PACWEST BANCORP - FORM 10-Q

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TABLE OF CONTENTS

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 00-30747

PACWEST BANCORP
(Exact name of registrant as specified in its charter)


DELAWARE (State or other jurisdiction of incorporation or organization)		33-0885320 (I.R.S. Employer Identification Number)
10250 Constellation Blvd., Suite 1640
Los Angeles, California		90067
(Address of principal executive offices)		(Zip Code)

(310) 286-1144
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of May 4, 2011, there were 35,461,802 shares of the registrant's common stock outstanding, excluding 1,756,104 shares of unvested restricted stock.

Table of Contents

PACWEST BANCORP AND SUBSIDIARIES

MARCH 31, 2011 FORM 10-Q

TABLE OF CONTENTS



PART I—FINANCIAL INFORMATION			3
	ITEM 1.	Condensed Consolidated Financial Statements (Unaudited)	3
		Condensed Consolidated Balance Sheets (Unaudited)	3
		Condensed Consolidated Statements of Earnings (Loss) (Unaudited)	4
		Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	5
		Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited)	6
		Condensed Consolidated Statements of Cash Flows (Unaudited)	7
		Notes to Condensed Consolidated Financial Statements (Unaudited)	8
	ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	75
	ITEM 4.	Controls and Procedures	75
PART II—OTHER INFORMATION			75
	ITEM 1.	Legal Proceedings	75
	ITEM 1A.	Risk Factors	75
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76
	ITEM 6.	Exhibits	76
SIGNATURES			77

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. Condensed Consolidated Financial Statements (Unaudited)

PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Par Value Data)

(Unaudited)

			March 31, 2011			December 31, 2010

ASSETS
Cash and due from banks			$	88,634		$	82,170
Interest-earning deposits in financial institutions				104,925			26,382

	Total cash and cash equivalents			193,559			108,552

Securities available-for-sale, at fair value ($52,132 and $50,437 covered by FDIC loss share at March 31, 2011 and December 31, 2010, respectively)				887,154			874,016
Federal Home Loan Bank stock, at cost				52,857			55,040

	Total investment securities			940,011			929,056

Non-covered loans, net of unearned income				3,057,654			3,161,055
Allowance for loan losses				(98,564	)		(98,653	)

	Total non-covered loans, net			2,959,090			3,062,402
Covered loans, net				859,433			908,576

	Total loans			3,818,523			3,970,978

Other real estate owned ($42,117 and $55,816 covered by FDIC loss share at March 31, 2011
	and December 31, 2010, respectively)			90,484			81,414
Premises and equipment, net				22,343			22,578
FDIC loss sharing asset				116,081			116,352
Cash surrender value of life insurance				66,560			66,182
Core deposit and customer relationship intangibles				23,536			25,843
Goodwill				46,751			47,301
Other assets				152,669			160,765

		Total assets	$	5,470,517		$	5,529,021

LIABILITIES
Noninterest-bearing deposits			$	1,606,182		$	1,465,562
Interest-bearing deposits				2,978,557			3,184,136

	Total deposits			4,584,739			4,649,698
Borrowings				225,000			225,000
Subordinated debentures				129,498			129,572
Accrued interest payable and other liabilities				39,920			45,954

		Total liabilities		4,979,157			5,050,224

STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized 5,000,000 shares; none issued and outstanding				—			—
Common stock, $0.01 par value; authorized 75,000,000 shares; 37,438,009 shares issued at March 31, 2011 and 36,880,225 at December 31, 2010 (includes 1,756,437 and 1,230,582 shares of unvested restricted stock, respectively)				374			369
Additional paid-in capital				1,086,810			1,085,364
Accumulated deficit				(596,366	)		(607,042	)
Treasury stock, at cost—219,962 and 207,796 shares at March 31, 2011 and December 31, 2010, respectively				(4,111	)		(3,863	)
Accumulated other comprehensive income				4,653			3,969

		Total stockholders' equity		491,360			478,797

		Total liabilities and stockholders' equity	$	5,470,517		$	5,529,021

See "Notes to Condensed Consolidated Financial Statements."

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PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(Dollars in Thousands, Except Per Share Data)

(Unaudited)

			Three Months Ended

			March 31, 2011			December 31, 2010			March 31, 2010
Interest income:
	Loans		$	66,781		$	70,597		$	63,745
	Investment securities			7,819			7,222			5,121
	Deposits in financial institutions			57			79			129

		Total interest income		74,657			77,898			68,995

Interest expense:
	Deposits			5,956			6,028			6,889
	Borrowings			1,744			2,113			2,668
	Subordinated debentures			1,219			1,237			1,415

		Total interest expense		8,919			9,378			10,972

		Net interest income		65,738			68,520			58,023

Provision for credit losses:
	Non-covered loans			7,800			35,315			112,527
	Covered loans			5,747			2,096			20,700

		Total provision for credit losses		13,547			37,411			133,227

		Net interest income (loss) after provision for credit losses		52,191			31,109			(75,204	)

Noninterest income:
	Service charges on deposit accounts			3,558			3,305			2,729
	Other commissions and fees			1,720			1,896			1,790
	Increase in cash surrender value of life insurance			379			320			398
	FDIC loss sharing income (expense), net			1,667			(1,277	)		16,172
	Other income			302			404			180

		Total noninterest income		7,626			4,648			21,269

Noninterest expense:
	Compensation			21,929			23,944			19,411
	Occupancy			6,983			7,233			6,958
	Data processing			2,475			2,556			1,969
	Other professional services			2,296			1,833			1,998
	Business development			569			570			667
	Communications			859			919			804
	Insurance and assessments			2,337			2,369			2,274
	Non-covered other real estate owned, net			703			1,093			8,441
	Covered other real estate owned, net			(2,578	)		699			2,169
	Intangible asset amortization			2,307			2,360			2,424
	Other expense			3,519			5,710			3,455

		Total noninterest expense		41,399			49,286			50,570

Earnings (loss) before income taxes				18,418			(13,529	)		(104,505	)
Income tax (expense) benefit				(7,742	)		5,841			43,972

	Net earnings (loss)		$	10,676		$	(7,688	)	$	(60,533	)

Earnings (loss) per share:
	Basic		$	0.29		$	(0.22	)	$	(1.76	)
	Diluted		$	0.29		$	(0.22	)	$	(1.76	)
Dividends declared per share			$	0.01		$	0.01		$	0.01

See "Notes to Condensed Consolidated Financial Statements."

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PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In Thousands)

(Unaudited)

		Three Months Ended

		March 31, 2011		December 31, 2010			March 31, 2010
Net earnings (loss)		$	10,676	$	(7,688	)	$	(60,533	)
Other comprehensive income (loss), net of related income taxes:
	Unrealized holding gains (losses) on securities available-for-sale arising during the period		684		(7,441	)		1,225

Comprehensive income (loss)		$	11,360	$	(15,129	)	$	(59,308	)

See "Notes to Condensed Consolidated Financial Statements."

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PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(Dollars in Thousands, Except Share Data)

(Unaudited)

		Common Stock

		Common Stock														Accumulated Other Comprehensive Income (Loss)
		Shares			Par Value		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Total
Balance, January 1, 2011			36,672,429		$	369	$	1,085,364		$	(607,042	)	$	(3,863	)	$	3,969	$	478,797
	Net earnings		—			—		—			10,676			—			—		10,676
	Tax effect from vesting of restricted stock		—			—		(188	)		—			—			—		(188	)
	Restricted stock awarded and earned stock compensation, net of shares forfeited		557,784			5		1,995			—			—			—		2,000
	Restricted stock surrendered		(12,166	)		—		—			—			(248	)		—		(248	)
	Cash dividends paid ($0.01 per share)		—			—		(361	)		—			—			—		(361	)
	Other comprehensive income—increase in net unrealized gain on securities available-for-sale, net of tax effect of $496 thousand		—			—		—			—			—			684		684

Balance, March 31, 2011			37,218,047		$	374	$	1,086,810		$	(596,366	)	$	(4,111	)	$	4,653	$	491,360

See "Notes to Condensed Consolidated Financial Statements."

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PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

					Three Months Ended March 31,

					2011			2010
Cash flows from operating activities:
	Net earnings (loss)				$	10,676		$	(60,533	)
		Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
			Depreciation and amortization			4,482			2,317
			Provision for credit losses			13,547			133,227
			Gain on sale of other real estate owned			(3,944	)		(1,047	)
			Provision for losses on other real estate owned			1,272			10,458
			(Gain) loss on sale of premises and equipment			(17	)		(4	)
			Restricted stock amortization			2,000			2,254
			Tax effect included in stockholders' equity of restricted stock vesting			188			664
			Increase (decrease) in accrued and deferred income taxes, net			7,741			(43,983	)
			Decrease in FDIC loss sharing asset			271			25,677
			Increase in other assets			(117	)		(3,995	)
			Decrease in accrued interest payable and other liabilities			(6,983	)		(11,513	)

				Net cash provided by operating activities		29,116			53,522

Cash flows from investing activities:
		Net cash and cash equivalents acquired in acquisitions				26			—
		Net decrease in net loans outstanding				108,562			94,001
		Proceeds from sale of loans				1,168			200,609
		Securities available-for-sale:
			Proceeds from maturities and paydowns			58,172			53,465
			Purchases			(71,060	)		(66,856	)
		Net redemptions of FHLB stock				2,183			—
		Proceeds from sales of other real estate owned				23,663			24,528
		Capitalized costs to complete other real estate owned				—			(545	)
		Purchases of premises and equipment, net				(1,087	)		(850	)
		Proceeds from sales of premises and equipment				20			6

			Net cash provided by investing activities			121,647			304,358

Cash flows from financing activities:
		Net increase (decrease) in deposits:
			Noninterest-bearing			140,620			85,672
			Interest-bearing			(205,579	)		(26,004	)
		Net proceeds from issuance of common stock				—			26,587
		Restricted stock surrendered				(248	)		(437	)
		Tax effect included in stockholders' equity of restricted stock vesting				(188	)		(664	)
		Net decrease in borrowings				—			(135,000	)
		Cash dividends paid				(361	)		(361	)

			Net cash used in financing activities			(65,756	)		(50,207	)

Net increase in cash and cash equivalents						85,007			307,673
Cash and cash equivalents, beginning of period						108,552			211,048

Cash and cash equivalents, end of period					$	193,559		$	518,721

Supplemental disclosures of cash flow information:
	Cash paid for interest				$	9,322		$	12,041
	Cash paid for income taxes					(9	)		—
	Loans transferred to other real estate owned					29,112			17,826

See "Notes to Condensed Consolidated Financial Statements."

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

PacWest Bancorp is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is to serve as a holding company for our banking subsidiary, Pacific Western Bank, which we refer to as Pacific Western or the Bank. When we say "we", "our" or the "Company", we mean the Company on a consolidated basis with the Bank. When we refer to "PacWest" or to the holding company, we are referring to the parent company on a stand-alone basis.

Pacific Western is a full-service commercial bank offering a broad range of banking products and services including: accepting time, money market, and demand deposits; originating loans, including commercial, real estate construction, SBA-guaranteed and consumer loans; and providing other business-oriented products. Although our operations are primarily located in Southern California, we expanded our presence in California's Central Coast with the FDIC-assisted acquisition of Los Padres Bank on August 20, 2010. The Bank focuses on conducting business with small to medium-sized businesses in our marketplace and the owners and employees of those businesses. The majority of our loans are secured by the real estate collateral of such businesses. We acquired through FDIC-assisted acquisitions three banking offices in the San Francisco Bay area and one office in Arizona. Our asset-based lending function operates in Arizona, California, Texas, and the Pacific Northwest.

We generate our revenue primarily from interest received on loans and, to a lesser extent, from interest received on investment securities, and fees received in connection with deposit services, extending credit and other services offered, including foreign exchange services. Our major operating expenses are the interest paid by the Bank on deposits and borrowings, compensation and general operating expenses. The Bank relies on a foundation of locally generated deposits. The Bank has a relatively low cost of funds due to a high percentage of noninterest-bearing and low cost deposits.

We have completed 22 acquisitions since May 2000.

Basis of Presentation

The accounting and reporting policies of the Company are in accordance with U.S. generally accepted accounting principles, which we may refer to as U.S. GAAP. All significant intercompany balances and transactions have been eliminated.

Our financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of the results for the interim periods presented. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The interim operating results are not necessarily indicative of operating results for the full year.

Use of Estimates

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these consolidated financial statements in conformity with U.S. GAAP. Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowances for credit losses, the carrying value of other real estate

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 1—BASIS OF PRESENTATION (Continued)

owned, the carrying value of intangible assets, the carrying value of the FDIC loss sharing asset and the realization of deferred tax assets.

In August 2010, Pacific Western acquired assets and assumed liabilities of the former Los Padres Bank ("Los Padres") in an FDIC-assisted transaction, which we refer to as the Los Padres acquisition. The acquired assets and assumed liabilities were measured at their estimated fair values. Management made significant estimates and exercised significant judgment in estimating fair values and accounting for the acquisition of Los Padres.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current year's presentation.

NOTE 2—GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill arises from business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization and are instead tested for impairment no less than annually. Impairment is determined in accordance with ASC 350, "Intangibles—Goodwill and Other" and is based on the reporting unit. Impairment exists when the carrying value of goodwill exceeds its implied fair value. An impairment loss would be recognized in an amount equal to that excess and would be included in noninterest expense in the consolidated statement of earnings (loss).

Goodwill in the amount of $46.8 million was recorded in the Los Padres acquisition. Such goodwill includes $9.5 million related to the FDIC's settlement accounting for a wholly-owned subsidiary of Los Padres. We disagree with the FDIC's accounting for this item and are in process of negotiating with the FDIC to resolve this matter. A successful resolution in any amount would result in goodwill being reduced by that amount. No assurance can be given, however, that we will be successful in our efforts.

Our intangible assets with definite lives are core deposit intangibles, or CDI, and customer relationship intangibles, or CRI. These intangible assets are amortized over their useful lives to their estimated residual values and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits or loan customers acquired.

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 2—GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

The following table presents the changes in CDI and CRI and the related accumulated amortization for the periods indicated:

			Three Months Ended

			March 31, 2011			December 31, 2010			March 31, 2010
			(In thousands)
Gross amount of CDI and CRI:
	Balance, beginning of period		$	76,319		$	78,338		$	75,911
	Adjustment to Los Padres Bank CDI			—			(238	)		—
	Fully amortized			—			(1,781	)		—

		Balance, end of period		76,319			76,319			75,911

Accumulated amortization:
	Balance, beginning of period			(50,476	)		(49,897	)		(42,615	)
	Amortization			(2,307	)		(2,360	)		(2,424	)
	Fully amortized			—			1,781			—

		Balance, end of period		(52,783	)		(50,476	)		(45,039	)

Net CDI and CRI, end of period			$	23,536		$	25,843		$	30,872

The aggregate amortization expense related to the intangible assets is expected to be $8.4 million for 2011. The estimated aggregate amortization expense related to these intangible assets for each of the subsequent four years is $6.1 million for 2012, $4.5 million for 2013, $2.9 million for 2014, and $2.7 million for 2015.

NOTE 3—INVESTMENT SECURITIES

Securities Available-for-Sale

The amortized cost, gross unrealized gains and losses and estimated fair values of securities available-for-sale are presented in the tables below as of the dates indicated. The private label collateralized mortgage obligations were acquired in the FDIC-assisted acquisition of Affinity Bank ("Affinity") in August 2009 and are covered by a FDIC loss sharing agreement. Other securities include

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 3—INVESTMENT SECURITIES (Continued)

an investment in overnight money market funds at a financial institution. See Note 9 for information on fair value measurements and methodology.

			March 31, 2011

			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
			(In thousands)
Municipal securities			$	7,435	$	124	$	(1	)	$	7,558
Residental mortgage-backed securities:
	Government and government-sponsored entity pass through securities			787,815		9,338		(8,816	)		788,337
	Government and government-sponsored entity collateralized mortgage obligations			37,216		329		(705	)		36,840
	Covered private label collateralized mortgage obligations			44,378		8,697		(943	)		52,132
Other securities				2,287		—		—			2,287

		Total securities available-for-sale	$	879,131	$	18,488	$	(10,465	)	$	887,154

			December 31, 2010

			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
					(In thousands)
Government-sponsored entity debt securities			$	10,014	$	15	$	—		$	10,029
Municipal securities				7,437		129		—			7,566
Residental mortgage-backed securities:
	Government and government-sponsored entity pass through securities			754,149		9,282		(7,366	)		756,065
	Government and government-sponsored entity collateralized mortgage obligations			47,416		565		(352	)		47,629
	Covered private label collateralized mortgage obligations			45,867		6,653		(2,083	)		50,437
Other securities				2,290		—		—			2,290

		Total securities available-for-sale	$	867,173	$	16,644	$	(9,801	)	$	874,016

Mortgage-backed securities have contractual terms to maturity and require periodic payments to reduce principal. In addition, expected maturities may differ from contractual maturities because obligors and/or issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 3—INVESTMENT SECURITIES (Continued)

The following table presents the contractual maturity distribution of our available-for-sale securities portfolio based on amortized cost and fair value as of the date indicated:

		March 31, 2011

		Amortized Cost		Estimated Fair Value
		(In thousands)
Due in one year or less		$	4,723	$	4,744
Due after one year through five years			10,160		10,600
Due after five years through ten years			44,219		45,384
Due after ten years			820,029		826,426

	Total securities available-for-sale	$	879,131	$	887,154

At March 31, 2011, the estimated fair value of debt securities and residential mortgage-backed debt securities issued by the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") was approximately $740.4 million. We do not own any equity securities issued by Fannie Mae or Freddie Mac.

As of March 31, 2011, securities available-for-sale with an estimated fair value of $97.4 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.

The following table presents the estimated fair values and the gross unrealized losses on securities by length of time the securities have been in an unrealized loss position at the dates indicated:

			March 31, 2011

			Less Than 12 Months					12 months or Longer					Total
			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
			(In thousands)
Municipal securities			$	684	$	(1	)	$	—	$	—		$	684	$	(1	)
Residential mortgage-backed securities:
	Government and government-sponsored entity pass through securities			331,455		(8,816	)		—		—			331,455		(8,816	)
	Government and government-sponsored entity collateralized mortgage obligations			15,516		(519	)		1,412		(186	)		16,928		(705	)
	Covered private label collateralized mortgage obligations			1,666		(51	)		4,913		(892	)		6,579		(943	)

		Total	$	349,321	$	(9,387	)	$	6,325	$	(1,078	)	$	355,646	$	(10,465	)

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 3—INVESTMENT SECURITIES (Continued)

			December 31, 2010

			Less Than 12 Months					12 months or Longer					Total
			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
			(In thousands)
Residential mortgage-backed securities:
	Government and government-sponsored entity pass through securities		$	321,537	$	(7,366	)	$	—	$	—		$	321,537	$	(7,366	)
	Government and government-sponsored entity collateralized mortgage obligations			15,690		(327	)		1,553		(25	)		17,243		(352	)
	Covered private label collateralized mortgage obligations			1,579		(472	)		4,980		(1,611	)		6,559		(2,083	)

		Total	$	338,806	$	(8,165	)	$	6,533	$	(1,636	)	$	345,339	$	(9,801	)

We reviewed the securities that were in a continuous loss position less than 12 months and longer than 12 months at March 31, 2011, and concluded that their losses were a result of the level of market interest rates relative to the types of securities and not a result of the underlying issuers' abilities to repay. Accordingly, we determined that the securities were temporarily impaired. Additionally, we have no plans to sell these securities and believe that it is more likely than not we would not be required to sell these securities before recovery of their amortized cost. Therefore, we did not recognize the temporary impairment in the consolidated statements of earnings (loss).

FHLB Stock

At March 31, 2011, the Company had a $52.9 million investment in Federal Home Loan Bank of San Francisco (FHLB) stock carried at cost. In January 2009, the FHLB announced that it suspended excess FHLB stock redemptions and dividend payments. Since this announcement, the FHLB has declared and paid cash dividends in 2010 and 2011, though at rates less than that paid in the past, and repurchased certain amounts of our excess stock. We evaluated the carrying value of our FHLB stock investment at March 31, 2011 and determined that it was not impaired. Our evaluation considered the long-term nature of the investment, the liquidity position of the FHLB, the actions being taken by the FHLB to address its regulatory situation, and our intent and ability to hold this investment for a period of time sufficient to recover our recorded investment.

NOTE 4—LOANS

Non-Covered Loans

When we refer to non-covered loans we are referring to loans not covered by our FDIC loss sharing agreements.

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

The following table presents the composition of non-covered loans as of the dates indicated:

Loan Category			March 31, 2011			December 31, 2010

			(In thousands)
Real estate mortgage			$	2,172,923		$	2,274,733
Commercial				667,401			663,557
Real estate construction				176,758			179,479
Consumer				21,815			25,058
Foreign				23,296			22,608

	Total gross non-covered loans			3,062,193			3,165,435
Less:
	Unearned income			(4,539	)		(4,380	)
	Allowance for loan losses			(98,564	)		(98,653	)

		Total net non-covered loans	$	2,959,090		$	3,062,402

The following table presents a summary of the activity in the allowance for credit losses on non-covered loans for the periods indicated:

		Components

		Components					Total Allowance for Credit Losses
		Allowance for Loan Losses			Reserve for Unfunded Loan Commitments		Total Allowance for Credit Losses
		(In thousands)
Balance, January 1, 2011		$	98,653		$	5,675	$	104,328
	Loans charged-off		(9,138	)		—		(9,138	)
	Recoveries on loans charged-off		1,249			—		1,249
	Provision		7,800			—		7,800

Balance, March 31, 2011		$	98,564		$	5,675	$	104,239

		Components

		Components					Total Allowance for Credit Losses
		Allowance for Loan Losses			Reserve for Unfunded Loan Commitments		Total Allowance for Credit Losses
		(In thousands)
Balance, January 1, 2010		$	118,717		$	5,561	$	124,278
	Loans charged-off		(203,222	)		—		(203,222	)
	Recoveries on loans charged-off		4,280			—		4,280
	Provision		178,878			114		178,992

Balance, December 31, 2010		$	98,653		$	5,675	$	104,328

Table of Contents

PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

The following tables present a summary of the activity in the allowance for loan losses on non-covered loans by portfolio segment for the periods indicated:

		Three Months Ended March 31, 2011

		Real Estate Mortgage			Real Estate Construction			Commercial			Consumer			Foreign		Total
		(In thousands)
Allowance for Loan Losses on Non-Covered Loans:
Beginning balance		$	51,657		$	8,766		$	33,229		$	4,652		$	349	$	98,653
	Charge-offs		(1,212	)		(4,645	)		(3,121	)		(160	)		—		(9,138	)
	Recoveries		97			92			617			411			32		1,249
	Provision (reversal)		1,316			6,840			839			(1,448	)		253		7,800

Ending balance		$	51,858		$	11,053		$	31,564		$	3,455		$	634	$	98,564

The ending balance of the allowance is composed of amounts applicable to loans:
	Individually evaluated for impairment	$	4,913		$	3,113		$	9,524		$	1,049		$	—	$	18,599

	Collectively evaluated for impairment	$	46,945		$	7,940		$	22,040		$	2,406		$	634	$	79,965

Non-Covered Loan Balances:
Ending balance		$	2,172,923		$	176,758		$	667,401		$	21,815		$	23,296	$	3,062,193

The ending balance of the non-covered loan portfolio is composed of loans:
	Individually evaluated for impairment	$	90,394		$	32,757		$	23,573		$	1,794		$	—	$	148,518

	Collectively evaluated for impairment	$	2,082,529		$	144,001		$	643,828		$	20,021		$	23,296	$	2,913,675

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

		Year Ended December 31, 2010

		Real Estate Mortgage			Real Estate Construction			Commercial			Consumer			Foreign			Total
		(In thousands)
Allowance for Loan Losses on Non-Covered Loans:
Beginning balance		$	58,241		$	39,934		$	17,710		$	2,021		$	811		$	118,717
	Charge-offs		(117,029	)		(63,590	)		(18,548	)		(3,749	)		(306	)		(203,222	)
	Recoveries		1,222			708			1,652			565			133			4,280
	Provision (reversal)		109,223			31,714			32,415			5,815			(289	)		178,878

Ending balance		$	51,657		$	8,766		$	33,229		$	4,652		$	349		$	98,653

The ending balance of the allowance is composed of amounts applicable to loans:
	Individually evaluated for impairment	$	3,893		$	1,125		$	8,911		$	1,049		$	—		$	14,978

	Collectively evaluated for impairment	$	47,764		$	7,641		$	24,318		$	3,603		$	349		$	83,675

Non-Covered Loan Balances:
Ending balance		$	2,274,733		$	179,479		$	663,557		$	25,058		$	22,608		$	3,165,435

The ending balance of the non-covered loan portfolio is composed of loans:
	Individually evaluated for impairment	$	94,171		$	47,350		$	39,820		$	1,951		$	163		$	183,455

	Collectively evaluated for impairment	$	2,180,562		$	132,129		$	623,737		$	23,107		$	22,445		$	2,981,980

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

The following tables present the credit risk rating categories for non-covered loans by portfolio segment and class as of the dates indicated. Nonclassified loans are those with a credit risk rating of either pass or special mention, while classified loans are those with a credit risk rating of either substandard or doubtful.

Our federal and state banking regulators, as an integral part of their examination process, periodically review the Company's loan risk rating classifications. Our regulators may require the Company to recognize rating downgrades based on their judgments related to information available to them at the time of their examinations. Risk rating downgrades generally result in higher provisions for credit losses.

			March 31, 2011

			Nonclassified		Classified		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	129,715	$	20,213	$	149,928
	SBA 504			55,436		9,279		64,715
	Other			1,860,361		97,919		1,958,280

		Total real estate mortgage		2,045,512		127,411		2,172,923

Real estate construction:
	Residential			36,048		5,980		42,028
	Commercial			106,187		28,543		134,730

		Total real estate construction		142,235		34,523		176,758

Commercial:
	Collateralized			348,195		20,057		368,252
	Unsecured			104,993		10,273		115,266
	Asset-based			149,850		2,658		152,508
	SBA 7(a)			21,185		10,190		31,375

		Total commercial		624,223		43,178		667,401

Consumer				19,915		1,900		21,815
Foreign				23,296		—		23,296

		Total non-covered loans	$	2,855,181	$	207,012	$	3,062,193

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

			December 31, 2010

			Nonclassified		Classified		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	137,952	$	18,700	$	156,652
	SBA 504			55,774		13,513		69,287
	Other			1,956,905		91,889		2,048,794

		Total real estate mortgage		2,150,631		124,102		2,274,733

Real estate construction:
	Residential			39,644		25,399		65,043
	Commercial			82,291		32,145		114,436

		Total real estate construction		121,935		57,544		179,479

Commercial:
	Collateralized			342,607		15,820		358,427
	Unsecured			119,326		10,417		129,743
	Asset-based			141,813		1,354		143,167
	SBA 7(a)			29,557		2,663		32,220

		Total commercial		633,303		30,254		663,557

Consumer				22,949		2,109		25,058
Foreign				22,608		—		22,608

		Total non-covered loans	$	2,951,426	$	214,009	$	3,165,435

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PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

The following table presents an aging analysis of our non-covered loans by portfolio segment and class as of the date indicated:

			March 31, 2011

			30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	865	$	—	$	—	$	865	$	149,063	$	149,928
	SBA 504			188		—		2,328		2,516		62,199		64,715
	Other			4,111		677		17,129		21,917		1,936,363		1,958,280

		Total real estate mortgage		5,164		677		19,457		25,298		2,147,625		2,172,923

Real estate construction:
	Residential			—		—		3,966		3,966		38,062		42,028
	Commercial			1,484		—		666		2,150		132,580		134,730

		Total real estate construction		1,484		—		4,632		6,116		170,642		176,758

Commercial:
	Collateralized			753		1,217		1,049		3,019		365,233		368,252
	Unsecured			400		—		6,444		6,844		108,422		115,266
	Asset-based			—		—		—		—		152,508		152,508
	SBA 7(a)			815		1,196		732		2,743		28,632		31,375

		Total commercial		1,968		2,413		8,225		12,606		654,795		667,401

Consumer				327		32		1,048		1,407		20,408		21,815
Foreign				—		—		—		—		23,296		23,296

		Total non-covered loans	$	8,943	$	3,122	$	33,362	$	45,427	$	3,016,766	$	3,062,193

Table of Contents

PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

			December 31, 2010

			30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days Past Due		Total Past Due		Current		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	—	$	—	$	—	$	—	$	156,652	$	156,652
	SBA 504			799		462		6,235		7,496		61,791		69,287
	Other			426		2,566		13,936		16,928		2,031,866		2,048,794

		Total real estate mortgage		1,225		3,028		20,171		24,424		2,250,309		2,274,733

Real estate construction:
	Residential			—		—		24,004		24,004		41,039		65,043
	Commercial			—		667		2,145		2,812		111,624		114,436

		Total real estate construction		—		667		26,149		26,816		152,663		179,479

Commercial:
	Collateralized			725		883		1,457		3,065		355,362		358,427
	Unsecured			—		5,966		600		6,566		123,177		129,743
	Asset-based			—		—		—		—		143,167		143,167
	SBA 7(a)			1,254		494		751		2,499		29,721		32,220

		Total commercial		1,979		7,343		2,808		12,130		651,427		663,557

Consumer				407		1,048		—		1,455		23,603		25,058
Foreign				—		—		163		163		22,445		22,608

		Total non-covered loans	$	3,611	$	12,086	$	49,291	$	64,988	$	3,100,447	$	3,165,435

At March 31, 2011 and December 31, 2010, the Company had no loans that were greater than 90 days past due and still accruing interest. It is the Company's policy to discontinue accruing interest when principal or interest payments are past due 90 days or when, in the opinion of management, there is a reasonable doubt as to collectibility of a loan in the normal course of business. At March 31, 2011, nonaccrual loans totaled $76.8 million. Nonaccrual loans include $5.5 million of loans 30 to 89 days past due and $38.0 million of current loans which have been placed on nonaccrual status based on management's judgment regarding the collectibility of such loans. Nonaccrual loans totaled $94.2 million at December 31, 2010, of which $12.0 million were 30 to 89 days past due and $32.9 million were current.

Table of Contents

PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

The following tables present our nonaccrual and performing non-covered loans by portfolio segment and class as of the dates indicated:

			March 31, 2011

			Nonaccrual		Performing		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	4,109	$	145,819	$	149,928
	SBA 504			5,138		59,577		64,715
	Other			31,596		1,926,684		1,958,280

		Total real estate mortgage		40,843		2,132,080		2,172,923

Real estate construction:
	Residential			4,586		37,442		42,028
	Commercial			8,620		126,110		134,730

		Total real estate construction		13,206		163,552		176,758

Commercial:
	Collateralized			5,748		362,504		368,252
	Unsecured			9,009		106,257		115,266
	Asset-based			15		152,493		152,508
	SBA 7(a)			6,234		25,141		31,375

		Total commercial		21,006		646,395		667,401

Consumer				1,794		20,021		21,815
Foreign				—		23,296		23,296

		Total non-covered loans	$	76,849	$	2,985,344	$	3,062,193

Table of Contents

PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

			December 31, 2010

			Nonaccrual		Performing		Total
			(In thousands)
Real estate mortgage:
	Hospitality		$	4,151	$	152,501	$	156,652
	SBA 504			9,346		59,941		69,287
	Other			27,452		2,021,342		2,048,794

		Total real estate mortgage		40,949		2,233,784		2,274,733

Real estate construction:
	Residential			24,004		41,039		65,043
	Commercial			5,238		109,198		114,436

		Total real estate construction		29,242		150,237		179,479

Commercial:
	Collateralized			6,241		352,186		358,427
	Unsecured			9,104		120,639		129,743
	Asset-based			15		143,152		143,167
	SBA 7(a)			6,518		25,702		32,220

		Total commercial		21,878		641,679		663,557

Consumer				1,951		23,107		25,058
Foreign				163		22,445		22,608

		Total non-covered loans	$	94,183	$	3,071,252	$	3,165,435

Table of Contents

PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

The following tables present information regarding our non-covered impaired loans by portfolio segment and class as of the dates indicated:

			March 31, 2011

			Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
			(In thousands)
With An Allowance Recorded:
Real estate mortgage:
	Hospitality		$	17,776	$	17,875	$	901	$	17,173	$	198
	SBA 504			5,138		6,387		156		5,138		—
	Other			66,279		73,493		3,856		49,829		334
Real estate construction:
	Residential			5,980		7,941		243		5,980		(21	)
	Other			26,766		30,525		2,870		18,147		144

		Total real estate		121,939		136,221		8,026		96,267		655

Commercial:
	Collateralized			5,849		7,651		1,602		5,196		21
	Unsecured			9,390		15,406		7,661		9,331		6
	SBA 7(a)			6,408		7,200		261		6,177		20
Consumer				1,357		2,418		1,049		1,356		—

	Total other			23,004		32,675		10,573		22,060		47

With No Related Allowance Recorded:
Real estate mortgage:
	Hospitality		$	—	$	—	$	—	$	—	$	—
	Other			1,201		1,320		—		1,118		(4	)
Real estate construction:
	Residential			11		12		—		11		—
	Other			—		—		—		—		—

		Total real estate		1,212		1,332		—		1,129		(4	)

Commercial:
	Collateralized			913		966		—		777		4
	Unsecured			98		107		—		98		—
	Asset-based			15		15		—		15		—
	SBA 7(a)			900		1,583		—		828		(2	)
Consumer				437		482		—		371		—
Foreign				—		—		—		—		—

	Total other			2,363		3,153		—		2,089		2

Total:
	Real estate mortgage		$	90,394	$	99,075	$	4,913	$	73,258	$	528
	Real estate construction			32,757		38,478		3,113		24,138		123
	Commercial			23,573		32,928		9,524		22,422		49
	Consumer			1,794		2,900		1,049		1,727		—
	Foreign			—		—		—		—		—

		Total non-covered loans	$	148,518	$	173,381	$	18,599	$	121,545	$	700

Table of Contents

PACWEST BANCORP AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(Unaudited)

NOTE 4—LOANS (Continued)

Loan Category		March 31, 2011			December 31, 2010

		(In thousands)
Multi-family		$	299,832		$	321,650
Commercial real estate			430,160			444,244
Single family			151,281			157,424
Construction and land			82,992			87,301
Commercial and industrial			24,583			34,828
Home equity lines of credit			5,811			5,916
Consumer			724			1,378

	Total gross covered loans		995,383			1,052,741
Less: discount			(106,512	)		(110,901	)

	Covered loans, net of discount		888,871			941,840
Less: allowance for loan losses			(29,438	)		(33,264	)

	Covered loans, net	$	859,433		$	908,576

		Covered Acquired Impaired Loans

		Carrying Amount			Accretable Yield
		(In thousands)
Balance, January 1, 2011		$	879,486		$	(290,665	)
	Accretion		17,344			17,344
	Payments received		(59,721	)		—
	Increase in expected cash flows		—			(11,190	)
	Provision for credit losses		(5,747	)		—

Balance, March 31, 2011		$	831,362		$	(284,511	)

		March 31, 2011

		Nonclassified		Classified		Total
		(In thousands)
Real estate mortgage		$	580,237	$	185,833	$	766,070
Real estate construction			19,393		46,998		66,391
Commercial			12,415		13,681		26,096
Consumer			340		536		876

	Total covered loans	$	612,385	$	247,048	$	859,433

		December 31, 2010

		Nonclassified		Classified		Total
		(In thousands)
Real estate mortgage		$	622,837	$	180,944	$	803,781
Real estate construction			21,370		51,729		73,099
Commercial			14,630		16,219		30,849
Consumer			722		125		847

	Total covered loans	$	659,559	$	249,017	$	908,576

		March 31, 2011

Property Type		Non-Covered OREO		Covered OREO		Total OREO
		(In thousands)
Commercial real estate		$	18,674	$	8,397	$	27,071
Construction and land development			27,191		19,036		46,227
Multi-family			—		4,343		4,343
Single family residence			2,502		10,341		12,843

	Total OREO, net	$	48,367	$	42,117	$	90,484

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OREO Activity:		Non-Covered OREO			Covered OREO			Total OREO

		(In thousands)
Balance, January 1, 2011		$	25,598		$	55,816		$	81,414
	Foreclosures		25,931			4,130			30,061
	Provision for losses		(382	)		(890	)		(1,272	)
	Reductions related to sales		(2,780	)		(16,939	)		(19,719	)

Balance, March 31, 2011		$	48,367		$	42,117		$	90,484

OREO Valuation Allowance Activity:		Non-Covered OREO			Covered OREO			Total OREO

		(In thousands)
Balance, January 1, 2011		$	13,831		$	3,982		$	17,813
	Provision for losses		382			890			1,272
	Due from the SBA		108			—			108
	Reductions due to sales		(2,511	)		(1,080	)		(3,591	)

Balance, March 31, 2011		$	11,810		$	3,792		$	15,602

		March 31, 2011

Maturity Date		Amount		Interest Rate			Next Date Callable by FHLB
		(In thousands)
December 11, 2017		$	200,000		3.16	%		June 11, 2011	⁽¹⁾
January 11, 2018			25,000		2.61	%		July 11, 2011	⁽¹⁾

	Total FHLB advances	$	225,000		3.10	%

Series		March 31, 2011 Amount					Fixed or Variable Rate	Rate Index

		(In thousands)
Trust CI	3/23/00	$	10,310	3/8/30	3/8/20		Fixed	N/A	11.00	%	N/A
Trust I	9/7/00		8,248	9/7/30	9/7/20		Fixed	N/A	10.60	%	N/A
Trust V	8/15/03		10,310	9/17/33		⁽¹⁾	Variable	3 month LIBOR + 3.10	3.41	%	6/15/11
Trust VI	9/3/03		10,310	9/15/33		⁽¹⁾	Variable	3 month LIBOR + 3.05	3.36	%	6/13/11
Trust CII	9/17/03		5,155	9/17/33		⁽¹⁾	Variable	3 month LIBOR + 2.95	3.26	%	6/15/11
Trust VII	2/5/04		61,856	4/23/34		⁽¹⁾	Variable	3 month LIBOR + 2.75	3.02	%	7/28/11
Trust CIII	8/15/05		20,619	9/15/35		⁽¹⁾	Variable	3 month LIBOR + 1.69	2.00	%	6/13/11

Gross subordinated debentures			126,808
Unamortized premium⁽³⁾			2,690

Net subordinated debentures		$	129,498

		Fair Value Measurement as of March 31, 2011

		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(In thousands)
Measured on a Recurring Basis:
Securities available-for-sale:
	Municipal securities	$	7,558	$	—	$	7,558	$	—
	Government and government-sponsored entity residential mortgage-backed securities		825,177		—		825,177		—
	Covered private label CMOs		52,132		—		—		52,132
	Other securities		2,287		—		2,287		—

		$	887,154	$	—	$	835,022	$	52,132

Measured on a Nonrecurring Basis:
	Non-covered impaired loans	$	99,644	$	—	$	9,043	$	90,601
	Non-covered other real estate owned		1,801		—		198		1,603
	Covered other real estate owned		5,184		—		3,878		1,306
	SBA loan servicing asset		1,432		—		—		1,432

		$	108,061	$	—	$	13,119	$	94,942

		Three Months Ended March 31, 2011

		(In thousands)
Non-covered impaired loans		$	(10,694	)
Non-covered other real estate owned			(382	)
Covered other real estate owned			(777	)
SBA loan servicing asset			(70	)

	Total gain (loss) on assets measured on a nonrecurring basis	$	(11,923	)

		Covered Private Label CMOs (Level 3)

		(In thousands)
Beginning as of January 1, 2011		$	50,437
	Total realized in earnings		610
	Total unrealized in comprehensive income		3,185
	Net settlements subsequent to acquisition		(2,100	)

Balance as of March 31, 2011		$	52,132

		March 31, 2011				December 31, 2010

		Carrying or Contract Amount		Estimated Fair Value		Carrying or Contract Amount		Estimated Fair Value
		(In thousands)
Financial Assets:
	Cash and due from banks	$	88,634	$	88,634	$	82,170	$	82,170
	Interest-earning deposits in financial institutions		104,925		104,925		26,382		26,382
	Securities available-for-sale		887,154		887,154		874,016		874,016
	Investment in FHLB stock		52,857		52,857		55,040		55,040
	Loans, net		3,818,523		3,806,968		3,970,978		3,960,244
Financial Liabilities:
	Deposits		4,584,739		4,594,751		4,649,698		4,664,575
	Borrowings		225,000		241,838		225,000		243,273
	Subordinated debentures		129,498		134,782		129,572		135,876

Three Months Ended:

March 31, 2011	56.4	%
December 31, 2010	67.4	%
September 30, 2010	60.8	%
June 30, 2010	61.4	%
March 31, 2010	63.8	%

GAAP to Non-GAAP Reconciliations			March 31, 2011			December 31, 2010			March 31, 2010

			(Dollars in thousands)
PacWest Bancorp Consolidated:
Net earnings (loss)			$	10,676		$	(7,688	)	$	(60,533	)
Plus: Total provision for credit losses				13,547			37,411			133,227
Other real estate owned expense (income):
Non-covered				703			1,093			8,441
Covered				(2,578	)		699			2,169
Income tax expense (benefit)				7,742			(5,841	)		(43,972	)
Less: FDIC loss sharing income (expense), net				1,667			(1,277	)		16,172

Pre-credit, pre-tax earnings			$	28,423		$	26,951		$	23,160

Stockholders' equity			$	491,360		$	478,797		$	474,844
Less: intangible assets				70,287			73,144			30,872

	Tangible common equity		$	421,073		$	405,653		$	443,972

Total assets			$	5,470,517		$	5,529,021		$	5,203,217
Less: intangible assets				70,287			73,144			30,872

	Tangible assets		$	5,400,230		$	5,455,877		$	5,172,345

Equity to assets ratio				8.98	%		8.66	%		9.13	%
Tangible common equity ratio⁽¹⁾				7.80	%		7.44	%		8.58	%
Pacific Western Bank:
	Stockholder's equity		$	584,418		$	570,118		$	559,909
	Less: intangible assets			70,287			73,144			30,872

		Tangible common equity	$	514,131		$	496,974		$	529,037

Total assets			$	5,453,971		$	5,513,601		$	5,192,003
Less: intangible assets				70,287			73,144			30,872

	Tangible assets		$	5,383,684		$	5,440,457		$	5,161,131

Equity to assets ratio				10.72	%		10.34	%		10.78	%
Tangible common equity ratio⁽¹⁾				9.55	%		9.13	%		10.25	%

		Three Months Ended

		March 31, 2011							December 31, 2010							March 31, 2010
		Average Balance		Interest Income/ Expense		Yields and Rates			Average Balance		Interest Income/ Expense		Yields and Rates			Average Balance		Interest Income/ Expense		Yields and Rates
		(Dollars in thousands)
ASSETS
Loans, net of unearned income⁽¹⁾⁽²⁾		$	3,992,204	$	66,781		6.78	%	$	4,216,088	$	70,597		6.64	%	$	4,122,853	$	63,745		6.27	%
Investment securities⁽¹⁾			913,613		7,819		3.47	%		886,392		7,222		3.23	%		469,732		5,121		4.42	%
Deposits in financial institutions			89,248		57		0.26	%		116,721		79		0.27	%		206,887		129		0.25	%

	Total interest-earning assets		4,995,065	$	74,657		6.06	%		5,219,201	$	77,898		5.92	%		4,799,472	$	68,995		5.83	%

Other assets			515,717							531,829							418,517

	Total assets	$	5,510,782						$	5,751,030						$	5,217,989

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest checking deposits		$	495,950	$	268		0.22	%	$	494,313	$	272		0.22	%	$	434,446	$	393		0.37	%
Money market deposits			1,240,524		1,734		0.57	%		1,305,199		1,954		0.59	%		1,166,688		2,868		1.00	%
Savings deposits			141,027		69		0.20	%		139,228		70		0.20	%		110,564		58		0.21	%
Time deposits			1,167,468		3,885		1.35	%		1,327,869		3,732		1.12	%		1,045,417		3,570		1.38	%

	Total interest-bearing deposits		3,044,969		5,956		0.79	%		3,266,609		6,028		0.73	%		2,757,115		6,889		1.01	%
Borrowings			227,122		1,744		3.11	%		272,848		2,113		3.07	%		445,754		2,668		2.43	%
Subordinated debentures			129,545		1,219		3.82	%		129,621		1,237		3.79	%		129,780		1,415		4.42	%

	Total interest-bearing liabilities		3,401,636	$	8,919		1.06	%		3,669,078	$	9,378		1.01	%		3,332,649	$	10,972		1.34	%

Noninterest-bearing demand deposits			1,582,720							1,538,748							1,332,862
Other liabilities			43,501							47,002							46,756

	Total liabilities		5,027,857							5,254,828							4,712,267
Stockholders' equity			482,925							496,202							505,722

	Total liabilities and stockholders' equity	$	5,510,782						$	5,751,030						$	5,217,989

Net interest income				$	65,738						$	68,520						$	58,023

Net interest rate spread							5.00	%						4.91	%						4.49	%
Net interest margin							5.34	%						5.21	%						4.90	%

				Three Months Ended

				March 31, 2011			December 31, 2010			September 30, 2010			June 30, 2010			March 31, 2010
				(In thousands)
Provision For Credit Losses:
	Addition to allowance for loan losses			$	7,800		$	34,390		$	17,271		$	14,345		$	112,872
	Addition (reduction) to reserve for unfunded loan commitments				—			925			(221	)		(245	)		(345	)

			Total provision for non-covered loans		7,800			35,315			17,050			14,100			112,527
	Provision for covered loans				5,747			2,096			7,400			8,850			20,700

		Total provision for credit losses		$	13,547		$	37,411		$	24,450		$	22,950		$	133,227

Allowance for Credit Losses Data:
	Net charge-offs on non-covered loans			$	7,889		$	32,231		$	9,240		$	12,045		$	145,426
	Charge-offs on non-covered loans sold				—			20,942			—			—			123,705
	Annualized net charge-off ratios:
		Net charge-offs to non-covered average loans			1.03	%		3.90	%		1.09	%		1.50	%		16.81	%
		Net charge-offs, excluding charge-offs on loans sold, to non-covered average loans			1.03	%		1.37	%		1.09	%		1.50	%		2.51	%
	At Period End:
		Allowance for loan losses		$	98,564		$	98,653		$	96,494		$	88,463		$	86,163
		Allowance for credit losses			104,239			104,328			101,244			93,434			91,379
		Allowance for credit losses to non-covered loans, net of unearned income			3.41	%		3.30	%		3.05	%		2.93	%		2.81	%
		Allowance for credit losses to non-covered nonaccrual loans			135.6	%		110.8	%		95.9	%		86.3	%		91.5	%

			March 31, 2011						December 31, 2010						September 30, 2010						June 30, 2010

Loan Category			Amount			% of Total			Amount			% of Total			Amount			% of Total			Amount			% of Total
			(Dollars in thousands)
Domestic:
	Real estate mortgage		$	2,172,923			71	%	$	2,274,733			72	%	$	2,368,943			71	%	$	2,229,331			70	%
	Commercial			667,401			22			663,557			21			708,329			21			709,075			22
	Real estate construction			176,758			5			179,479			5			192,595			6			194,181			6
	Consumer			21,815			1			25,058			1			28,328			1			30,323			1
Foreign:
	Commercial			21,808			1			21,057			1			22,948			1			25,309			1
	Other, including real estate			1,488			—			1,551			—			1,595			—			1,637			—

		Total gross non-covered loans		3,062,193			100	%		3,165,435			100	%		3,322,738			100	%		3,189,856			100	%

Less: unearned income				(4,539	)					(4,380	)					(4,329	)					(4,831	)
Less: allowance for loan losses				(98,564	)					(98,653	)					(96,494	)					(88,463	)

	Total net non-covered loans		$	2,959,090					$	3,062,402					$	3,221,915					$	3,096,562

			March 31, 2011					December 31, 2010

Loan Category			Balance		% of Total			Balance		% of Total
			(Dollars in thousands)
Commercial real estate mortgage:
	Industrial/warehouse		$	393,000		18.1	%	$	432,263		19.0	%
	Retail			337,149		15.5	%		374,027		16.4	%
	Office buildings			332,233		15.3	%		350,192		15.4	%
	Owner-occupied			276,631		12.7	%		263,603		11.6	%
	Hotel			149,928		6.9	%		156,614		6.9	%
	Healthcare			106,061		4.9	%		102,227		4.5	%
	Mixed use			57,624		2.7	%		57,230		2.5	%
	Gas station			36,227		1.7	%		38,502		1.7	%
	Self storage			26,312		1.2	%		26,432		1.2	%
	Restaurant			24,166		1.1	%		26,463		1.2	%
	Land acquisition/development			9,602		0.4	%		9,649		0.4	%
	Unimproved land			1,519		0.1	%		1,494		0.1	%
	Other			248,558		11.4	%		250,068		11.0	%

		Total commercial real estate mortgage		1,999,010		92.0	%		2,088,764		91.8	%

Residential real estate mortgage:
	Multi-family			75,775		3.5	%		81,880		3.6	%
	Single family owner-occupied			37,230		1.7	%		38,025		1.7	%
	Single family nonowner-occupied			23,070		1.1	%		26,618		1.2	%
	HELOCs			37,838		1.7	%		38,823		1.7	%
	Unimproved land			—		0.0	%		623		0.0	%

		Total residential real estate mortgage		173,913		8.0	%		185,969		8.2	%

	Total gross non-covered real estate mortgage loans		$	2,172,923		100.0	%	$	2,274,733		100.0	%

		Three Months Ended March 31, 2011			Three Months Ended December 31, 2010			Year Ended December 31, 2010			Three Months Ended March 31, 2010

		(In thousands)
Allowance for credit losses, beginning of period		$	104,328		$	101,244		$	124,278		$	124,278
	Provision for credit losses		7,800			35,315			178,992			112,527
	Net charge-offs		(7,889	)		(32,231	)		(198,942	)		(145,426	)

Allowance for credit losses, end of period		$	104,239		$	104,328		$	104,328		$	91,379

		Three Months Ended March 31, 2011		Three Months Ended December 31, 2010		Year Ended December 31, 2010		Three Months Ended March 31, 2010

		(In thousands)
Reserve for unfunded loan commitments, beginning of period		$	5,675	$	4,750	$	5,561	$	5,561
	Provision (reversal)		—		925		114		(345	)

Reserve for unfunded loan commitments, end of period		$	5,675	$	5,675	$	5,675	$	5,216

			Three Months Ended March 31, 2011			Three Months Ended December 31, 2010			Year Ended December 31, 2010			Three Months Ended March 31, 2010

			(Dollars in thousands)
Allowance for loan losses, beginning of period			$	98,653		$	96,494		$	118,717		$	118,717
Loans charged off:
	Real estate mortgage			(1,212	)		(22,591	)		(117,029	)		(82,849	)
	Real estate construction			(4,645	)		(1,476	)		(63,590	)		(55,741	)
	Commercial			(3,121	)		(7,311	)		(18,548	)		(8,139	)
	Consumer			(160	)		(1,469	)		(3,749	)		(58	)
	Foreign			—			(193	)		(306	)		—

		Total loans charged off		(9,138	)		(33,040	)		(203,222	)		(146,787	)

Recoveries on loans charged off:
	Real estate mortgage			97			25			1,222			180
	Real estate construction			92			—			708			681
	Commercial			617			591			1,652			488
	Consumer			411			193			565			12
	Foreign			32			—			133			—

		Total recoveries on loans charged off		1,249			809			4,280			1,361

Net charge-offs				(7,889	)		(32,231	)		(198,942	)		(145,426	)
Provision for loan losses				7,800			34,390			178,878			112,872

Allowance for loan losses, end of period			$	98,564		$	98,653		$	98,653		$	86,163

Net charge-offs excluding charge-offs from classified loan sale			$	7,889		$	11,289		$	54,295		$	21,721
Ratios⁽¹⁾:
Allowance for loan losses to loans, net (end of period)				3.22	%		3.12	%		3.12	%		2.65	%
Allowance for loan losses to nonaccrual loans (end of period)				128.26	%		104.75	%		104.75	%		86.23	%
Annualized net charge-offs to average loans				1.03	%		3.90	%		5.94	%		16.81	%
Annualized net charge-offs to average loans excluding charge-offs from classified loan sale				1.03	%		1.37	%		1.62	%		2.51	%

		Three Months Ended March 31, 2011			Three Months Ended December 31, 2010			Year Ended December 31, 2010			Three Months Ended March 31, 2010

		(In thousands)
Allowance for credit losses on covered loans, beginning of period		$	33,264		$	40,179		$	18,000		$	18,000
	Provision		5,747			2,096			39,046			20,700
	Charge-offs, net		(9,573	)		(9,011	)		(23,782	)		(6,686	)

Allowance for credit losses on covered loans, end of period		$	29,438		$	33,264		$	33,264		$	32,014

		March 31, 2011			December 31, 2010			March 31, 2010

		(Dollars in thousands)
Nonaccrual loans⁽¹⁾		$	76,849		$	94,183		$	99,920
Other real estate owned⁽¹⁾			48,367			25,598			29,643

	Total nonperforming assets	$	125,216		$	119,781		$	129,563

Performing restructured loans⁽¹⁾		$	71,669		$	89,272		$	68,127
Nonperforming assets ratio⁽¹⁾⁽²⁾			4.03	%		3.76	%		3.95	%
Nonaccrual loans to loans, net of unearned income⁽¹⁾			2.51	%		2.98	%		3.07	%

			Nonaccrual Loans⁽¹⁾

			Nonaccrual Loans⁽¹⁾										Accruing and Over 30 days Past Due⁽¹⁾
			March 31, 2011					December 31, 2010					Accruing and Over 30 days Past Due⁽¹⁾
Loan Category			Balance		% of Loan Category			Balance		% of Loan Category			March 31, 2011 Balance		December 31, 2010 Balance
			(Dollars in thousands)
Real estate mortgage:
	Hospitality		$	4,109		2.7	%	$	4,151		2.6	%	$	864	$	—
	SBA 504			5,138		7.9	%		9,346		13.5	%		188		190
	Other commercial			21,679		1.2	%		17,311		0.9	%		1,395		1,652
	Residential			9,917		5.7	%		10,141		5.5	%		90		585

		Total real estate mortgage		40,843		1.9	%		40,949		1.8	%		2,537		2,427

Real estate construction:
	Residential			4,586		10.9	%		24,004		36.9	%		—		—
	Commercial			8,620		6.4	%		5,238		4.6	%		1,484		—

		Total real estate construction		13,206		7.5	%		29,242		16.3	%		1,484		—

Commercial:
	Collateralized			5,748		1.6	%		6,241		1.7	%		661		680
	Unsecured			9,009		7.8	%		9,104		7.0	%		400		71
	Asset-based			15		0.0	%		15		0.0	%		—		—
	SBA 7(a)			6,234		19.9	%		6,518		20.2	%		1,253		423

		Total commercial		21,006		3.1	%		21,878		3.3	%		2,314		1,174

Consumer				1,794		8.2	%		1,951		7.8	%		267		133
Foreign				—		0.0	%		163		0.7	%		—		—

		Total non-covered loans	$	76,849		2.5	%	$	94,183		3.0	%	$	6,602	$	3,734