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 PacWest Bancorp Announces Results for the Fourth Quarter and Full Year 2016
   Thursday, January 19, 2017 7:00:24 AM ET

Fourth Quarter 2016 Highlights

-- Net Earnings of $85.6 Million, or $0.71 Per Diluted Share

-- New Loan and Lease Production of $1.3 Billion; $713 Million of Net Loan Growth

-- Core Deposits Increase of $513 Million and Represent 79% of Total Deposits

-- Tax Equivalent Net Interest Margin of 5.47%; Core Tax Equivalent Net Interest Margin of 5.09%

Full Year 2016 Highlights

-- Net Earnings of $352.2 Million, or $2.90 Per Diluted Share

-- New Loan and Lease Production of $4.1 Billion; $978 Million of Net Loan Growth

-- Core Deposits Increase of $2.0 Billion

-- Tax Equivalent Net Interest Margin of 5.40%; Core Tax Equivalent Net Interest Margin of 5.10%

PacWest Bancorp (PACW ) today announced net earnings for the fourth quarter of 2016 of $85.6 million, or $0.71 per diluted share, compared to net earnings for the third quarter of 2016 of $93.9 million, or $0.77 per diluted share. Net earnings for the full year 2016 were $352.2 million, or $2.90 per diluted share, compared to net earnings for the full year 2015 of $299.6 million, or $2.79 per diluted share. The 18% increase in annual net earnings was due mostly to including the operations of Square 1 Financial, Inc. for all of 2016 compared to including its operations in 2015 from the October 6, 2015 acquisition date.

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 2016 return on assets of 1.66% and return on tangible equity of 15.52% drove a 4% increase in diluted EPS. These exceptional operating results allowed us to return $271 million to our stockholders in 2016 through stock repurchases and dividends."

Patrick Rusnak, Executive Vice President and CFO stated, "Our fourth quarter core tax equivalent NIM increased one basis point to 5.09% while our NIM excluding all purchase accounting items increased six basis points to 5.04%. Our NIM has continued to hold up during this sustained period of low interest rates and, with our large concentrations of floating rate loans and core deposits, our balance sheet is well-positioned for a rising rate environment."

Mr. Rusnak continued, "We are pleased with the 2016 full year loan and lease growth of 7% as it was produced by various business groups, maintaining our favorable loan diversification along our product lines."

Mr. Wagner continued, "We are very well-positioned for continued growth and superior financial performance in 2017 given our proven and efficient business banking model supported by talented bankers. Even with the prospect of a more favorable outlook for economic growth and the banking sector, we will remain vigilant with respect to prudent risk management. Our financial performance was recently recognized in Forbes magazine’s 2017 List of America’s Best Banks where PacWest was named the best performing of the 100 largest publicly-traded U.S. banks."

FINANCIAL HIGHLIGHTS

                           At or For the Three Months Ended                         At or For the Year Ended
                           December 31,        September 30,                        December 31,
                                 2016               2016             Change            2016              2015           Change
                           (Dollars in thousands, except per share data)
Financial Highlights
Net Earnings               $     85,647        $    93,895           $  (8,248  )   $  352,166        $  299,619        $  52,547
Diluted Earnings Per Share $     0.71          $    0.77             $  (0.06   )   $  2.90           $  2.79           $  0.11
Return on Average Assets         1.59       %       1.77       %        (0.18   )      1.66       %      1.70       %      (0.04     )
Return on Average
Tangible Equity (1)              14.88      %       16.15      %        (1.27   )      15.52      %      15.76      %      (0.24     )
Net Interest Margin
(tax equivalent)                 5.47       %       5.26       %        0.21           5.40       %      5.60       %      (0.20     )
Core Net Interest Margin
(tax equivalent) (1)             5.09       %       5.08       %        0.01           5.10       %      5.25       %      (0.15     )
Efficiency Ratio                 40.1       %       40.1       %        -              39.8       %      38.5       %      1.3
Total Assets               $     21,869,767    $    21,315,291       $  554,476     $  21,869,767     $  21,288,490     $  581,277
Loans and Leases, Net
of Deferred Fees           $     15,455,954    $    14,742,846       $  713,108     $  15,455,954     $  14,478,254     $  977,700
Noninterest-Bearing
Deposits                   $     6,659,016     $    6,521,946        $  137,070     $  6,659,016      $  6,171,455      $  487,561
Core Deposits              $     12,523,834    $    12,010,639       $  513,195     $  12,523,834     $  10,571,573     $  1,952,261
Total Deposits             $     15,870,611    $    15,645,668       $  224,943     $  15,870,611     $  15,666,182     $  204,429
Noninterest-Bearing
Deposits as Percentage
of Total Deposits                42         %       42         %        -              42         %      39         %      3
Core Deposits as
Percentage of Total
Deposits                         79         %       77         %        2              79         %      67         %      12
Equity to Assets Ratio           20.48      %       21.31      %        (0.83   )      20.48      %      20.66      %      (0.18     )
Tangible Common Equity
Ratio (1)                        11.54      %       12.19      %        (0.65   )      11.54      %      11.38      %      0.16
Book Value Per Share       $     36.93         $    37.29            $  (0.36   )   $  36.93          $  36.22          $  0.71
Tangible Book Value Per
Share (1)                  $     18.71         $    19.12            $  (0.41   )   $  18.71          $  17.86          $  0.85
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $13.7 million to $248.3 million in the fourth quarter of 2016 compared to $234.6 million in the third quarter of 2016 due to the combination of higher discount accretion on acquired loans and higher average loan and lease balances, offset by lower nonaccrual interest recoveries. Total accretion on acquired loans was $21.2 million in the fourth quarter of 2016 (56 basis points on the loan and lease yield) compared to $14.2 million in the third quarter of 2016 (39 basis points on the loan and lease yield). The increase in accretion was due primarily to higher accelerated accretion from payoffs on acquired loans, including $13.5 million from the payoff of a nonaccrual purchased credit impaired ("PCI") loan. The loan and lease yield for the fourth quarter of 2016 was 6.31% compared to 6.17% for the third quarter of 2016. The increase in the loan and lease yield was due to the higher accretion on acquired loans offset by a lower yield on new production relative to the current portfolio yield. Excluding accelerated accretion, the core loan and lease yield was 5.85% in the fourth quarter compared to 5.94% in the third quarter.

The tax equivalent NIM for the fourth quarter of 2016 was 5.47% compared to 5.26% for the third quarter of 2016. The increase in the NIM was mostly due to higher accretion on acquired loans. Such accretion contributed 46 basis points to the NIM in the fourth quarter of 2016 and 31 basis points to the NIM in the third quarter of 2016. Excluding accelerated accretion, the core tax equivalent NIM was 5.09% in the fourth quarter compared to 5.08% for the third quarter.

Included in net interest income for the third quarter of 2016 was $3.0 million of interest resulting from the full payoff of a nonperforming loan. This recovery contributed seven basis points to the NIM and eight basis points of loan and lease yield for the third quarter of 2016.

The cost of total deposits was 0.19% in the fourth quarter, unchanged from the third quarter.

The tax equivalent NIM and loan and lease yield are impacted by volatility in accretion of acquisition discounts on 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, 2016       September 30, 2016
                                                                       Loan and                Loan and
                                                            NIM        Lease Yield  NIM        Lease Yield
Reported                                                    5.47  %    6.31  %      5.26  %    6.17  %
Less:                  Accelerated accretion of acquisition
                       discounts from early payoffs of
                       acquired loans                       (0.38 )%   (0.46 )%     (0.18 )%   (0.23 )%
Core                                                        5.09  %    5.85  %      5.08  %    5.94  %
Less:                  Remaining accretion of Non-PCI loan
                       acquisition discounts                (0.08 )%   (0.10 )%     (0.13 )%   (0.16 )%
Excluding total accretion of loan acquisition
                       discounts                            5.01  %    5.75  %      4.95  %    5.78  %
Total accretion of loan acquisition discounts               (0.46 )%   (0.56 )%     (0.31 )%   (0.39 )%

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, 2016               September 30, 2016
                                                                 Impact on                      Impact on
                                                Amount           NIM            Amount          NIM
                                                (Dollars in thousands)
Net interest income/NIM                         $      253,131   5.47   %       $   239,473     5.26  %
Less:       Accelerated accretion of acquisition
            discounts from early payoffs of
            acquired loans                             (17,454 ) (0.38  )%          (8,226  )   (0.18 )%
            Remaining accretion of Non-PCI loan
            acquisition discounts                      (3,726  ) (0.08  )%          (5,997  )   (0.13 )%
            Total accretion of loan acquisition
            discounts                                  (21,180 ) (0.46  )%          (14,223 )   (0.31 )%
            Amortization of TruPS discount             1,388     0.03   %           1,391       0.03  %
            Accretion of time deposits premium         (94     ) 0.00   %           (121    )   0.00  %
                                                       (19,886 ) (0.43  )%          (12,953 )   (0.28 )%
Net interest income/NIM - excluding purchase
accounting                                      $      233,245   5.04   %       $   226,520     4.98  %

Noninterest Income

Noninterest income increased by $2.0 million to $28.9 million in the fourth quarter of 2016 compared to $26.9 million for the third quarter of 2016 due mostly to a $1.1 million increase in dividends and gains on equity investments and a $1.1 million increase in other income attributable mainly to higher warrant income.

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

                                                   Three Months Ended
                                                   December 31,      September 30,     Increase
Noninterest Income                                      2016              2016         (Decrease)
                                                   (In thousands)
Service charges on deposit accounts                $    3,557        $    3,488        $   69
Other commissions and fees                              12,036            12,528           (492  )
Leased equipment income                                 8,614             8,538            76
Gain on sale of loans and leases                        119               157              (38   )
Gain on securities                                      515               382              133
Other income:
Dividends and realized gains on equity investments      1,453             377              1,076
Foreign currency translation net (losses) gains         (171   )          (224   )         53
Other                                                   2,772             1,674            1,098
Total noninterest income                           $    28,895       $    26,920       $   1,975

Noninterest Expense

Noninterest expense increased by $7.9 million to $118.6 million for the fourth quarter of 2016 compared to $110.7 million for the third quarter of 2016. The increase was due mostly to higher compensation expense of $3.4 million, higher foreclosed assets expense of $2.9 million, higher loan expense of $1.2 million, and higher other expense of $1.0 million, offset by lower intangible asset amortization of $1.0 million. Compensation expense increased due mainly to higher severance, bonus, and commissions expense. Foreclosed assets expense increased due primarily to a $2.6 million write-down on an existing property. Loan expense increased primarily due to a $0.9 million recovery of work-out expenses for a single credit in the third quarter. Intangible asset amortization decreased due to declining amortization on the Square 1 customer deposit and customer relationship intangible assets.

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

                                        Three Months Ended
                                        December 31,   September 30,      Increase
Noninterest Expense                          2016           2016          (Decrease)
                                        (In thousands)
Compensation                            $    66,013    $    62,661        $   3,352
Occupancy                                    12,076         12,010            66
Data processing                              6,574          6,234             340
Other professional services                  4,880          4,625             255
Insurance and assessments                    4,124          4,324             (200   )
Intangible asset amortization                3,176          4,224             (1,048 )
Leased equipment depreciation                5,291          5,298             (7     )
Foreclosed assets expense (income), net      2,693          (248    )         2,941
Other expense:
Loan expense                                 3,140          1,931             1,209
Other                                        10,655         9,651             1,004
Total noninterest expense               $    118,622   $    110,710       $   7,912

Income Taxes

The overall effective income tax rate was 36.7% in the fourth quarter of 2016 and 34.1% in the third quarter of 2016. The effective rate for the third quarter was lower due to certain discrete items associated with completion of the 2015 tax returns. The effective tax rate for the full year 2016 was 36.9%. The estimated effective tax rate for the full year 2017 is approximately 38.5%.

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Total loans and leases increased by $713.1 million in the fourth quarter to $15.5 billion at December 31, 2016. The net increase was driven by fourth quarter originations and purchases of $1.3 billion, offset partially by principal repayments of $526.2 million. For the year ended December 31, 2016, total loans and leases increased by $977.7 million, or approximately 7%.

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)                      2016                         2016                     2016
                                        (Dollars in thousands)
Beginning balance                       $            14,742,846      $            14,641,460          $    14,478,254
New production                                       1,272,900                    1,071,943                4,118,330
Existing loans and leases:
Principal repayments, net (2)                        (526,232     )               (933,037     )           (2,844,553 )
Loan and lease sales                                 (14,825      )               (27,065      )           (120,144   )
Transfers to foreclosed assets                       (652         )               -                        (781       )
Charge-offs                                          (18,083      )               (10,455      )           (35,954    )
Sale of PWEF                                         -                            -                        (139,198   )
Ending balance                          $            15,455,954      $            14,742,846          $    15,455,954
Weighted average rate on new production              4.83         %               5.11         %           4.92       %
(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,      June 30,         December 31,
Loan and Lease Portfolio                         2016               2016             2016             2015
                                        (In thousands)
Real estate mortgage:
Commercial                              $        4,396,696   $      4,327,565   $    4,519,209   $    4,645,533
Residential                                      1,314,036          1,242,254        1,164,784        1,211,209
Total real estate mortgage                       5,710,732          5,569,819        5,683,993        5,856,742
Real estate construction and land:
Commercial                                       581,246            510,831          417,144          345,991
Residential                                      384,001            323,104          281,788          184,382
Total real estate construction and land          965,247            833,935          698,932          530,373
Total real estate loans                          6,675,979          6,403,754        6,382,925        6,387,115
Commercial:
Cash flow                                        3,112,890          3,071,606        3,048,439        3,073,965
Asset-based                                      2,611,796          2,573,437        2,683,913        2,547,665
Venture capital                                  1,987,900          1,766,509        1,666,352        1,458,013
Equipment finance                                691,967            670,783          646,940          890,349
Total commercial                                 8,404,553          8,082,335        8,045,644        7,969,992
Consumer                                         375,422            256,757          212,891          121,147
Total loans and leases, net of
deferred fees                           $        15,455,954  $      14,742,846  $    14,641,460  $    14,478,254
Total unfunded loan commitments         $        4,166,703   $      4,156,147   $    3,888,686   $    3,580,655

Loan growth in the fourth quarter came primarily from the venture capital, construction, and consumer portfolios.

Deposits and Client Investment Funds

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

                                              December 31,          September 30,         June 30,          December 31,
Deposit Category                                      2016               2016                2016                2015
                                              (Dollars in thousands)
Noninterest-bearing demand deposits           $       6,659,016     $    6,521,946        $  6,222,696      $    6,171,455
Interest checking deposits                            1,448,394          1,184,350           1,035,395           874,349
Money market deposits                                 3,705,385          3,532,050           3,392,811           2,782,974
Savings deposits                                      711,039            772,293             761,090             742,795
Total core deposits                                   12,523,834         12,010,639          11,411,992          10,571,573
Brokered non-maturity deposits                        1,174,487          1,082,114           972,820             942,253
Total non-maturity deposits                           13,698,321         13,092,753          12,384,812          11,513,826
Time deposits under $100,000                          1,018,849          1,180,428           1,114,074           1,656,227
Time deposits of $100,000 and over                    1,153,441          1,372,487           1,649,123           2,496,129
Total time deposits                                   2,172,290          2,552,915           2,763,197           4,152,356
Total deposits                                $       15,870,611    $    15,645,668       $  15,148,009     $    15,666,182
Noninterest-bearing demand deposits
as percentage of total deposits                       42         %       42         %        41         %        39         %
Core deposits as percentage of total deposits         79         %       77         %        75         %        67         %

At December 31, 2016, core deposits totaled $12.5 billion, or 79% of total deposits, including $6.7 billion of noninterest-bearing demand deposits, or 42% of total deposits.

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Square 1 Asset Management, Inc. ("S1AM"), our registered investment advisor subsidiary, and third-party sweep products. Total client investment funds at December 31, 2016 were $1.3 billion, of which $1.1 billion was managed by S1AM.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $23.2 million was recorded in the fourth quarter of 2016 compared to $8.5 million in the third quarter of 2016. The fourth quarter provision consisted of $21.0 million for non-purchased credit impaired ("Non-PCI") loans and leases and $2.2 million for PCI loans; this compares to $8.0 million and $0.5 million for the third quarter. The higher fourth quarter 2016 provision was due to significant loan and lease portfolio growth and lower recoveries. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio was 1.05% at December 31, 2016 and September 30, 2016.

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

                             Three Months Ended December 31, 2016
                             Non-PCI
Allowance for Credit         Loans and        Unfunded        Total          PCI
Losses Rollforward           Leases           Commitments     Non-PCI        Loans       Total
                             (In thousands)
Beginning balance            $   136,747      $   17,323      $  154,070     $ 11,229    $ 165,299
Charge-offs                      (18,083 )        -              (18,083 )     -           (18,083 )
Recoveries                       4,291            -              4,291         39          4,330
Net (charge-offs) recoveries     (13,792 )        -              (13,792 )     39          (13,753 )
Provision                        20,800           200            21,000        2,215       23,215
Ending balance               $   143,755      $   17,523      $  161,278     $ 13,483    $ 174,761
                             Three Months Ended September 30, 2016
                             Non-PCI
Allowance for Credit         Loans and        Unfunded        Total          PCI
Losses Rollforward           Leases           Commitments     Non-PCI        Loans       Total
                             (In thousands)
Beginning balance            $   132,000      $   17,944      $  149,944     $ 11,289    $ 161,233
Charge-offs                      (9,924  )        -              (9,924  )     (531   )    (10,455 )
Recoveries                       6,050            -              6,050         -           6,050
Net charge-offs                  (3,874  )        -              (3,874  )     (531   )    (4,405  )
Provision                        8,621            (621   )       8,000         471         8,471
Ending balance               $   136,747      $   17,323      $  154,070     $ 11,229    $ 165,299

The higher fourth quarter 2016 charge-offs were principally due to the charge-off of $15.7 million of specific reserves that were established in previous quarters compared to $9.7 million in the third quarter.

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 leases and associated purchase accounting discounts:

                              December 31, 2016                                                                                                                                                 September 30, 2016
Non-PCI Adjusted              Non-PCI                                                                                                                                                           Non-PCI
Allowance for Credit Losses   Loans and                                                     Allowance/                                                         Coverage                         Loans and                                                     Allowance/                                                         Coverage
to Loans and Leases           Leases                                                        Discount                                                           Ratio                            Leases                                                        Discount                                                           Ratio
                              (Dollars in thousands)
Adjustment for -
Acquired loans and leases
and related allowance:
Ending balance                $                             15,412,092                      $                             161,278                              1.05                          %  $                             14,686,206                      $                             154,070                              1.05                          %
Acquired loans and allowance                                (4,413,176                    )                               (44,352                       ) (1 )                                                                (4,612,787                    )                               (46,039                       ) (1 )
Adjusted balance              $                             10,998,916                      $                             116,926                              1.06                          %  $                             10,073,419                      $                             108,031                              1.07                          %
Adjustment for -
Unamortized net discount on
acquired loans and leases:
Ending balance                $                             15,412,092                      $                             161,278                              1.05                          %  $                             14,686,206                      $                             154,070                              1.05                          %
Unamortized net discount                                    45,639                                                        45,639                          (2 )                                                                53,041                                                        53,041                          (2 )
Adjusted balance              $                             15,457,731                      $                             206,917                              1.34                          %  $                             14,739,247                      $                             207,111                              1.41                          %
(1) Allowance attributed to $4.4 billion and $4.6 billion of acquired Non-PCI loans at December 31, 2016 and September 30, 2016, 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 $4.4 billion and $4.6 billion of acquired Non-PCI loans at December 31, 2016 and September 30, 2016, 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 $45.6 million at December 31, 2016, is expected to be substantially accreted to income by the end of 2018.

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                        2016             2016
                                                (Dollars in thousands)
Nonaccrual loans and leases                     $     170,599    $     171,085
Classified loans and leases                           409,645          417,541
Performing troubled debt restructured loans           64,952           70,348
Allowance for credit losses                           161,278          154,070
Net charge-offs (for the quarter)                     13,792           3,874
Provision for credit losses (for the quarter)         21,000           8,000
Allowance for credit losses to loans and leases       1.05    %        1.05    %
Allowance for credit losses to nonaccrual loans
and leases                                            94.5    %        90.1    %
Nonaccrual loans and leases to loans and leases       1.11    %        1.16    %
Nonperforming assets to loans and leases and
foreclosed assets                                     1.19    %        1.27    %
Classified loans and leases to loans and leases       2.66    %        2.84    %

The following table presents Non-PCI nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated:

                           Non-PCI Nonaccrual Loans and Leases               Non-PCI Accruing and
                           December 31, 2016         September 30, 2016      30-89 Days Past Due
                                           % of                   % of       December 31,   September 30,
                                           Loan                   Loan              2016           2016
                           Amount          Category  Amount       Category   Amount         Amount
                           (Dollars in thousands)
Real estate mortgage:
Commercial                 $       62,454  1.4    %  $    74,606  1.7  %     $      7,691   $      2,146
Residential                        6,881   0.5    %       5,089   0.4  %            5,524          -
Total real estate mortgage         69,335  1.2    %       79,695  1.5  %            13,215         2,146
Real estate construction and land:
Commercial                         -       0.0    %       1,245   0.2  %            -              -
Residential                        364     0.1    %       366     0.1  %            -              -
Total real estate
construction and land              364     0.0    %       1,611   0.2  %            -              -
Commercial:
Cash flow                          53,908  1.7    %       27,831  0.9  %            153            21
Asset-based                        2,118   0.1    %       4,044   0.2  %            1,500          6,644
Venture capital                    11,687  0.6    %       10,782  0.6  %            13,295         -
Equipment finance                  32,848  4.7    %       46,916  7.0  %            218            -
Total commercial                   100,561 1.2    %       89,573  1.1  %            15,166         6,665
Consumer                           339     0.1    %       206     0.1  %            224            -
Total Non-PCI loans and
leases                     $       170,599 1.1    %  $    171,085 1.2  %     $      28,605  $      8,811

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

                                                December 31,         September 30,
Nonperforming Assets                                     2016             2016
                                                (Dollars in thousands)
Nonaccrual Non-PCI loans and leases             $        170,599     $    171,085
Nonaccrual PCI loans                                     2,928            3,478
Total nonaccrual loans and leases                        173,527          174,563
Foreclosed assets, net                                   12,976           15,113
Total nonperforming assets                      $        186,503     $    189,676
Nonaccrual loans and leases to loans and leases          1.12     %       1.18    %
Nonperforming assets to loans and leases
and foreclosed assets                                    1.20     %       1.28    %

STOCK REPURCHASE PROGRAM

In the fourth quarter of 2016, the Company repurchased 652,835 shares of common stock for a total amount of $27.9 million under its previously announced $400 million stock repurchase program. The repurchased shares were retired by the Company.

SALE AND CLOSURE OF BRANCHES

In December 2016, Pacific Western Bank completed the sale of two branches to First Foundation Bank (the "Transaction"). The branches were located in Laguna Hills and Seal Beach, California (the "Branches"). The deposits of the Branches totaled approximately $180 million, principally comprised of time deposits. No loans were sold in connection with the Transaction. In addition, Pacific Western Bank will close its three branches located in the San Francisco Bay Area in the first quarter of 2017. At December 31, 2016, the deposits of these branches totaled approximately $100 million. No significant one-time charges are expected to be incurred related to the closure of these branches.

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 77 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 forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results and metrics. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "assume," "intend," "believe," "forecast," "expect," "estimate," "plan," "continue," "will," "should," "look forward" and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. These risks and uncertainties include, but are not limited to, our ability to compete effectively against other financial institutions in our banking markets; the impact of changes in interest rates or levels of market activity, especially on our loan and investment portfolios; deterioration, weaker than expected improvement, or other changes in the state of the economy or the markets in which we conduct business (including the levels of IPOs and M&A activities); changes in credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and leases losses; our ability to attract deposits and other sources of funding or liquidity; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the impact of adverse judgments or settlements in litigation, the initiation and resolution of regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; and our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including the Annual Report on Form 10-K for the year ended December 31, 2015, and particularly the discussion of risk factors within that document.

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

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
                                                       December 31,          September 30,          December 31,
                                                              2016                2016                   2015
                                                       (Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks                                $      337,965        $    286,371           $    161,020
Interest-earning deposits in financial institutions           81,705              253,994                235,466
Total cash and cash equivalents                               419,670             540,365                396,486
Securities available-for-sale, at estimated fair value        3,223,830           3,341,335              3,559,437
Federal Home Loan Bank stock, at cost                         21,870              19,386                 19,710
Total investment securities                                   3,245,700           3,360,721              3,579,147
Non-PCI loans and leases                                      15,412,092          14,686,206             14,339,070
PCI loans                                                     108,445             120,221                189,095
Total gross loans and leases                                  15,520,537          14,806,427             14,528,165
Deferred fees, net                                            (64,583     )       (63,581     )          (49,911     )
Total loans and leases, net of deferred fees                  15,455,954          14,742,846             14,478,254
Allowance for loan and lease losses                           (157,238    )       (147,976    )          (115,111    )
Total loans and leases, net                                   15,298,716          14,594,870             14,363,143
Equipment leased to others under operating leases             229,905             198,931                197,452
Premises and equipment, net                                   38,594              38,977                 39,197
Foreclosed assets, net                                        12,976              15,113                 22,120
Deferred tax asset, net                                       94,112              27,073                 126,389
Goodwill                                                      2,173,949           2,173,949              2,176,291
Core deposit and customer
relationship intangibles, net                                 36,366              39,542                 53,220
Other assets                                                  319,779             325,750                335,045
Total assets                                           $      21,869,767     $    21,315,291        $    21,288,490
LIABILITIES:
Noninterest-bearing deposits                           $      6,659,016      $    6,521,946         $    6,171,455
Interest-bearing deposits                                     9,211,595           9,123,722              9,494,727
Total deposits                                                15,870,611          15,645,668             15,666,182
Borrowings                                                    905,812             541,011                621,914
Subordinated debentures                                       440,744             441,112                436,000
Accrued interest payable and other liabilities                173,545             144,905                166,703
Total liabilities                                             17,390,712          16,772,696             16,890,799
STOCKHOLDERS’ EQUITY (1)                                      4,479,055           4,542,595              4,397,691
Total liabilities and stockholders’ equity             $      21,869,767     $    21,315,291        $    21,288,490
Book value per share                                   $      36.93          $    37.29             $    36.22
Tangible book value per share (2)                      $      18.71          $    19.12             $    17.86
Shares outstanding                                            121,283,669         121,817,524            121,413,727
(1) Includes net unrealized gain on securities         $      5,982          $    72,073            $    27,828
available-for-sale, net
(2) Non-GAAP measure.
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                                        Three Months Ended                                     Year Ended
                                        December 31,     September 30,      December 31,       December 31,
                                              2016            2016               2015             2016             2015
                                        (Dollars in thousands, except per share data)
Interest income:
Loans and leases                        $     238,223    $    225,370       $    219,677       $  924,294       $  819,094
Investment securities                         23,403          22,187             23,648           90,557           64,368
Deposits in financial institutions            147             298                172              1,061            476
Total interest income                         261,773         247,855            243,497          1,015,912        883,938
Interest expense:
Deposits                                      7,369           7,247              9,391            31,512           41,503
Borrowings                                    631             695                159              2,259            554
Subordinated debentures                       5,468           5,278              4,748            20,850           18,535
Total interest expense                        13,468          13,220             14,298           54,621           60,592
Net interest income                           248,305         234,635            229,199          961,291          823,346
Provision for credit losses                   23,215          8,471              13,772           65,729           45,481
Net interest income after provision
for credit losses                             225,090         226,164            215,427          895,562          777,865
Noninterest income:
Service charges on deposit accounts           3,557           3,488              3,901            14,534           11,688
Other commissions and fees                    12,036          12,528             12,691           47,126           31,586
Leased equipment income                       8,614           8,538              7,791            33,919           24,023
Gain on sale of loans and leases              119             157                183              909              373
Gain on securities                            515             382                -                9,485            3,744
FDIC loss sharing expense, net                -               -                  (4,291  )        (8,917    )      (18,246  )
Other income                                  4,054           1,827              7,783            15,419           31,142
Total noninterest income                      28,895          26,920             28,058           112,475          84,310
Noninterest expense:
Compensation                                  66,013          62,661             58,992           251,913          203,914
Occupancy                                     12,076          12,010             12,194           48,911           44,144
Data processing                               6,574           6,234              5,585            24,356           18,617
Other professional services                   4,880           4,625              3,811            16,478           13,760
Insurance and assessments                     4,124           4,324              5,450            18,364           16,996
Intangible asset amortization                 3,176           4,224              4,910            16,517           9,410
Leased equipment depreciation                 5,291           5,298              4,235            20,899           13,603
Foreclosed assets expense (income), net       2,693           (248    )          (3,185  )        1,881            (668     )
Acquisition, integration and
reorganization costs                          -               -                  17,600           200              21,247
Other expense                                 13,795          11,582             12,672           50,582           41,016
Total noninterest expense                     118,622         110,710            122,264          450,101          382,039
Earnings before income taxes                  135,363         142,374            121,221          557,936          480,136
Income tax expense                            (49,716 )       (48,479 )          (49,380 )        (205,770  )      (180,517 )
Net earnings                            $     85,647     $    93,895        $    71,841        $  352,166       $  299,619
Basic and diluted earnings per share    $     0.71       $    0.77          $    0.60          $  2.90          $  2.79
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
                                      Three Months Ended                                            Year Ended
                                      December 31,       September 30,      December 31,            December 31,
                                              2016               2016               2015               2016           2015
                                      (Dollars in thousands, except per share data)
Basic Earnings Per Share:
Net earnings                          $       85,647     $       93,895     $       71,841          $  352,166     $  299,619
Less: earnings allocated to unvested
restricted stock (1)                          (1,004  )          (1,048  )          (690    )          (3,988  )      (2,892  )
Net earnings allocated to common
shares                                $       84,643     $       92,847     $       71,151          $  348,178     $  296,727
Weighted-average basic shares and
unvested restricted stock outstanding         121,464            121,818            120,385            121,670        107,401
Less: weighted-average unvested
restricted stock outstanding                  (1,450  )          (1,401  )          (1,133  )          (1,431  )      (1,074  )
Weighted-average basic shares
outstanding                                   120,014            120,417            119,252            120,239        106,327
Basic earnings per share              $       0.71       $       0.77       $       0.60            $  2.90        $  2.79
Diluted Earnings Per Share:
Net earnings allocated to common
shares                                $       84,643     $       92,847     $       71,151          $  348,178     $  296,727
Weighted-average basic shares
outstanding                                   120,014            120,417            119,252            120,239        106,327
Diluted earnings per share            $       0.71       $       0.77       $       0.60            $  2.90        $  2.79
(1) Represents cash dividends paid to holders of unvested stock, net of estimated forfeitures, plus
undistributed earnings amounts available to holders of unvested restricted stock, if any.
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
                          Three Months Ended
                          December 31, 2016                                                September 30, 2016                                               December 31, 2015
                                                   Interest                 Average                                 Interest                 Average                                 Interest                                                                                                          Average
                          Average                  Income/                  Yield/         Average                  Income/                  Yield/         Average                  Income/                                                                                                           Yield/
                          Balance                  Expense                  Cost           Balance                  Expense                  Cost           Balance                  Expense                                                                                                           Cost
                          (Dollars in thousands)
Assets:
PCI loans                 $           104,234      $           17,481       66.72       %  $           117,781      $           5,868        19.82       %  $           169,772      $           6,345                                                                                                 14.83 %
Non-PCI loans and leases              14,904,034               220,742      5.89        %              14,417,170               219,502      6.06        %              13,861,330               213,332                                                                                               6.11  %
Total loans and leases                15,008,268               238,223      6.31        %              14,534,951               225,370      6.17        %              14,031,102               219,677                                                                                               6.21  %
Investment securities (1)             3,293,003                28,229       3.41        %              3,338,209                27,025       3.22        %              3,492,124                28,408                                                                                                3.23  %
Deposits in financial
institutions                          111,918                  147          0.52        %              238,425                  298          0.50        %              254,308                  172                                                                                                   0.27  %
Total interest-earning
assets                                18,413,189               266,599      5.76        %              18,111,585               252,693      5.55        %              17,777,534               248,257                                                                                               5.54  %
Other assets                          3,014,761                                                        2,960,468                                                        3,047,714
Total assets              $           21,427,950                                           $           21,072,053                                           $           20,825,248
Liabilities and
Stockholders’ Equity:
Interest checking         $           1,449,346                951          0.26        %  $           1,161,931                604          0.21        %  $           889,035                  345                                                                                                   0.15  %
Money market                          4,740,944                3,672        0.31        %              4,514,525                3,303        0.29        %              3,557,364                1,543                                                                                                 0.17  %
Savings                               751,817                  331          0.18        %              764,415                  341          0.18        %              747,054                  445                                                                                                   0.24  %
Time                                  2,384,973                2,415        0.40        %              2,666,434                2,999        0.45        %              4,439,940                7,058                                                                                                 0.63  %
Total interest-bearing
deposits                              9,327,080                7,369        0.31        %              9,107,305                7,247        0.32        %              9,633,393                9,391                                                                                                 0.39  %
Borrowings                            505,567                  631          0.50        %              583,982                  695          0.47        %              206,236                  159                                                                                                   0.31  %
Subordinated debentures               440,907                  5,468        4.93        %              439,970                  5,278        4.77        %              435,293                  4,748                                                                                                 4.33  %
Total interest-bearing
liabilities                           10,273,554               13,468       0.52        %              10,131,257               13,220       0.52        %              10,274,922               14,298                                                                                                0.55  %
Noninterest-bearing
demand deposits                       6,496,221                                                        6,274,294                                                        6,043,900
Other liabilities                     156,227                                                          135,801                                                          160,264
Total liabilities                     16,926,002                                                       16,541,352                                                       16,479,086
Stockholders’ equity                  4,501,948                                                        4,530,701                                                        4,346,162
Total liabilities and
stockholders’ equity      $           21,427,950                                           $           21,072,053                                           $           20,825,248
Net interest income (2)                            $           253,131                                              $           239,473                                              $           233,959
Net interest spread (2)                                                     5.24        %                                                    5.03        %                                                                                                                                             4.99  %
Net interest margin (2)                                                     5.47        %                                                    5.26        %                                                                                                                                             5.22  %
Total deposits (3)        $           15,823,301   $           7,369        0.19        %  $           15,381,599   $           7,247        0.19        %  $           15,677,293   $           9,391                                                                                                 0.24  %
Funding sources (4)       $           16,769,775   $           13,468       0.32        %  $           16,405,551   $           13,220       0.32        %  $           16,318,822   $           14,298                                                                                                0.35  %
(1) Includes tax equivalent adjustments of $4.8 million, $4.8 million, and $4.8 million for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 related to tax exempt income on municipal securities.  The federal statutory tax rate utilized was 35% for the periods.
(2) Tax equivalent.
(3) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits.  The cost of total deposits is calculated annualized interest expense on deposits divided by average total deposits.
(4) Funding sources is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated as annualized total interest expense divided by average funding sources.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
                                    December 31,           September 30,          June 30,           March 31,              December 31,
                                            2016                2016                 2016                2016                    2015
                                    (Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks             $       337,965        $    286,371           $  226,471         $   161,977            $    161,020
Interest-earning deposits in financial
institutions                                81,705              253,994              218,882             357,541                 235,466
Total cash and cash equivalents             419,670             540,365              445,353             519,518                 396,486
Securities available-for-sale               3,223,830           3,341,335            3,347,546           3,240,586               3,559,437
Federal Home Loan Bank stock                21,870              19,386               24,214              17,250                  19,710
Total investment securities                 3,245,700           3,360,721            3,371,760           3,257,836               3,579,147
Non-PCI loans and leases                    15,412,092          14,686,206           14,566,425          14,365,915              14,339,070
PCI loans                                   108,445             120,221              136,901             176,607                 189,095
Total gross loans and leases                15,520,537          14,806,427           14,703,326          14,542,522              14,528,165
Deferred fees, net                          (64,583     )       (63,581     )        (61,866     )       (59,005     )           (49,911     )
Total loans and leases, net of
deferred fees                               15,455,954          14,742,846           14,641,460          14,483,517              14,478,254
Allowance for loan and lease losses         (157,238    )       (147,976    )        (143,289    )       (130,361    )           (115,111    )
Total loans and leases, net                 15,298,716          14,594,870           14,498,171          14,353,156              14,363,143
Equipment leased to others under
operating leases                            229,905             198,931              204,062             205,163         -       197,452
Premises and equipment, net                 38,594              38,977               38,718              39,713                  39,197
Foreclosed assets, net                      12,976              15,113               16,181              18,310                  22,120
Deferred tax asset, net                     94,112              27,073               24,413              91,126                  126,389
Goodwill                                    2,173,949           2,173,949            2,175,791           2,175,791               2,176,291
Core deposit and customer
relationship intangibles, net               36,366              39,542               43,766              48,137                  53,220
Other assets                                319,779             325,750              328,924             322,259                 335,045
Total assets                        $       21,869,767     $    21,315,291        $  21,147,139      $   21,031,009         $    21,288,490
LIABILITIES:
Noninterest-bearing deposits        $       6,659,016      $    6,521,946         $  6,222,696       $   6,139,963          $    6,171,455
Interest-bearing deposits                   9,211,595           9,123,722            8,925,313           9,301,412               9,494,727
Total deposits                              15,870,611          15,645,668           15,148,009          15,441,375              15,666,182
Borrowings                                  905,812             541,011              918,208             551,401                 621,914
Subordinated debentures                     440,744             441,112              439,322             438,723                 436,000
Accrued interest payable and other
liabilities                                 173,545             144,905              128,296             142,918                 166,703
Total liabilities                           17,390,712          16,772,696           16,633,835          16,574,417              16,890,799
STOCKHOLDERS’ EQUITY (1)                    4,479,055           4,542,595            4,513,304           4,456,592               4,397,691
Total liabilities and stockholders’
equity                              $       21,869,767     $    21,315,291        $  21,147,139      $   21,031,009         $    21,288,490
Book value per share                $       36.93          $    37.29             $  37.05           $   36.60              $    36.22
Tangible book value per share (2)   $       18.71          $    19.12             $  18.83           $   18.33              $    17.86
Shares outstanding                          121,283,669         121,817,524          121,819,849         121,771,252             121,413,727
(1) Includes net unrealized gain on $       5,982          $    72,073            $  81,744          $   48,479             $    27,828
securities available-for-sale, net
(2) Non-GAAP measure.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
                                        Three Months Ended
                                        December 31,     September 30,      June 30,       March 31,        December 31,
                                              2016            2016             2016            2016              2015
                                        (Dollars in thousands, except per share data)
Interest income:
Loans and leases                        $     238,223    $    225,370       $  224,326     $   236,375      $    219,677
Investment securities                         23,403          22,187           22,420          22,547            23,648
Deposits in financial institutions            147             298              308             308               172
Total interest income                         261,773         247,855          247,054         259,230           243,497
Interest expense:
Deposits                                      7,369           7,247            7,823           9,073             9,391
Borrowings                                    631             695              352             581               159
Subordinated debentures                       5,468           5,278            5,122           4,982             4,748
Total interest expense                        13,468          13,220           13,297          14,636            14,298
Net interest income                           248,305         234,635          233,757         244,594           229,199
Provision for credit losses                   23,215          8,471            13,903          20,140            13,772
Net interest income after provision
for credit losses                             225,090         226,164          219,854         224,454           215,427
Noninterest income:
Service charges on deposit accounts           3,557           3,488            3,633           3,856             3,901
Other commissions and fees                    12,036          12,528           11,073          11,489            12,691
Leased equipment income                       8,614           8,538            8,523           8,244             7,791
Gain on sale of loans and leases              119             157              388             245               183
Gain on securities                            515             382              478             8,110             -
FDIC loss sharing expense, net                -               -                (6,502  )       (2,415  )         (4,291  )
Other income                                  4,054           1,827            4,528           5,010             7,783
Total noninterest income                      28,895          26,920           22,121          34,539            28,058
Noninterest expense:
Compensation                                  66,013          62,661           62,174          61,065            58,992
Occupancy                                     12,076          12,010           12,193          12,632            12,194
Data processing                               6,574           6,234            5,644           5,904             5,585
Other professional services                   4,880           4,625            3,401           3,572             3,811
Insurance and assessments                     4,124           4,324            4,951           4,965             5,450
Intangible asset amortization                 3,176           4,224            4,371           4,746             4,910
Leased equipment depreciation                 5,291           5,298            5,286           5,024             4,235
Foreclosed assets expense (income), net       2,693           (248    )        (3      )       (561    )         (3,185  )
Acquisition, integration and
reorganization costs                          -               -                -               200               17,600
Other expense                                 13,795          11,582           12,064          13,141            12,672
Total noninterest expense                     118,622         110,710          110,081         110,688           122,264
Earnings before income taxes                  135,363         142,374          131,894         148,305           121,221
Income tax expense                            (49,716 )       (48,479 )        (49,726 )       (57,849 )         (49,380 )
Net earnings                            $     85,647     $    93,895        $  82,168      $   90,456       $    71,841
Basic and diluted earnings per share    $     0.71       $    0.77          $  0.68        $   0.74         $    0.60
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,
                                               2016               2016                2016               2016                 2015
                                         (Dollars in thousands)
Performance Ratios:
Return on average assets (1)                   1.59       %       1.77       %        1.57       %       1.72       %         1.37       %
Return on average equity (1)                   7.57       %       8.24       %        7.37       %       8.20       %         6.56       %
Return on average tangible equity (1)(2)       14.88      %       16.15      %        14.61      %       16.45      %         13.14      %
Yield on average loans and leases (1)          6.31       %       6.17       %        6.24       %       6.57       %         6.21       %
Yield on average interest-earning
assets (1)(3)                                  5.76       %       5.55       %        5.63       %       5.85       %         5.54       %
Cost of average total deposits (1)             0.19       %       0.19       %        0.20       %       0.23       %         0.24       %
Cost of average time deposits (1)              0.40       %       0.45       %        0.52       %       0.61       %         0.63       %
Cost of average interest-bearing
liabilities (1)                                0.52       %       0.52       %        0.54       %       0.57       %         0.55       %
Cost of average funding sources (1)            0.32       %       0.32       %        0.33       %       0.35       %         0.35       %
Net interest rate spread (1)(3)                5.24       %       5.03       %        5.09       %       5.28       %         4.99       %
Net interest margin (1)(3)                     5.47       %       5.26       %        5.33       %       5.53       %         5.22       %
Core net interest margin (1)(2)(3)             5.09       %       5.08       %        5.11       %       5.10       %         5.10       %
Efficiency ratio                               40.1       %       40.1       %        40.6       %       38.5       %         39.3       %
Noninterest expense as a percentage
of average assets (1)                          2.20       %       2.09       %        2.11       %       2.10       %         2.33       %
Average Balances:
Loans and leases                         $     15,008,268    $    14,534,951       $  14,468,590     $   14,471,165      $    14,031,102
Interest-earning assets                        18,413,189         18,111,585          18,003,075         18,161,751           17,777,534
Total assets                                   21,427,950         21,072,053          20,999,942         21,198,594           20,825,248
Noninterest-bearing deposits                   6,496,221          6,274,294           6,437,720          6,273,249            6,043,900
Interest-bearing deposits                      9,327,080          9,107,305           9,199,097          9,388,652            9,633,393
Total deposits                                 15,823,301         15,381,599          15,636,817         15,661,901           15,677,293
Borrowings and subordinated
debentures                                     946,474            1,023,952           739,509            931,260              641,529
Interest-bearing liabilities                   10,273,554         10,131,257          9,938,606          10,319,912           10,274,922
Funding sources                                16,769,775         16,405,551          16,376,326         16,593,161           16,318,822
Stockholders’ equity                           4,501,948          4,530,701           4,483,593          4,438,602            4,346,162
(1) Annualized.
(2) Non-GAAP measure.
(3) Tax equivalent.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
                                       At or For the Three Months Ended
                                       December 31,          September 30,         June 30,          March 31,           December 31,
                                               2016                  2016             2016               2016                 2015
                                       (Dollars in thousands)
Non-PCI Credit Quality:
Allowance for credit losses to loans
and leases                                     1.05       %          1.05       %     1.03       %       0.96       %         0.85       %
Allowance for credit losses to
nonaccrual loans and leases                    95         %          90         %     118        %       106        %         95         %
Nonaccrual loans and leases to loans
and leases                                     1.11       %          1.16       %     0.88       %       0.91       %         0.90       %
Nonperforming assets to loans and
leases and foreclosed assets                   1.19       %          1.27       %     0.99       %       1.05       %         1.06       %
Nonperforming assets to total assets           0.84       %          0.87       %     0.68       %       0.72       %         0.71       %
Trailing twelve month net charge-offs
to average loans and leases                    0.15       %          0.04       %     0.04       %       0.03       %         0.06       %
PacWest Bancorp Consolidated
Capital:
Tier 1 leverage ratio (1)                      11.91      %          12.13      %     11.92      %       11.51      %         11.67      %
Common equity tier 1 capital ratio (1)         12.31      %          12.83      %     12.72      %       12.63      %         12.58      %
Tier 1 capital ratio (1)                       12.31      %          12.83      %     12.72      %       12.63      %         12.60      %
Total capital ratio (1)                        15.56      %          16.18      %     16.08      %       15.96      %         15.65      %
Risk-weighted assets (1)               $       18,568,724    $       17,713,506    $  17,520,609     $   17,226,658      $    17,170,292
Equity to assets ratio                         20.48      %          21.31      %     21.34      %       21.19      %         20.66      %
Tangible common equity ratio (2)               11.54      %          12.19      %     12.12      %       11.87      %         11.38      %
Book value per share                   $       36.93         $       37.29         $  37.05          $   36.60           $    36.22
Tangible book value per share (2)      $       18.71         $       19.12         $  18.83          $   18.33           $    17.86
Pacific Western Bank Capital:
Tier 1 leverage ratio (1)                      11.40      %          11.54      %     11.38      %       11.10      %         11.40      %
Common equity tier 1 capital ratio (1)         11.78      %          12.21      %     12.13      %       12.18      %         12.03      %
Tier 1 capital ratio (1)                       11.78      %          12.21      %     12.13      %       12.18      %         12.03      %
Total capital ratio (1)                        12.72      %          13.15      %     13.06      %       13.05      %         12.80      %
Equity to assets ratio                         20.02      %          20.77      %     20.82      %       20.70      %         20.19      %
Tangible common equity ratio (2)               11.02      %          11.56      %     11.51      %       11.27      %         10.80      %
(1) Capital information for December 31, 2016 is preliminary.
(2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP financial disclosures for return on average tangible equity, tangible common equity ratio, tangible book value per share, core net interest margin, core loan and lease yield, and adjusted allowance for credit losses to loans and leases. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. In particular, the use of return on average tangible equity, tangible common equity ratio, and tangible book value per share is prevalent among banking regulators, investors and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of return on average equity, equity to assets ratio, book value per share, net interest margin, loan and lease yield, and allowance for credit losses to loans and leases, respectively.

The reconciliations for the following GAAP financial measures to the non-GAAP financial measures are presented earlier in this press release: (1) net interest margin to core net interest margin, (2) loan and lease yield to core loan and lease yield, and (3) allowance for credit losses to loans and leases to adjusted allowance for credit losses to loans and leases.

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

PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
                                             Three Months Ended                                             Year Ended
                                             December 31,         September 30,        December 31,         December 31,
Return on Average Tangible Equity                    2016                 2016              2015              2016           2015
                                             (Dollars in thousands)
Net earnings                                 $       85,647       $       93,895       $    71,841          $ 352,166      $ 299,619
Average stockholders’ equity                 $       4,501,948    $       4,530,701    $    4,346,162       $ 4,488,862    $ 3,751,995
Less:              Average intangible assets         2,212,042            2,217,564         2,177,631         2,219,756      1,850,988
Average tangible common equity               $       2,289,906    $       2,313,137    $    2,168,531       $ 2,269,106    $ 1,901,007
Return on average equity (1)                         7.57      %          8.24      %       6.56      %       7.85      %    7.99      %
Return on average tangible equity (2)                14.88     %          16.15     %       13.14     %       15.52     %    15.76     %
(1) Annualized net earnings divided by average stockholders’ equity.
(2) Annualized net earnings divided by average tangible common equity.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
Tangible Common Equity Ratio/     December 31,           September 30,          June 30,           March 31,             December 31,
Tangible Book Value Per Share             2016                   2016              2016                2016                   2015
                                  (Dollars in thousands, except per share data)
PacWest Bancorp Consolidated:
Stockholders’ equity              $       4,479,055      $       4,542,595      $  4,513,304       $   4,456,592         $    4,397,691
Less: Intangible assets                   2,210,315              2,213,491         2,219,557           2,223,928              2,229,511
Tangible common equity            $       2,268,740      $       2,329,104      $  2,293,747       $   2,232,664         $    2,168,180
Total assets                      $       21,869,767     $       21,315,291     $  21,147,139      $   21,031,009        $    21,288,490
Less: Intangible assets                   2,210,315              2,213,491         2,219,557           2,223,928              2,229,511
Tangible assets                   $       19,659,452     $       19,101,800     $  18,927,582      $   18,807,081        $    19,058,979
Equity to assets ratio                    20.48       %          21.31       %     21.34       %       21.19        %         20.66       %
Tangible common equity ratio (1)          11.54       %          12.19       %     12.12       %       11.87        %         11.38       %
Book value per share              $       36.93          $       37.29          $  37.05           $   36.60             $    36.22
Tangible book value per share (2) $       18.71          $       19.12          $  18.83           $   18.33             $    17.86
Shares outstanding                        121,283,669            121,817,524       121,819,849         121,8771,252           121,413,727
Pacific Western Bank:
Stockholder’s equity              $       4,374,478      $       4,416,623      $  4,390,928       $   4,331,841         $    4,276,279
Less: Intangible assets                   2,210,315              2,213,491         2,219,557           2,223,928              2,229,511
Tangible common equity            $       2,164,163      $       2,203,132      $  2,171,371       $   2,107,913         $    2,046,768
Total assets                      $       21,848,644     $       21,266,705     $  21,084,950      $   20,928,105        $    21,180,689
Less: Intangible assets                   2,210,315              2,213,491         2,219,557           2,223,928              2,229,511
Tangible assets                   $       19,638,329     $       19,053,214     $  18,865,393      $   18,704,177        $    18,951,178
Equity to assets ratio                    20.02       %          20.77       %     20.82       %       20.70        %         20.19       %
Tangible common equity ratio (1)          11.02       %          11.56       %     11.51       %       11.27        %         10.80       %
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.
Contact:

Donald D. Destino
Executive Vice President
Corporate Development and Investor Relations
Phone: 310-887-8521

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