(5) Funding sources is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated  
as annualized total interest expense divided by average funding sources.            

PACWEST BANCORP AND SUBSIDIARIES                
FIVE QUARTER BALANCE SHEET                  
                   
  September 30,   June 30,   March 31,   December 31,   September 30,
    2017       2017       2017       2016       2016  
                                       
  (Dollars in thousands, except per share data)
ASSETS:                  
Cash and due from banks $ 147,579     $ 180,330     $ 184,608     $ 337,965     $ 286,371  
Interest-earning deposits in financial                  
institutions   122,439       107,150       111,892       81,705       253,994  
Total cash and cash equivalents   270,018       287,480       296,500       419,670       540,365  
                   
Securities available-for-sale   3,532,230       3,474,560       3,336,992       3,223,830       3,341,335  
Federal Home Loan Bank stock   17,250       22,059       17,901       21,870       19,386  
Total investment securities   3,549,480       3,496,619       3,354,893       3,245,700       3,360,721  
                   
Loans held for sale   -       175,158       -       -       -  
                   
Non-PCI loans and leases   15,693,776       15,536,735       15,526,518       15,412,092       14,686,206  
PCI loans   62,509       72,445       96,353       108,445       120,221  
Total gross loans and leases                  
held for investment   15,756,285       15,609,180       15,622,871       15,520,537       14,806,427  
Deferred fees, net   (65,768 )     (65,723 )     (66,182 )     (64,583 )     (63,581 )
Total loans and leases held for                  
investment, net of deferred fees   15,690,517       15,543,457       15,556,689       15,455,954       14,742,846  
Allowance for loan and lease losses   (159,606 )     (145,958 )     (161,307 )     (157,238 )     (147,976 )
Total loans and leases held for                  
investment, net   15,530,911       15,397,499       15,395,382       15,298,716       14,594,870  
                   
Equipment leased to others under                  
operating leases   233,866       203,212       224,580       229,905       198,931  
Premises and equipment, net   28,910       29,108       28,908       38,594       38,977  
Foreclosed assets, net   11,630       13,278       12,842       12,976       15,113  
Deferred tax asset, net   65,321       70,354       88,765       94,112       27,073  
Goodwill   2,173,949       2,173,949       2,173,949       2,173,949       2,173,949  
Core deposit and customer                  
relationship intangibles, net   27,188       30,237       33,302       36,366       39,542  
Other assets   351,659       369,983       318,133       319,779       325,750  
Total assets $ 22,242,932     $ 22,246,877     $ 21,927,254     $ 21,869,767     $ 21,315,291  
                   
LIABILITIES:                  
Noninterest-bearing deposits $ 6,911,874     $ 6,701,039     $ 6,789,808     $ 6,659,016     $ 6,521,946  
Interest-bearing deposits   9,861,371       10,173,938       9,541,200       9,211,595       9,123,722  
Total deposits   16,773,245       16,874,977       16,331,008       15,870,611       15,645,668  
Borrowings   250,399       217,454       460,609       905,812       541,011  
Subordinated debentures   448,126       445,743       442,516       440,744       441,112  
Accrued interest payable and other                  
liabilities   160,494       148,798       185,015       173,545       144,905  
Total liabilities   17,632,264       17,686,972       17,419,148       17,390,712       16,772,696  
STOCKHOLDERS' EQUITY (1)   4,610,668       4,559,905       4,508,106       4,479,055       4,542,595  
Total liabilities and stockholders'                  
equity $ 22,242,932     $ 22,246,877     $ 21,927,254     $ 21,869,767     $ 21,315,291  
                   
Book value per share $ 37.96     $ 37.55     $ 37.13     $ 36.93     $ 37.29  
Tangible book value per share (2) $ 19.84     $ 19.40     $ 18.95     $ 18.71     $ 19.12  
Shares outstanding   121,449,794       121,448,321       121,408,133       121,283,669       121,817,524  
                   
(1) Includes net unrealized gain on                  
securities available-for-sale, net $ 33,613     $ 29,729     $ 12,718     $ 5,982     $ 72,073  
(2) Non-GAAP measure.                  

PACWEST BANCORP AND SUBSIDIARIES                
FIVE QUARTER STATEMENT OF EARNINGS                
                   
  Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
    2017       2017       2017       2016       2016  
                                       
  (Dollars in thousands, except per share data)
Interest income:                  
Loans and leases $ 235,666     $ 234,618     $ 224,178     $ 238,223     $ 225,370  
Investment securities   24,762       24,689       23,039       23,403       22,187  
Deposits in financial institutions   538       237       192       147       298  
Total interest income   260,966       259,544       247,409       261,773       247,855  
                   
Interest expense:                  
Deposits   13,071       10,205       8,377       7,369       7,247  
Borrowings   188       1,066       1,018       631       695  
Subordinated debentures   6,017       5,800       5,562       5,468       5,278  
Total interest expense   19,276       17,071       14,957       13,468       13,220  
                   
Net interest income   241,690       242,473       232,452       248,305       234,635  
Provision for credit losses   15,119       11,499       24,728       23,215       8,471  
Net interest income after provision                  
for credit losses   226,571       230,974       207,724       225,090       226,164  
                   
Noninterest income:                  
Service charges on deposit accounts   3,465       3,510       3,758       3,557       3,488  
Other commissions and fees   9,944       10,583       10,390       12,036       12,528  
Leased equipment income   8,332       11,635       9,475       8,614       8,538  
Gain on sale of loans and leases   2,848       649       712       119       157  
Gain (loss) on sale of securities   1,236       1,651       (99 )     515       382  
FDIC loss sharing expense, net   -       -       -       -       -  
Other income   5,557       7,254       10,878       4,054       1,827  
Total noninterest income   31,382       35,282       35,114       28,895       26,920  
                   
Noninterest expense:                  
Compensation   64,413       65,288       64,880       66,013       62,661  
Occupancy   12,729       11,811       11,608       12,076       12,010  
Data processing   6,459       6,337       7,015       6,574       6,234  
Other professional services   4,213       3,976       3,378       4,880       4,625  
Insurance and assessments   4,702       4,856       4,791       4,124       4,324  
Intangible asset amortization   3,049       3,065       3,064       3,176       4,224  
Leased equipment depreciation   4,862       5,232       5,625       5,291       5,298  
Foreclosed assets expense (income), net   2,191       (157 )     143       2,693       (248 )
Acquisition, integration and                  
reorganization costs   1,450       1,700       500       -       -  
Loan expense   3,421       3,884       3,387       3,140       1,931  
Other expense   11,053       11,715       12,153       10,655       9,651  
Total noninterest expense   118,542       117,707       116,544       118,622       110,710  
                   
Earnings before income taxes   139,411       148,549       126,294       135,363       142,374  
Income tax expense   (37,945 )     (54,902 )     (47,626 )     (49,716 )     (48,479 )
Net earnings $ 101,466     $ 93,647     $ 78,668     $ 85,647     $ 93,895  
                   
Basic and diluted earnings per share $ 0.84     $ 0.77     $ 0.65     $ 0.71     $ 0.77  
                   

PACWEST BANCORP AND SUBSIDIARIES                
FIVE QUARTER SELECTED FINANCIAL DATA                
                   
  At or For the Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
    2017       2017       2017       2016       2016  
                   
  (Dollars in thousands)
Performance Ratios:                  
Return on average assets (1)   1.82 %     1.71 %     1.47 %     1.59 %     1.77 %
Return on average equity (1)   8.77 %     8.26 %     7.08 %     7.57 %     8.24 %
Return on average tangible equity (1)(2)   16.85 %     16.06 %     13.90 %     14.88 %     16.15 %
                   
Yield on average loans and leases (1)   6.01 %     6.07 %     5.94 %     6.31 %     6.17 %
Yield on average interest-earning                  
assets (1)(3)   5.48 %     5.57 %     5.48 %     5.76 %     5.55 %
Cost of average total deposits (1)   0.31 %     0.25 %     0.21 %     0.19 %     0.19 %
Cost of average time deposits (1)   0.62 %     0.55 %     0.45 %     0.40 %     0.45 %
Cost of average interest-bearing                  
liabilities (1)   0.73 %     0.65 %     0.59 %     0.52 %     0.52 %
Cost of average funding sources (1)   0.44 %     0.40 %     0.36 %     0.32 %     0.32 %
Net interest spread (1)(3)   4.75 %     4.92 %     4.89 %     5.24 %     5.03 %
Net interest margin (1)(3)   5.08 %     5.21 %     5.16 %     5.47 %     5.26 %
                   
Efficiency ratio   40.4 %     40.3 %     41.4 %     40.1 %     40.1 %
Noninterest expense as a percentage                  
of average assets (1)   2.15 %     2.15 %     2.18 %     2.20 %     2.09 %
                   
Average Balances:                  
Loans and leases, net of deferred fees $ 15,575,030     $ 15,497,921     $ 15,297,044     $ 15,008,268     $ 14,534,951  
Interest-earning assets   19,257,441       19,030,793       18,655,243       18,413,189       18,111,585  
Total assets   22,137,874       21,936,602       21,645,534       21,427,950       21,072,053  
Noninterest-bearing deposits   6,858,816       6,646,349       6,595,346       6,496,221       6,274,294  
Interest-bearing deposits   10,024,554       9,692,352       9,330,235       9,327,080       9,107,305  
Total deposits   16,883,370       16,338,701       15,925,581       15,823,301       15,381,599  
Borrowings and subordinated                  
debentures   508,083       901,530       1,038,424       946,474       1,023,952  
Interest-bearing liabilities   10,532,637       10,593,882       10,368,659       10,273,554       10,131,257  
Funding sources   17,391,453       17,240,231       16,964,005       16,769,775       16,405,551  
Stockholders' equity   4,592,489       4,545,276       4,503,675       4,501,948       4,530,701  
                   
(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
  September 30,   June 30,   March 31,   December 31,   September 30,
    2017       2017       2017       2016       2016  
                                       
  (Dollars in thousands)
Non-PCI Credit Quality:                  
Allowance for credit losses to loans                  
and leases held for investment   1.11 %     1.02 %     1.08 %     1.05 %     1.05 %
Allowance for credit losses to                  
nonaccrual loans and leases held                  
for investment   110.1 %     92.2 %     96.9 %     94.5 %     90.1 %
Nonaccrual loans and leases held for                  
investment to loans and leases held                  
for investment   1.00 %     1.11 %     1.11 %     1.11 %     1.16 %
Nonperforming assets to loans and                  
leases held for investment and                  
foreclosed assets   1.08 %     1.20 %     1.20 %     1.19 %     1.27 %
Nonperforming assets to total assets   0.76 %     0.84 %     0.85 %     0.84 %     0.87 %
Trailing twelve month net charge-offs                  
to average loans and leases                  
held for investment   0.35 %     0.37 %     0.24 %     0.15 %     0.04 %
                   
PacWest Bancorp Consolidated                  
Capital:                  
Tier 1 leverage ratio (1)   12.02 %     11.90 %     11.87 %     11.91 %     12.13 %
Common equity tier 1 capital ratio (1)   12.52 %     12.28 %     12.31 %     12.31 %     12.83 %
Tier 1 capital ratio (1)   12.52 %     12.28 %     12.31 %     12.31 %     12.83 %
Total capital ratio (1)   15.74 %     15.42 %     15.56 %     15.56 %     16.18 %
Risk-weighted assets (1) $ 19,086,798     $ 19,084,823     $ 18,732,723     $ 18,568,622     $ 17,713,506  
                   
Equity to assets ratio   20.73 %     20.50 %     20.56 %     20.48 %     21.31 %
Tangible common equity ratio (2)   12.02 %     11.75 %     11.67 %     11.54 %     12.19 %
Book value per share $ 37.96     $ 37.55     $ 37.13     $ 36.93     $ 37.29  
Tangible book value per share (2) $ 19.84     $ 19.40     $ 18.95     $ 18.71     $ 19.12  
                   
Pacific Western Bank Capital:                  
Tier 1 leverage ratio (1)   11.46 %     11.41 %     11.36 %     11.40 %     11.54 %
Common equity tier 1 capital ratio (1)   11.95 %     11.79 %     11.79 %     11.78 %     12.21 %
Tier 1 capital ratio (1)   11.95 %     11.79 %     11.79 %     11.78 %     12.21 %
Total capital ratio (1)   12.89 %     12.66 %     12.74 %     12.72 %     13.15 %
                   
Equity to assets ratio   20.22 %     20.07 %     20.11 %     20.02 %     20.77 %
Tangible common equity ratio (2)   11.45 %     11.27 %     11.16 %     11.02 %     11.56 %
                   
(1) Capital information for September 30, 2017 is preliminary.            
(2) Non-GAAP measure.                  

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP financial disclosures for: (1) return on average tangible equity, (2) tangible common equity ratio, and (3) 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, and tangible book value per share is prevalent among banking regulators, investors and analysts.  Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) return on average equity, (2) equity to assets ratio, and (3) book value per share.   

The reconciliations for the following GAAP financial measures to the non-GAAP financial measures are presented below: (1) return on average equity to return on average tangible equity, (2) equity to assets ratio to tangible common equity ratio, and (3) book value per share to tangible book value per share.

PACWEST BANCORP AND SUBSIDIARIES                  
GAAP TO NON-GAAP RECONCILIATION                  
                       
    Three Months Ended   Nine Months Ended