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 PacWest Bancorp Announces Results for the Fourth Quarter and Full Year 2015
   Thursday, January 21, 2016 7:00:15 AM ET

Fourth Quarter 2015 Highlights

-- Square 1 Acquisition Closed October 6, 2015

-- Net Earnings of $71.8 Million, or $0.60 Per Diluted Share; Adjusted Net Earnings of $83.9 Million, or $0.70 Per Diluted Share

-- New Loan and Lease Production of $1.4 Billion for the Quarter

-- Core Deposits Increased $3.8 Billion for the Quarter and Represented 67% of Total Deposits

-- Core Tax Equivalent Net Interest Margin of 5.10%

Full Year 2015 Highlights

-- Net Earnings of $299.6 Million, or $2.79 Per Diluted Share; Adjusted Net Earnings of $287.4 Million, or $2.68 Per Diluted Share

-- New Loan and Lease Production of $4.2 Billion for the Year; Organic Growth Rate of 9%

-- Core Deposits Increased $4.4 Billion for the Year, Including $3.8 Billion From the Square 1 Acquisition

-- Core Tax Equivalent Net Interest Margin of 5.25%

PacWest Bancorp (PACW ) today announced net earnings for the fourth quarter of 2015 of $71.8 million, or $0.60 per diluted share, compared to net earnings for the third quarter of 2015 of $69.6 million, or $0.68 per diluted share. Net earnings for the full year 2015 were $299.6 million, or $2.79 per diluted share, compared to net earnings of $168.9 million for the full year 2014, or $1.92 per diluted share. The increase in annual net earnings was due mostly to including the operations of CapitalSource for all of 2015 compared to including its operations in 2014 only from the April 7, 2014 merger date.

When certain income and expense items described below are excluded, adjusted net earnings were $83.9 million, or $0.70 per diluted share, for the fourth quarter of 2015 compared to $65.1 million, or $0.63 per diluted share, for the third quarter of 2015. Adjusted net earnings were $287.4 million, or $2.68 per diluted share, for the full year 2015 compared to $219.7 million, or $2.49 per diluted share, for the full year 2014.

Matt Wagner, President and CEO, commented, "Our strong fourth quarter results capped a year of profitable growth and continued solid operating performance. Our full year 2015 diluted EPS increased 45%, driving our return on assets of 1.70% and return on tangible equity of 15.76%. These exceptional operating results allowed us to distribute more than $215 million of cash dividends to our stockholders in 2015."

Mr. Wagner continued, "Our entry into the venture capital banking space as a result of the Square 1 acquisition combined with the recent expansion of new commercial construction and multi-family lending groups will help to diversify our loan and lease portfolio along product and geographical lines and contribute toward our targeted upper single-digit portfolio growth. With our strong capital levels and overall sound asset quality metrics we are well positioned for continued success. Our achievements were recently recognized in Forbes magazine’s 2016 List of America’s Best Banks where PacWest was named the second best performing of the 100 largest publicly-traded U.S. banks."

Patrick Rusnak, Executive Vice President and CFO stated, "Our fourth quarter tax equivalent net interest margin on a core basis of 5.10% reflects proactive steps taken during the third and fourth quarters in connection with the Square 1 acquisition. These actions included a further reduction in time deposits and a restructuring of the acquired investment securities portfolio. Further, Square 1’s core deposits substantially improved our core deposit base driving core deposits as a percentage of total deposits up to 67%, nearly a 20% increase. Our total organic loan and lease portfolio growth for 2015, which excludes merger related and bulk acquisitions, totaled over $800 million, or 7%, driven by growth in cash flow, asset-based and construction lending."

Mr. Rusnak continued, "Our total oil and gas related credit exposure at year end was $137 million, or less than one percent of total loans and leases, reflecting a reduction of 10% from principal payments received during the fourth quarter. The reserves related to this credit exposure total approximately 8%. We continue to control operating expenses as shown by our efficiency ratio, which declined to 39.3% in the fourth quarter. We are excited about our prospects for 2016 and believe our talented teams will continue to deliver strong results."

FINANCIAL HIGHLIGHTS

                            At or For the Three Months Ended                                 At or For the Year Ended
                            December 31,          September 30,                              December 31,
                                    2015               2015             Change                    2015                  2014             Change
                            (Dollars in thousands, except per share data)
Financial Highlights (1):
Net Earnings                $       71,841        $    69,616           $    2,225           $    299,619          $    168,905          $    130,714
Diluted Earnings Per Share  $       0.60          $    0.68             $    (0.08     )     $    2.79             $    1.92             $    0.87
Return on Average Assets            1.37       %       1.65       %          (0.28     )          1.70       %          1.27       %          0.43
Return on Average
Tangible Equity (2)                 13.14      %       15.09      %          (1.95     )          15.76      %          11.88      %          3.88
Adjusted Net Earnings (2)   $       83,927        $    65,063           $    18,864          $    287,422          $    219,701          $    67,721
Adjusted Diluted Earnings
Per Share (2)               $       0.70          $    0.63             $    0.07            $    2.68             $    2.49             $    0.19
Adjusted Return on Average
Assets (2)                          1.60       %       1.55       %          0.05                 1.64       %          1.65       %          (0.01     )
Adjusted Return on Average
Tangible Equity (2)                 15.35      %       14.10      %          1.25                 15.12      %          15.46      %          (0.34     )
Net Interest Margin
(tax equivalent)                    5.22       %       5.46       %          (0.24     )          5.60       %          6.01       %          (0.41     )
Core Net Interest Margin
(tax equivalent) (2)                5.10       %       5.19       %          (0.09     )          5.25       %          5.66       %          (0.41     )
Efficiency Ratio                    39.3       %       39.6       %          (0.3      )          38.5       %          41.6       %          (3.1      )
Total Assets                $       21,288,490    $    16,814,105       $    4,474,385       $    21,288,490       $    16,234,605       $    5,053,885
Loans and Leases, Net of
Deferred Fees               $       14,478,254    $    12,452,205       $    2,026,049       $    14,478,254       $    11,882,432       $    2,595,822
Total Deposits              $       15,666,182    $    12,115,763       $    3,550,419       $    15,666,182       $    11,755,128       $    3,911,054
Noninterest-Bearing Deposits
as Percentage of Total
Deposits                            39         %       29         %          10                   39         %          25         %          14
Core Deposits as Percentage
of Total Deposits                   67         %       56         %          11                   67         %          52         %          15
Tangible Common Equity
Ratio (2)                           11.38      %       12.21      %          (0.83     )          11.38      %          12.20      %          (0.82     )
Tangible Book Value Per
Share (2)                   $       17.86         $    17.86            $    -               $    17.86            $    17.17            $    0.69
________________________
(1) The operations of Square 1 Financial, Inc. are included from its October 6, 2015, acquisition date.
(2) Non-GAAP measure.

ADJUSTED NET EARNINGS

In evaluating our earnings, certain items are excluded to arrive at adjusted net earnings and adjusted diluted earnings per share, as detailed below:

                                                              Three Months Ended                                       Year Ended
                                                              December 31,       September 30,      December 31,       December 31,
                                                                   2015               2015               2014               2015                2014
                                                              (Dollars in thousands)
Net earnings                                                  $    71,841        $    69,616        $    70,999        $    299,619        $    168,905
Less:                  Tax benefit on discontinued operations      -                  -                  (47     )          -                   (1,114   )
Add:                   Tax expense on continuing operations        49,380             39,777             43,261             180,517             117,005
Pre-tax earnings                                                   121,221            109,393            114,213            480,136             284,796
Add:                   Acquisition, integration, and
                       reorganization costs                        17,600             747                7,381              21,247              101,016
Less:                  FDIC loss sharing expense, net              (4,291  )          (4,449  )          (4,360  )          (18,246  )          (31,730  )
                       Gain on sale of loans and leases            183                27                 7                  373                 601
                       Gain on securities                          -                  655                -                  3,744               4,841
                       Covered OREO income (expense), net          2,920              (20     )          (176    )          2,931               1,172
                       Gain on sale of owned office building       -                  -                  -                  -                   1,570
Adjusted pre-tax earnings before accelerated
discount accretion                                                 140,009            113,927            126,123            512,581             409,358
Less:                  Accelerated discount accretion from
                       early payoffs of acquired loans             5,511              9,659              11,421             51,969              38,867
Adjusted pre-tax earnings                                          134,498            104,268            114,702            460,612             370,491
                       Tax expense (1)                             (50,571 )          (39,205 )          (46,684 )          (173,190 )          (150,790 )
Adjusted net earnings                                         $    83,927        $    65,063        $    68,018        $    287,422        $    219,701
Adjusted diluted earnings per share                           $    0.70          $    0.63          $    0.66          $    2.68           $    2.49
Adjusted return on average assets                                  1.60    %          1.55    %          1.70    %          1.64     %          1.65     %
___________________________________
(1) Full-year actual effective tax rates of 37.6% used for 2015 periods and 40.7% used for 2014 periods.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $36.7 million to $229.2 million for the fourth quarter of 2015 compared to $192.5 million for the third quarter of 2015 due to higher average investment and loan balances offset by lower discount accretion on acquired loans. The loan and lease yield for the fourth quarter of 2015 was 6.21% compared to 6.34% for the third quarter of 2015. The decrease in the loan and lease yield was due to lower discount accretion on acquired loans and the yield on new originations being lower than the current portfolio yield. Total discount accretion on acquired loans was $16.1 million in the fourth quarter of 2015 (46 basis points on the loan and lease yield) compared to $17.1 million in the third quarter of 2015 (57 basis points on the loan and lease yield). The decrease in discount accretion was due primarily to lower accelerated accretion from early payoffs.

The tax equivalent net interest margin ("NIM") for the fourth quarter of 2015 was 5.22% compared to 5.46% for the third quarter of 2015. The decrease in the NIM was due to lower discount accretion on acquired loans and a higher percentage of average lower-yielding assets in the mix. Discount accretion on acquired loans contributed 36 basis points to the NIM in the fourth quarter of 2015 and 48 basis points in the third quarter of 2015.

The cost of total deposits decreased to 0.24% in the fourth quarter from 0.33% in the third quarter due to the increased balance of noninterest-bearing deposits and a lower level of higher-cost time deposits.

Net interest margin information is presented in the following table for the periods indicated:

                                              Three Months Ended
                                              December 31,          September 30,
                                                   2015                  2015
                                              (Dollars in thousands)
Average Assets:
Loans and leases                              $    14,031,102       $    12,112,881
Investment securities                              3,492,124             1,806,628
Deposits in financial institutions                 254,308               278,973
Interest-earning assets                            17,777,534            14,198,482
Other assets                                       3,047,714             2,491,695
Total assets                                  $    20,825,248       $    16,690,177
Average Liabilities and Stockholders’ Equity:
Interest-bearing deposits                     $    9,633,393        $    8,993,681
Borrowings                                         206,236               70,171
Subordinated debentures                            435,293               434,420
Interest-bearing liabilities                       10,274,922            9,498,272
Noninterest-bearing demand deposits                6,043,900             3,486,780
Other liabilities                                  160,264               132,360
Total liabilities                                  16,479,086            13,117,412
Stockholders’ equity                               4,346,162             3,572,765
Liabilities and stockholders’ equity          $    20,825,248       $    16,690,177
Time deposits                                 $    4,439,940        $    5,042,768
Total deposits                                $    15,677,293       $    12,480,461
Funding sources                               $    16,318,822       $    12,985,052
Yields on Average Assets:
Loans and leases                                   6.21       %          6.34       %
Investment securities (1)                          3.23       %          3.67       %
Interest-earning assets (1)                        5.54       %          5.88       %
Costs of Average Liabilities:
Total deposits                                     0.24       %          0.33       %
Time deposits                                      0.63       %          0.66       %
Interest-bearing deposits                          0.39       %          0.46       %
Borrowings                                         0.31       %          0.41       %
Subordinated debentures                            4.33       %          4.27       %
Interest-bearing liabilities                       0.55       %          0.63       %
Funding sources                                    0.35       %          0.46       %
Net interest rate spread (1)                       4.99       %          5.25       %
Net interest margin (1)                            5.22       %          5.46       %
(1) Tax equivalent

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
                                                     December 31, 2015            September 30, 2015
                                                                   Loan and                     Loan and
                                                     NIM           Lease Yield    NIM           Lease Yield
Reported                                                 5.22  %       6.21  %        5.46  %       6.34  %
Less: Accelerated accretion of acquisition discounts
      from early payoffs of acquired loans               (0.12 )%      (0.16 )%       (0.27 )%      (0.32 )%
Core                                                     5.10  %       6.05  %        5.19  %       6.02  %

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
                                                                      December 31, 2015              September 30, 2015
                                                                                      Impact on                      Impact on
                                                                      Amount          NIM            Amount          NIM
                                                                      (Dollars in thousands)
Net interest income/NIM                                               $   233,959         5.22  %    $   195,274         5.46  %
Less:                  Accelerated accretion of acquisition discounts
                       from early payoffs of acquired loans               (5,511  )       (0.12 )%       (9,659  )       (0.27 )%
                       Remaining accretion of Non-PCI loan
                       acquisition discounts                              (10,553 )       (0.24 )%       (7,485  )       (0.21 )%
                       Total accretion of loan acquisition discounts      (16,064 )       (0.36 )%       (17,144 )       (0.48 )%
                       Amortization of TruPS discount                     1,397           0.03  %        1,399           0.04  %
                       Accretion of time deposits premium                 (384    )       (0.01 )%       (576    )       (0.02 )%
                                                                          (15,051 )       (0.34 )%       (16,321 )       (0.46 )%
Net interest income/NIM - excluding purchase
accounting                                                            $   218,908         4.88  %    $   178,953         5.00  %

Noninterest Income

Noninterest income increased by $12.3 million to $28.1 million for the fourth quarter of 2015 compared to $15.8 million for the third quarter of 2015 due mostly to higher other commissions and fees of $6.3 million, higher leased equipment income of $2.3 million, higher other income of $2.7 million and higher service charges on deposit accounts of $1.3 million. The increase in other commissions and fees was comprised of $3.3 million from loan prepayment fees, $1.7 million from foreign exchange fees and $0.7 million from credit card fee income. The last two items are new revenue streams acquired in the Square 1 acquisition. Leased equipment income increased due to higher average balances and other income increased due to gains from early lease terminations, dividends received on other investments, a miscellaneous recovery and warrant gains. We acquired a portfolio of equity warrants in the Square 1 acquisition, and we continue to receive warrants in connection with extending loan commitments to certain of our customers. Warrants potentially provide gains in the case of a future customer liquidity event. The increase in deposit service charges was due to the acquired Square 1 deposits.

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

                                                   Three Months Ended
                                                   December 31,      September 30,     Increase
Noninterest Income                                      2015              2015         (Decrease)
                                                   (In thousands)
Service charges on deposit accounts                $    3,901        $    2,601        $   1,300
Other commissions and fees                              12,691            6,376            6,315
Leased equipment income                                 7,791             5,475            2,316
Gain on sale of loans and leases                        183               27               156
Gain on securities                                      -                 655              (655   )
FDIC loss sharing expense, net                          (4,291 )          (4,449 )         158
Other income:
Dividends and realized gains on equity investments      4,886             4,357            529
Foreign currency translation net losses                 (661   )          (373   )         (288   )
Income recognized on early repayment of leases          802               12               790
Other                                                   2,756             1,077            1,679
Total noninterest income                           $    28,058       $    15,758       $   12,300

Noninterest Expense

Noninterest expense increased by $32.1 million to $122.3 million for the fourth quarter of 2015 compared to $90.1 million for the third quarter of 2015. The increase was due mostly to higher acquisition, integration and reorganization costs of $16.9 million related to the Square 1 acquisition and integration. All operating expense categories were higher quarter over quarter due mostly to the Square 1 acquisition. Foreclosed assets expense is lower by $7.7 million due to gains of $3.0 million on foreclosed asset sales in the fourth quarter, while the third quarter included a write-down of $4.6 million on an existing foreclosed property.

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

                                                  Three Months Ended
                                                  December 31,       September 30, Increase
Noninterest Expense                                    2015               2015     (Decrease)
                                                  (In thousands)
Compensation                                      $    58,992        $    48,152   $   10,840
Occupancy                                              12,194             10,762       1,432
Data processing                                        5,585              4,322        1,263
Other professional services                            3,811              3,396        415
Insurance and assessments                              5,450              3,805        1,645
Intangible asset amortization                          4,910              1,497        3,413
Leased equipment depreciation                          4,235              3,162        1,073
Foreclosed assets (income) expense, net                (3,185  )          4,521        (7,706 )
Acquisition, integration and reorganization costs      17,600             747          16,853
Other expense:
Loan expense                                           2,745              1,494        1,251
Other                                                  9,927              8,281        1,646
Total noninterest expense                         $    122,264       $    90,139   $   32,125

Income Taxes

Our overall effective income tax rate was 40.7% for the fourth quarter of 2015 and 36.4% for the third quarter of 2015. The effective tax rate for the full year 2015 was 37.6%.

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Total loans and leases increased $2.0 billion in the fourth quarter to $14.5 billion at December 31, 2015. The net increase was driven by the acquisition of Square 1 loans of $1.6 billion and fourth quarter originations and purchases of $1.4 billion, offset partially by principal repayments of $910.4 million. For the year ended December 31, 2015, total loans and leases increased $2.6 billion, or approximately 22%. Fourth quarter new production included $96 million of purchased multi-family loans and the third quarter included $132 million of purchased multi-family and student loans.

The following table presents a roll forward of the loan and lease portfolio for the periods indicated:

                                            Three Months Ended                                                    Year Ended
                                            December 31,                       September 30,                      December 31,
Loan and Lease Roll Forward (1)                             2015                               2015                               2015
                                            (In thousands)
Beginning balance                           $               12,452,205         $               12,034,189         $               11,882,432
New production                                              1,403,611                          1,070,986                          4,171,172
Existing loans and leases:
Principal repayments, net (2)                               (910,445        )                  (630,292        )                  (3,067,733      )
Loan and lease sales                                        (19,610         )                  (6,864          )                  (30,095         )
Transfers to foreclosed assets                              -                                  (10,383         )                  (13,471         )
Charge-offs                                                 (1,227          )                  (5,431          )                  (17,771         )
Loans acquired through Square 1 acquisition                 1,553,720                          -                                  1,553,720
Ending balance                              $               14,478,254         $               12,452,205         $               14,478,254
Weighted average yields on new production                   5.29            %                  5.16            %                  5.47            %
___________________________________
(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.

The following table presents the composition of our loan and lease portfolio as of the dates indicated:

                                             December 31,      September 30,     December 31,
Loan and Lease Portfolio                          2015              2015              2014
                                             (In thousands)
Real estate mortgage:
Commercial                                   $    4,642,088    $    4,512,489    $    4,583,350
Residential                                       1,211,209         1,177,302         1,010,022
Total real estate mortgage                        5,853,297         5,689,791         5,593,372
Real estate construction and land:
Commercial                                        349,436           229,904           220,927
Residential                                       184,382           145,262           96,749
Total real estate construction and land           533,818           375,166           317,676
Total real estate loans                           6,387,115         6,064,957         5,911,048
Commercial:
Cash flow                                         3,073,965         2,980,650         2,665,654
Asset-based                                       2,547,665         2,381,706         2,234,474
Equipment finance                                 890,349           894,777           969,489
Venture capital                                   1,458,013         -                 -
Total commercial                                  7,969,992         6,257,133         5,869,617
Consumer                                          121,147           130,115           101,767
Total loans and leases, net of deferred fees $    14,478,254   $    12,452,205   $    11,882,432
Total unfunded loan commitments              $    3,580,655    $    2,022,046    $    1,921,067

Production from our recently expanded construction lending team is ramping up resulting in the growth in construction loans in the fourth quarter from the combination of new loans originated and disbursements on previously booked loans. Venture capital loans and unfunded loan commitments showed large increases in the fourth quarter due to the acquired balances from Square 1.

Credit Exposure Affected by Low Oil Prices

At December 31, 2015, PacWest had 24 outstanding loan and lease relationships totaling $137.3 million to borrowers involved in the oil and gas services industry, down from $152.3 million at September 30, 2015. The collateral for these loans and leases primarily includes equipment, such as drilling equipment and transportation vehicles. At December 31, 2015, three relationships totaling $47.1 million were on nonaccrual status and were classified, down from $47.9 million at September 30, 2015. The largest of these relationships had an aggregate outstanding balance of $40.1 million at December 31, 2015. These nonaccrual loans had specific valuation allowances of $6.3 million at December 31, 2015 reflecting a $4.9 million increase during the fourth quarter of 2015. The total reserves related to our oil and gas services industry exposure was approximately 8% at year end.

Deposits and Client Investment Funds

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

                                                                    December 31,          September 30,         December 31,
Deposit Category                                                         2015                  2015                  2014
                                                                    (Dollars in thousands)
Noninterest-bearing demand deposits                                 $    6,171,455        $    3,508,682        $    2,931,352
Interest checking deposits                                               874,349               693,632               732,196
Money market deposits                                                    2,782,974             1,860,983             1,709,068
Savings deposits                                                         742,795               751,955               762,961
Total core deposits                                                      10,571,573            6,815,252             6,135,577
Brokered non-maturity deposits                                           942,253               713,215               120,613
Total non-maturity deposits                                              11,513,826            7,528,467             6,256,190
Time deposits under $100,000                                             1,656,227             1,951,938             2,467,338
Time deposits of $100,000 and over                                       2,496,129             2,635,358             3,031,600
Total time deposits                                                      4,152,356             4,587,296             5,498,938
Total deposits                                                      $    15,666,182       $    12,115,763       $    11,755,128
Noninterest-bearing demand deposits as percentage of total deposits      39         %          29         %          25         %
Core deposits as percentage of total deposits                            67         %          56         %          52         %

At December 31, 2015, core deposits totaled $10.6 billion, or 67% of total deposits, including $6.2 billion of noninterest-bearing demand deposits, or 39% of total deposits. Core deposits obtained in the Square 1 acquisition totaled $3.8 billion.

The following table summarizes the maturities of our time deposits as of the date indicated:

                                             December 31, 2015
                                             Time Deposits     Time Deposits     Total                      Estimated
                                             Under                $  100,000     Time          Contractual  Effective
Time Deposit Maturities                         $  100,000     or More           Deposits      Rate         Rate
                                             (Dollars in thousands)
Due in three months or less                  $     589,234     $     784,141     $  1,373,375      0.60 %       0.58 %
Due in over three months through six months        453,763           821,581        1,275,344      0.73 %       0.72 %
Due in over six months through twelve months       500,658           763,141        1,263,799      0.64 %       0.62 %
Due in over 12 months through 24 months            82,459            100,050        182,509        0.63 %       0.51 %
Due in over 24 months                              30,113            27,216         57,329         1.03 %       0.84 %
Total                                        $     1,656,227   $     2,496,129   $  4,152,356      0.66 %       0.64 %
At September 30, 2015                        $     1,951,938   $     2,635,358   $  4,587,296      0.67 %       0.65 %

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 December 31, 2015 were $2.0 billion, of which $1.6 billion was managed by S1AM. In conjunction with the integration of Square 1 Bank, approximately $300 million of assets managed by S1AM were transferred into on-balance sheet deposit products during the fourth quarter of 2015.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $13.8 million was recorded in the fourth quarter of 2015 compared to $8.7 million in the third quarter of 2015. The fourth quarter provision was comprised of a $15.1 million provision for Non-PCI loans and leases and a negative provision of $1.3 million for PCI loans. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio increased to 0.85% at December 31, 2015 from 0.82% at September 30, 2015. The increase in the reserve for unfunded commitments was due to higher levels of expected unfunded commitments utilization and a higher level of unfunded commitments, excluding any gained in the Square 1 acquisition. The negative provision for PCI loans resulted from increases in actual and expected cash flows, mostly due to payoffs.

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

                                                        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
                                                        Three Months Ended September 30, 2015
Allowance for Credit                                    Non-PCI
Losses Rollforward                                      Loans and        Unfunded     Total          PCI
                                                        Leases           Commitments  Non-PCI        Loans       Total
                                                        (In thousands)
Beginning balance                                       $   85,047       $   7,874    $  92,921      $ 14,328    $ 107,249
Charge-offs                                                 (4,312  )        -           (4,312  )     (1,119 )    (5,431  )
Recoveries                                                  1,081            -           1,081         -           1,081
Net (charge-offs) recoveries                                (3,231  )        -           (3,231  )     (1,119 )    (4,350  )
Provision (negative provision)                              10,500           500         11,000        (2,254 )    8,746
Ending balance                                          $   92,316       $   8,374    $  100,690     $ 10,955    $ 111,645

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:

                                   December 31, 2015                                                                                                                                                                          September 30, 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                     $                                  14,339,070                           $                                  122,268                                                                 0.85 %  $                                  12,300,057                           $                                  100,690                                                                 0.82 %
Acquired loans                                                        (6,030,921                         )                                    (19,127                            ) (1                                 )                                          (5,180,808                         )                                    (12,173                            ) (1                                 )
Adjusted balance                   $                                  8,308,149                            $                                  103,141                                                                 1.24 %  $                                  7,119,249                            $                                  88,517                                                                  1.24 %
Ending balance                     $                                  14,339,070                           $                                  122,268                                                                 0.85 %  $                                  12,300,057                           $                                  100,690                                                                 0.82 %
Unamortized net discount                                              92,192                                                                  92,192                               (2                                 )                                          88,690                                                                  88,690                               (2                                 )
Adjusted balance                   $                                  14,431,262                           $                                  214,460                                                                 1.49 %  $                                  12,388,747                           $                                  189,380                                                                 1.53 %
___________________________
(1) Allowance attributed to $6.0 billion and $5.2 billion of acquired Non-PCI loans at December 31, 2015 and September 30, 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 $6.0 billion and $5.2 billion of acquired Non-PCI loans at December 31, 2015 and September 30, 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 $92.2 million at December 31, 2015, is expected to be substantially accreted to income by the end of 2018.

Non-PCI loans and leases at December 31, 2015 included $8.3 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 1.09% of the outstanding balance.

CREDIT QUALITY

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

                                                               December 31,                                       September 30,
Non-PCI Credit Quality Metrics                                                         2015                                               2015
                                                               (Dollars in thousands)
Allowance for credit losses                                    $                       122,268                    $                       100,690
Nonaccrual loans and leases (1)                                                        129,019                                            107,190
Classified loans and leases                                                            391,754                                            328,038
Performing restructured loans                                                          40,182                                             39,956
Net charge-offs (recoveries) (for the quarter)                                         (1,718                  )                          3,231
Provision for credit losses (for the quarter)                                          15,114                                             11,000
Allowance for credit losses to loans and leases                                        0.85                    %                          0.82                    %
Allowance for credit losses to nonaccrual loans and leases (1)                         94.8                    %                          93.9                    %
Nonaccrual loans and leases to loans and leases                                        0.90                    %                          0.87                    %
Nonperforming assets to loans and leases and foreclosed assets                         1.06                    %                          1.14                    %
Classified loans and leases to loans and leases                                        2.73                    %                          2.67                    %
_________________________________________
(1) The December 31, 2015 and September 30, 2015 amounts include $85.2 million and $54.9 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:

                                        Nonaccrual Loans and Leases                                                     Accruing and
                                        December 31, 2015                       September 30, 2015                      30-89 Days Past Due
                                                           % of                                    % of                 December 31,        September 30,
                                                           Loan                                    Loan                          2015                2015
                                        Amount             Category             Amount             Category             Amount              Amount
                                        (Dollars in thousands)
Real estate mortgage:
Commercial                              $        52,363             1.2      %  $        25,899             0.6      %  $        1,498      $        1,191
Residential                                      4,914              0.4      %           5,922              0.5      %           3,174               1,911
Total real estate mortgage                       57,277             1.0      %           31,821             0.6      %           4,672               3,102
Real estate construction and land:
Commercial                                       -                  -                    -                  -                    -                   -
Residential                                      372                0.2      %           374                0.3      %           -                   -
Total real estate construction and land          372                0.1      %           374                0.1      %           -                   -
Commercial:
Cash flow                                        15,800             0.5      %           15,602             0.5      %           1,118               11
Asset-based                                      2,505              0.1      %           2,861              0.1      %           1                   82
Equipment finance (1)                            51,410             5.8      %           53,153             5.9      %           360                 -
Venture capital                                  124                -                    -                  -                    250                 -
Total commercial                                 69,839             0.9      %           71,616             1.1      %           1,729               93
Consumer                                         1,531              1.3      %           3,379              2.6      %           628                 88
Total Non-PCI loans and leases          $        129,019            0.9      %  $        107,190            0.9      %  $        7,029      $        3,283
_________________________
(1) Includes nonaccrual leases and loans to companies involved in the oil and gas industries of $47.1 million and $47.9 million at December 31, 2015 and September 30, 2015, respectively.

The following table presents nonperforming assets as of the dates indicated:

                                                               December 31,                     September 30,
Nonperforming Assets                                                          2015                             2015
                                                               (Dollars in thousands)
Nonaccrual Non-PCI loans and leases                            $              129,019           $              107,190
Nonaccrual PCI Loans (1)                                                      4,596                            4,823
Total nonaccrual loans and leases                                             133,615                          112,013
Non-PCI accruing loan contractually past due 90 days or more                  700                              -
Foreclosed assets, net                                                        22,120                           33,216
Total nonperforming assets                                     $              156,435           $              145,229
Nonaccrual loans and leases to loans and leases                               0.92           %                 0.90           %
Nonperforming assets to loans and leases and foreclosed assets                1.08           %                 1.16           %
_________________________________________
(1) Represents legacy CapitalSource borrowing relationships placed on nonaccrual status as of the acquisition date.

SQUARE 1 FINANCIAL, INC. ACQUISITION

On October 6, 2015, the acquisition of Square 1 Financial, Inc. ("Square 1") was consummated in a transaction valued at approximately $815 million. PacWest Bancorp is the surviving company and Pacific Western Bank is the surviving subsidiary bank, with the banking operations of Square 1 conducted under the trade name of Square 1 Bank, a division of Pacific Western Bank.

Under the terms of the merger agreement, Square 1 stockholders received 0.5997 shares of PacWest common stock for each share of Square 1 common stock and holders of stock options and restricted stock units received cash consideration as described in the merger agreement. The total value of the per share merger consideration was $26.37, based on the closing price of PacWest common stock of $43.97 on October 6, 2015.

The following table shows the various purchase accounting adjustments at the acquisition date by category along with accretion/amortization periods:

                                               Purchase
                                               Accounting         Estimated Accretion/
Description                                    Adjustment         Amortization Method
                                               (In thousands)
                                               Debit (Credit)
Loan portfolio discount                        $    (37,892 )     30 months using a level yield method
Reserve for unfunded commitments               $    (4,746  )     30 months based on commitment activity
Core deposit intangible                        $    42,300        84 months using an accelerated method
Customer relationship intangible               $    3,126         84 months using an accelerated method
Other intangible assets with definite lives    $    1,500         Straight line over 18 months
Other intangible assets with indefinite lives  $    2,100         Not amortized

ABOUT PACWEST BANCORP

PacWest Bancorp ("PacWest") is a bank holding company with over $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 acquisition of Square 1, intentions to expand Pacific Western’s lending business, credit loss exposure, profitability, and loan and lease portfolio growth. 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;

-- our ability to complete future acquisitions and to successfully integrate such acquired entities, including Square 1, or achieve expected benefits, synergies and/or operating efficiencies within expected time frames or at all;

-- business disruption following the Square 1 acquisition;

-- changes in our stock price;

-- the reaction to the Square 1 acquisition of the Company’s customers, employees and counterparties;

-- inability to attract qualified professionals;

-- the success and timing of other business strategies; 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
                                                                                                                                                              December 31,           September 30,          December 31,
                                                                                                                                                                   2015                   2015                   2014
                                                                                                                                                              (Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks                                                                                                                                       $    161,020           $    154,652           $    164,757
Interest-earning deposits in financial institutions                                                                                                                235,466                81,642                 148,469
Total cash and cash equivalents                                                                                                                                    396,486                236,294                313,226
Securities available-for-sale, at estimated fair value                                                                                                             3,559,437              1,809,364              1,567,177
Federal Home Loan Bank stock, at cost                                                                                                                              19,710                 17,250                 40,609
Total investment securities                                                                                                                                        3,579,147              1,826,614              1,607,786
Non-PCI loans and leases                                                                                                                                           14,339,070             12,300,057             11,613,832
PCI loans                                                                                                                                                          189,095                193,340                290,852
Total gross loans and leases                                                                                                                                       14,528,165             12,493,397             11,904,684
Deferred fees and costs                                                                                                                                            (49,911     )          (41,192     )          (22,252     )
Total loans and leases, net of deferred fees                                                                                                                       14,478,254             12,452,205             11,882,432
Allowance for loan and lease losses                                                                                                                                (115,111    )          (103,271    )          (84,455     )
Total loans and leases, net                                                                                                                                        14,363,143             12,348,934             11,797,977
Equipment leased to others under operating leases                                                                                                                  197,452                161,508                122,506
Premises and equipment, net                                                                                                                                        39,197                 36,475                 36,551
Foreclosed assets, net                                                                                                                                             22,120                 33,216                 43,721
Deferred tax asset, net                                                                                                                                            126,389                169,760                284,411
Goodwill                                                                                                                                                           2,176,291              1,728,380              1,720,479
Core deposit and customer relationship intangibles, net                                                                                                            53,220                 12,704                 17,204
Other assets                                                                                                                                                       335,045                260,220                290,744
Total assets                                                                                                                                                  $    21,288,490        $    16,814,105        $    16,234,605
LIABILITIES:
Noninterest-bearing deposits                                                                                                                                  $    6,171,455         $    3,508,682         $    2,931,352
Interest-bearing deposits                                                                                                                                          9,494,727              8,607,081              8,823,776
Total deposits                                                                                                                                                     15,666,182             12,115,763             11,755,128
Borrowings                                                                                                                                                         621,914                552,497                383,402
Subordinated debentures                                                                                                                                            436,000                435,417                433,583
Accrued interest payable and other liabilities                                                                                                                     166,703                128,724                156,262
Total liabilities                                                                                                                                                  16,890,799             13,232,401             12,728,375
STOCKHOLDERS’ EQUITY (1)                                                                                                                                           4,397,691              3,581,704              3,506,230
Total liabilities and stockholders’ equity                                                                                                                    $    21,288,490        $    16,814,105        $    16,234,605
(1) Includes net unrealized gain on securities available-for-sale, net                                                                                        $    27,828            $    24,459            $    26,380
Book value per share                                                                                                                                          $    36.22             $    34.76             $    34.03
Tangible book value per share                                                                                                                                 $    17.86             $    17.86             $    17.17
Shares outstanding (includes unvested restricted shares of 1,211,951 at December 31, 2015, 988,825 at September 30, 2015, and 1,108,505 at December 31, 2014)      121,413,727            103,053,694            103,022,017
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                                                      Three Months Ended                                       Year Ended
                                                      December 31,       September 30,      December 31,       December 31,
                                                           2015               2015               2014             2015            2014
                                                      (Dollars in thousands, except per share data)
Interest income:
Loans and leases                                      $    219,677       $    193,539       $    197,472       $  819,094      $  657,097
Investment securities                                      23,648             13,955             12,205           64,368          47,345
Deposits in financial institutions                         172                178                19               476             333
Total interest income                                      243,497            207,672            209,696          883,938         704,775
Interest expense:
Deposits                                                   9,391              10,400             9,972            41,503          27,332
Borrowings                                                 159                72                 144              554             496
Subordinated debentures                                    4,748              4,680              4,597            18,535          14,570
Total interest expense                                     14,298             15,152             14,713           60,592          42,398
Net interest income                                        229,199            192,520            194,983          823,346         662,377
Provision for credit losses                                13,772             8,746              2,063            45,481          11,499
Net interest income after provision for credit losses      215,427            183,774            192,920          777,865         650,878
Noninterest income:
Service charges on deposit accounts                        3,901              2,601              2,787            11,688          11,233
Other commissions and fees                                 12,691             6,376              4,556            31,586          18,602
Leased equipment income                                    7,791              5,475              5,382            24,023          16,669
Gain on sale of loans and leases                           183                27                 7                373             601
Gain on securities                                         -                  655                -                3,744           4,841
FDIC loss sharing expense, net                             (4,291  )          (4,449  )          (4,360  )        (18,246  )      (31,730  )
Other income                                               7,783              5,073              4,331            31,142          21,971
Total noninterest income                                   28,058             15,758             12,703           84,310          42,187
Noninterest expense:
Compensation                                               58,992             48,152             45,930           203,914         165,499
Occupancy                                                  12,194             10,762             10,745           44,144          40,606
Data processing                                            5,585              4,322              4,050            18,617          14,618
Other professional services                                3,811              3,396              3,181            13,760          11,234
Insurance and assessments                                  5,450              3,805              3,115            16,996          10,907
Intangible asset amortization                              4,910              1,497              1,619            9,410           6,268
Leased equipment depreciation                              4,235              3,162              3,103            13,603          9,159
Foreclosed assets (income) expense, net                    (3,185  )          4,521              1,938            (668     )      5,401
Acquisition, integration and reorganization costs          17,600             747                7,381            21,247          101,016
Other expense                                              12,672             9,775              10,243           41,016          40,884
Total noninterest expense                                  122,264            90,139             91,305           382,039         405,592
Earnings from continuing operations before taxes           121,221            109,393            114,318          480,136         287,473
Income tax expense                                         (49,380 )          (39,777 )          (43,261 )        (180,517 )      (117,005 )
Net earnings from continuing operations                    71,841             69,616             71,057           299,619         170,468
Loss from discontinued operations before taxes             -                  -                  (105    )        -               (2,677   )
Income tax benefit                                         -                  -                  47               -               1,114
Net loss from discontinued operations                      -                  -                  (58     )        -               (1,563   )
Net earnings                                          $    71,841        $    69,616        $    70,999        $  299,619      $  168,905
Basic and diluted earnings per share:
Net earnings from continuing operations               $    0.60          $    0.68          $    0.69          $  2.79         $  1.94
Net earnings                                          $    0.60          $    0.68          $    0.69          $  2.79         $  1.92
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
                                           Three Months Ended
                                           December 31, 2015                                                 September 30, 2015                                                December 31, 2014
                                                                 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                                  $         169,772     $         6,345                14.83     %  $         193,094     $         7,505                15.42     %  $         311,061     $         11,247               14.34     %
Non-PCI loans and leases                             13,861,330            213,332              6.11      %            11,919,787            186,034              6.19      %            11,275,512            186,225              6.55      %
Total loans and leases                               14,031,102            219,677              6.21      %            12,112,881            193,539              6.34      %            11,586,573            197,472              6.76      %
Investment securities (1)                            3,492,124             28,408               3.23      %            1,806,628             16,709               3.67      %            1,591,839             13,840               3.45      %
Deposits in financial institutions                   254,308               172                  0.27      %            278,973               178                  0.25      %            26,971                19                   0.28      %
Total interest-earning assets                        17,777,534            248,257              5.54      %            14,198,482            210,426              5.88      %            13,205,383            211,331              6.35      %
Other assets                                         3,047,714                                                         2,491,695                                                         2,687,378
Total assets                               $         20,825,248                                              $         16,690,177                                              $         15,892,761
Liabilities and Stockholders’ Equity:
Interest checking                          $         889,035               345                  0.15      %  $         787,271               300                  0.15      %  $         702,498               194                  0.11      %
Money market                                         3,557,364             1,543                0.17      %            2,417,280             1,218                0.20      %            1,788,341             932                  0.21      %
Savings                                              747,054               445                  0.24      %            746,362               449                  0.24      %            761,073               572                  0.30      %
Time                                                 4,439,940             7,058                0.63      %            5,042,768             8,433                0.66      %            5,427,687             8,274                0.60      %
Total interest-bearing deposits                      9,633,393             9,391                0.39      %            8,993,681             10,400               0.46      %            8,679,599             9,972                0.46      %
Borrowings                                           206,236               159                  0.31      %            70,171                72                   0.41      %            214,053               144                  0.27      %
Subordinated debentures                              435,293               4,748                4.33      %            434,420               4,680                4.27      %            433,859               4,597                4.20      %
Total interest-bearing liabilities                   10,274,922            14,298               0.55      %            9,498,272             15,152               0.63      %            9,327,511             14,713               0.63      %
Noninterest-bearing demand deposits                  6,043,900                                                         3,486,780                                                         2,900,388
Other liabilities                                    160,264                                                           132,360                                                           164,571
Total liabilities                                    16,479,086                                                        13,117,412                                                        12,392,470
Stockholders’ equity                                 4,346,162                                                         3,572,765                                                         3,500,291
Total liabilities and stockholders’ equity $         20,825,248                                              $         16,690,177                                              $         15,892,761
Net interest income (2)                                          $         233,959                                                 $         195,274                                                 $         196,618
Net interest spread (2)                                                                         4.99      %                                                       5.25      %                                                       5.72      %
Net interest margin (2)                                                                         5.22      %                                                       5.46      %                                                       5.91      %
Total deposits (3)                         $         15,677,293  $         9,391                0.24      %  $         12,480,461  $         10,400               0.33      %  $         11,579,987  $         9,972                0.34      %
Funding sources (4)                        $         16,318,822  $         14,298               0.35      %  $         12,985,052  $         15,152               0.46      %  $         12,227,899  $         14,713               0.48      %
___________________
(1) Includes tax equivalent adjustments of $4.8 million, $2.8 million, and $1.6 million for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014 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
                                                                       December 31,           September 30,          June 30,           March 31,            December 31,
                                                                            2015                   2015                 2015                2015                  2014
                                                                       (Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks                                                $    161,020           $    154,652           $  207,598         $   140,873          $    164,757
Interest-earning deposits in financial institutions                         235,466                81,642               433,033             250,981               148,469
Total cash and cash equivalents                                             396,486                236,294              640,631             391,854               313,226
Securities available-for-sale                                               3,559,437              1,809,364            1,698,158           1,595,409             1,567,177
Federal Home Loan Bank stock, at cost                                       19,710                 17,250               17,250              28,905                40,609
Total investment securities                                                 3,579,147              1,826,614            1,715,408           1,624,314             1,607,786
Non-PCI loans and leases                                                    14,339,070             12,300,057           11,846,314          12,047,946            11,613,832
PCI loans                                                                   189,095                193,340              222,691             254,346               290,852
Total gross loans and leases                                                14,528,165             12,493,397           12,069,005          12,302,292            11,904,684
Deferred fees and costs                                                     (49,911     )          (41,192     )        (34,816     )       (30,126     )         (22,252     )
Total loans and leases, net of deferred fees                                14,478,254             12,452,205           12,034,189          12,272,166            11,882,432
Allowance for loan and lease losses                                         (115,111    )          (103,271    )        (99,375     )       (92,378     )         (84,455     )
Total loans and leases, net                                                 14,363,143             12,348,934           11,934,814          12,179,788            11,797,977
Equipment leased to others under operating leases                           197,452                161,508              117,182             119,959               122,506
Premises and equipment, net                                                 39,197                 36,475               35,984              36,022                36,551
Foreclosed assets, net                                                      22,120                 33,216               31,668              35,940                43,721
Deferred tax asset, net                                                     126,389                169,760              211,556             236,065               284,411
Goodwill                                                                    2,176,291              1,728,380            1,728,380           1,728,380             1,720,479
Core deposit and customer relationship intangibles, net                     53,220                 12,704               14,201              15,703                17,204
Other assets                                                                335,045                260,220              267,196             275,915               290,744
Total assets                                                           $    21,288,490        $    16,814,105        $  16,697,020      $   16,643,940       $    16,234,605
LIABILITIES:
Noninterest-bearing deposits                                           $    6,171,455         $    3,508,682         $  3,396,688       $   3,029,463        $    2,931,352
Interest-bearing deposits                                                   9,494,727              8,607,081            9,185,128           8,904,712             8,823,776
Total deposits                                                              15,666,182             12,115,763           12,581,816          11,934,175            11,755,128
Borrowings                                                                  621,914                552,497              2,751               618,156               383,402
Subordinated debentures                                                     436,000                435,417              433,944             431,448               433,583
Accrued interest payable and other liabilities                              166,703                128,724              127,019             126,800               156,262
Total liabilities                                                           16,890,799             13,232,401           13,145,530          13,110,579            12,728,375
STOCKHOLDERS’ EQUITY (1)                                                    4,397,691              3,581,704            3,551,490           3,533,361             3,506,230
Total liabilities and stockholders’ equity                             $    21,288,490        $    16,814,105        $  16,697,020      $   16,643,940       $    16,234,605
(1) Includes net unrealized gain on securities available-for-sale, net $    27,828            $    24,459            $  16,255          $   28,744           $    26,380
Book value per share                                                   $    36.22             $    34.76             $  34.46           $   34.29            $    34.03
Tangible book value per share                                          $    17.86             $    17.86             $  17.55           $   17.36            $    17.17
Shares outstanding (includes unvested restricted shares)                    121,413,727            103,053,694          103,051,989         103,044,257           103,022,017
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
                                                      Three Months Ended
                                                      December 31,       September 30,      June 30,       March 31,        December 31,
                                                           2015               2015             2015            2015              2014
                                                      (Dollars in thousands, except per share data)
Interest income:
Loans and leases                                      $    219,677       $    193,539       $  203,781     $   202,097      $    197,472
Investment securities                                      23,648             13,955           14,570          12,195            12,205
Deposits in financial institutions                         172                178              104             22                19
Total interest income                                      243,497            207,672          218,455         214,314           209,696
Interest expense:
Deposits                                                   9,391              10,400           11,233          10,479            9,972
Borrowings                                                 159                72               88              235               144
Subordinated debentures                                    4,748              4,680            4,582           4,525             4,597
Total interest expense                                     14,298             15,152           15,903          15,239            14,713
Net interest income                                        229,199            192,520          202,552         199,075           194,983
Provision for credit losses                                13,772             8,746            6,529           16,434            2,063
Net interest income after provision for credit losses      215,427            183,774          196,023         182,641           192,920
Noninterest income:
Service charges on deposit accounts                        3,901              2,601            2,612           2,574             2,787
Other commissions and fees                                 12,691             6,376            7,123           5,396             4,556
Leased equipment income                                    7,791              5,475            5,375           5,382             5,382
Gain on sale of loans and leases                           183                27               163             -                 7
Gain (loss) on securities                                  -                  655              (186    )       3,275             -
FDIC loss sharing expense, net                             (4,291  )          (4,449  )        (5,107  )       (4,399  )         (4,360  )
Other income                                               7,783              5,073            9,643           8,643             4,331
Total noninterest income                                   28,058             15,758           19,623          20,871            12,703
Noninterest expense:
Compensation                                               58,992             48,152           49,033          47,737            45,930
Occupancy                                                  12,194             10,762           10,588          10,600            10,745
Data processing                                            5,585              4,322            4,402           4,308             4,050
Other professional services                                3,811              3,396            3,332           3,221             3,181
Insurance and assessments                                  5,450              3,805            4,716           3,025             3,115
Intangible asset amortization                              4,910              1,497            1,502           1,501             1,619
Leased equipment depreciation                              4,235              3,162            3,103           3,103             3,103
Foreclosed assets (income) expense, net                    (3,185  )          4,521            (2,340  )       336               1,938
Acquisition, integration and reorganization costs          17,600             747              900             2,000             7,381
Other expense                                              12,672             9,775            10,040          8,529             10,243
Total noninterest expense                                  122,264            90,139           85,276          84,360            91,305
Earnings from continuing operations before taxes           121,221            109,393          130,370         119,152           114,318
Income tax expense                                         (49,380 )          (39,777 )        (45,287 )       (46,073 )         (43,261 )
Net earnings from continuing operations                    71,841             69,616           85,083          73,079            71,057
Loss from discontinued operations before taxes             -                  -                -               -                 (105    )
Income tax benefit                                         -                  -                -               -                 47
Net loss from discontinued operations                      -                  -                -               -                 (58     )
Net earnings                                          $    71,841        $    69,616        $  85,083      $   73,079       $    70,999
Basic and diluted earnings per share:
Net earnings from continuing operations               $    0.60          $    0.68          $  0.83        $   0.71         $    0.69
Net earnings                                          $    0.60          $    0.68          $  0.83        $   0.71         $    0.69
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
                                                          At or For the Three Months Ended
                                                          December 31,          September 30,         June 30,          March 31,           December 31,
                                                               2015                  2015                2015               2015                 2014
                                                          (Dollars in thousands)
Performance Ratios - GAAP:
Return on average assets (1)                                   1.37       %          1.65       %        2.07       %       1.82       %         1.77       %
Return on average equity (1)                                   6.56       %          7.73       %        9.62       %       8.39       %         8.05       %
Yield on average loans and leases                              6.21       %          6.34       %        6.75       %       6.80       %         6.76       %
Yield on average interest-earning assets (2)                   5.54       %          5.88       %        6.35       %       6.40       %         6.35       %
Cost of average total deposits                                 0.24       %          0.33       %        0.37       %       0.36       %         0.34       %
Cost of average time deposits                                  0.63       %          0.66       %        0.68       %       0.65       %         0.60       %
Cost of average interest-bearing liabilities                   0.55       %          0.63       %        0.66       %       0.64       %         0.63       %
Cost of average funding sources                                0.35       %          0.46       %        0.50       %       0.49       %         0.48       %
Net interest rate spread (2)                                   4.99       %          5.25       %        5.69       %       5.76       %         5.72       %
Net interest margin (2)                                        5.22       %          5.46       %        5.89       %       5.95       %         5.91       %
Noninterest expense as a percentage of average assets (1)      2.33       %          2.14       %        2.08       %       2.10       %         2.28       %
Efficiency ratio                                               39.3       %          39.6       %        38.0       %       36.9       %         38.4       %
Performance Ratios - Non-GAAP:
Adjusted return on average assets (1)                          1.60       %          1.55       %        1.78       %       1.63       %         1.70       %
Adjusted return on average equity (1)                          7.66       %          7.22       %        8.25       %       7.51       %         7.71       %
Return on average tangible equity (1)                          13.14      %          15.09      %        18.90      %       16.50      %         16.00      %
Adjusted return on average tangible equity (1)                 15.35      %          14.10      %        16.21      %       14.78      %         15.33      %
Core net interest margin (2)                                   5.10       %          5.19       %        5.33       %       5.44       %         5.57       %
Average Balances:
Loans and leases                                          $    14,031,102       $    12,112,881       $  12,108,016     $   12,055,682      $    11,586,573
Interest-earning assets                                        17,777,534            14,198,482          13,942,289         13,701,865           13,205,383
Total assets                                                   20,825,248            16,690,177          16,463,311         16,296,640           15,892,761
Noninterest-bearing deposits                                   6,043,900             3,486,780           3,157,129          2,949,719            2,900,388
Interest-bearing deposits                                      9,633,393             8,993,681           9,107,937          8,801,306            8,679,599
Total deposits                                                 15,677,293            12,480,461          12,265,066         11,751,025           11,579,987
Borrowings and subordinated debentures                         641,529               504,591             513,820            856,664              647,912
Interest-bearing liabilities                                   10,274,922            9,498,272           9,621,757          9,657,970            9,327,511
Funding sources                                                16,318,822            12,985,052          12,778,886         12,607,689           12,227,899
Stockholders’ equity                                           4,346,162             3,572,765           3,548,748          3,533,343            3,500,291
(1) Annualized.
(2) Tax equivalent.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
                                                                  At or For the Three Months Ended
                                                                  December 31,          September 30,         June 30,            March 31,           December 31,
                                                                       2015                  2015                 2015                2015                 2014
                                                                  (Dollars in thousands)
Non-PCI Credit Quality:
Allowance for credit losses to loans and leases                        0.85       %          0.82       %         0.78       %        0.72       %         0.66       %
Allowance for credit losses to nonaccrual loans and leases             95         %          94         %         71         %        62         %         92         %
Nonaccrual loans and leases to loans and leases                        0.90       %          0.87       %         1.11       %        1.16       %         0.72       %
Nonperforming assets to loans and leases and foreclosed assets         1.06       %          1.14       %         1.37       %        1.45       %         1.09       %
Nonperforming assets to total assets                                   0.71       %          0.84       %         0.98       %        1.05       %         0.78       %
Trailing twelve month net charge-offs to average loans and leases      0.06       %          0.04       %         0.06       %        0.07       %         0.02       %
PacWest Bancorp Consolidated Capital:
Tier 1 leverage ratio (1)                                              11.67      %          12.04      %         11.96      %        11.74      %         12.34      %
Common equity tier 1 capital ratio (1)                                 12.56      %          12.74      %         12.87      %        12.27      %         N/A
Tier 1 capital ratio (1)                                               12.58      %          12.74      %         12.87      %        12.27      %         13.16      %
Total capital ratio (1)                                                15.60      %          16.32      %         16.53      %        15.80      %         16.07      %
Tangible common equity ratio (non-GAAP measure)                        11.38      %          12.21      %         12.10      %        12.01      %         12.20      %
Risk-weighted assets (1)                                          $    17,198,540       $    14,038,839       $   13,569,369      $   13,776,106      $    13,096,354
Pacific Western Bank Capital:
Tier 1 leverage ratio (1)                                              11.40      %          11.56      %         11.65      %        11.53      %         11.70      %
Common equity tier 1 capital ratio (1)                                 12.03      %          12.25      %         12.55      %        12.07      %         N/A
Tier 1 capital ratio (1)                                               12.03      %          12.25      %         12.55      %        12.07      %         12.46      %
Total capital ratio (1)                                                12.78      %          13.05      %         13.35      %        12.80      %         13.16      %
Tangible common equity ratio (non-GAAP measure)                        10.80      %          11.53      %         11.46      %        11.32      %         11.51      %
___________________________
(1) Capital information for December 31, 2015 is preliminary.
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
                                                                        Three Months Ended                                                   Year Ended
                                                                        December 31,           September 30,          December 31,           December 31,
                                                                                  2015                   2015                   2014                   2015           2014
                                                                        (Dollars in thousands, except per share data)
Basic Earnings Per Share:
Net earnings from continuing operations                                 $         71,841       $         69,616       $         71,057       $         299,619      $ 170,468
Less: earnings allocated to unvested restricted stock (1)                         (690      )            (649      )            (810      )            (2,892    )    (1,959    )
Net earnings from continuing operations allocated to common shares                71,151                 68,967                 70,247                 296,727        168,509
Net earnings from discontinued operations allocated to common shares              -                      -                      (57       )            -              (1,545    )
Net earnings allocated to common shares                                 $         71,151       $         68,967       $         70,190       $         296,727      $ 166,964
Weighted-average basic shares and unvested restricted stock outstanding           120,385                103,048                103,045                107,401        87,871
Less: weighted-average unvested restricted stock outstanding                      (1,133    )            (985      )            (1,132    )            (1,074    )    (1,018    )
Weighted-average basic shares outstanding                                         119,252                102,063                101,913                106,327        86,853
Basic earnings per share:
Net earnings from continuing operations                                 $         0.60         $         0.68         $         0.69         $         2.79         $ 1.94
Net earnings from discontinued operations                                         -                      -                      -                      -              (0.02     )
Net earnings                                                            $         0.60         $         0.68         $         0.69         $         2.79         $ 1.92
Diluted Earnings Per Share:
Net earnings from continuing operations allocated to common shares      $         71,151       $         68,967       $         70,247       $         296,727      $ 168,509
Net earnings from discontinued operations allocated to common shares              -                      -                      (57       )            -              (1,545    )
Net earnings allocated to common shares                                 $         71,151       $         68,967       $         70,190       $         296,727      $ 166,964
Weighted-average basic shares outstanding                                         119,252                102,063                101,913                106,327        86,853
Diluted earnings per share:
Net earnings from continuing operations                                 $         0.60         $         0.68         $         0.69         $         2.79         $ 1.94
Net earnings from discontinued operations                                         -                      -                      -                      -              (0.02     )
Net earnings                                                            $         0.60         $         0.68         $         0.69         $         2.79         $ 1.92
_______________________________________
(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.

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP financial disclosures for adjusted net earnings, adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted return on average tangible equity, tangible common equity amounts and ratios, tangible book value per share, core net interest margin, and operating expense as a percentage of average assets. 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:

-- Adjusted net earnings: To calculate adjusted net earnings, we exclude from net earnings primarily income statement items for which the related assets or liabilities have been completely resolved and are no longer on the balance sheet. As analysts and investors view this measure as an indicator of the Company’s ability to generate recurring earnings, we disclose this amount in addition to net earnings.

-- Adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted 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 tables on the following pages 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                                          Year Ended
Adjusted Net Earnings and                                                 December 31,        September 30,       December 31,        December 31,
Related Ratios                                                                  2015                2015                2014                2015            2014
                                                                          (Dollars in thousands)
Net earnings                                                              $     71,841        $     69,616        $     70,999        $     299,619       $ 168,905
Less: Tax benefit on discontinued operations                                    -                   -                   (47        )        -               (1,114     )
Add: Tax expense on continuing operations                                       49,380              39,777              43,261              180,517         117,005
Pre-tax earnings                                                                121,221             109,393             114,213             480,136         284,796
Add: Acquisition, integration and reorganization costs                          17,600              747                 7,381               21,247          101,016
Less: FDIC loss sharing expense, net                                            (4,291     )        (4,449     )        (4,360     )        (18,246    )    (31,730    )
Gain on sale of loans and leases                                                183                 27                  7                   373             601
Gain on securities                                                              -                   655                 -                   3,744           4,841
Covered OREO income (expense), net                                              2,920               (20        )        (176       )        2,931           1,172
Gain on sale of owned office building                                           -                   -                   -                   -               1,570
Adjusted pre-tax earnings before accelerated discount accretion                 140,009             113,927             126,123             512,581         409,358
Less: Accelerated discount accretion from early payoffs of acquired loans       5,511               9,659               11,421              51,969          38,867
Adjusted pre-tax earnings                                                       134,498             104,268             114,702             460,612         370,491
Tax expense (1)                                                                 (50,571    )        (39,205    )        (46,684    )        (173,190   )    (150,790   )
Adjusted net earnings                                                     $     83,927        $     65,063        $     68,018        $     287,422       $ 219,701
Average assets                                                            $     20,825,248    $     16,690,177    $     15,892,761    $     17,578,844    $ 13,322,388
Average stockholders’ equity                                              $     4,346,162     $     3,572,765     $     3,500,291     $     3,751,995     $ 2,763,726
Less: Average intangible assets                                                 2,177,631           1,741,902           1,739,977           1,850,988       1,342,286
Average tangible common equity                                            $     2,168,531     $     1,830,863     $     1,760,314     $     1,901,007     $ 1,421,440
Return on average assets (2)                                                    1.37       %        1.65       %        1.77       %        1.70       %    1.27       %
Return on average equity (3)                                                    6.56       %        7.73       %        8.05       %        7.99       %    6.11       %
Return on average tangible equity (4)                                           13.14      %        15.09      %        16.00      %        15.76      %    11.88      %
Adjusted return on average assets (5)                                           1.60       %        1.55       %        1.70       %        1.64       %    1.65       %
Adjusted return on average equity (6)                                           7.66       %        7.22       %        7.71       %        7.66       %    7.95       %
Adjusted return on average tangible equity (7)                                  15.35      %        14.10      %        15.33      %        15.12      %    15.46      %
_________________________________
(1) Full-year actual effective rates of 37.6% used for 2015 periods and 40.7% used for 2014 periods.
(2) Annualized net earnings divided by average assets.
(3) Annualized net earnings divided by average stockholders’ equity.
(4) Annualized net earnings divided by average tangible common equity.
(5) Annualized adjusted net earnings divided by average assets.
(6) Annualized adjusted net earnings divided by average stockholders’ equity.
(7) Annualized adjusted net earnings divided by average tangible common equity.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
                                  December 31,           September 30,          June 30,           March 31,            December 31,
Tangible Common Equity Ratio           2015                   2015                 2015                2015                  2014
                                  (Dollars in thousands)
PacWest Bancorp Consolidated:
Stockholders’ equity              $    4,397,691         $    3,581,704         $  3,551,490       $   3,533,361        $    3,506,230
Less: Intangible assets                2,229,511              1,741,084            1,742,581           1,744,083             1,737,683
Tangible common equity            $    2,168,180         $    1,840,620         $  1,808,909       $   1,789,278        $    1,768,547
Total assets                      $    21,288,490        $    16,814,105        $  16,697,020      $   16,643,940       $    16,234,605
Less: Intangible assets                2,229,511              1,741,084            1,742,581           1,744,083             1,737,683
Tangible assets                   $    19,058,979        $    15,073,021        $  14,954,439      $   14,899,857       $    14,496,922
Equity to assets ratio                 20.66       %          21.30       %        21.27       %       21.23       %         21.60       %
Tangible common equity ratio (1)       11.38       %          12.21       %        12.10       %       12.01       %         12.20       %
Book value per share              $    36.22             $    34.76             $  34.46           $   34.29            $    34.03
Tangible book value per share (2) $    17.86             $    17.86             $  17.55           $   17.36            $    17.17
Shares outstanding                     121,413,727            103,053,694          103,051,989         103,044,257           103,022,017
Pacific Western Bank:
Stockholders’ equity              $    4,276,279         $    3,466,817         $  3,440,715       $   3,410,276        $    3,378,879
Less: Intangible assets                2,229,511              1,741,084            1,742,581           1,744,083             1,737,683
Tangible common equity            $    2,046,768         $    1,725,733         $  1,698,134       $   1,666,193        $    1,641,196
Total assets                      $    21,180,689        $    16,707,072        $  16,555,610      $   16,458,591       $    15,995,719
Less: Intangible assets                2,229,511              1,741,084            1,742,581           1,744,083             1,737,683
Tangible assets                   $    18,951,178        $    14,965,988        $  14,813,029      $   14,714,508       $    14,258,036
Equity to assets ratio                 20.19       %          20.75       %        20.78       %       20.72       %         21.12       %
Tangible common equity ratio           10.80       %          11.53       %        11.46       %       11.32       %         11.51       %
________________________________
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.
Contact: Matthew P. Wagner
President and CEO
Phone: 310-887-8520

Patrick J. Rusnak
Executive Vice President and CFO
714-989-4705

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