Attached files
| file | filename |
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| 8-K - 8-K - PACWEST BANCORP | a15-15638_18k.htm |
Exhibit 99.1
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Filed by PacWest Bancorp pursuant to Rule 425 under the Securities Act |
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of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities |
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Exchange Act of 1934 |
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Subject Company: Square 1 Financial, Inc. |
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Commission File No.: 001-36372 |
PRESS RELEASE
PacWest Bancorp
(NASDAQ: PACW)
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Contact: |
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Matthew P. Wagner |
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Victor R. Santoro |
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President and CEO |
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Executive Vice President and CFO |
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10250 Constellation Boulevard, Suite 1640 |
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10250 Constellation Boulevard, Suite 1640 |
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Los Angeles, CA 90067 |
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Los Angeles, CA 90067 |
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Phone: |
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310-728-1020 |
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310-728-1021 |
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FOR IMMEDIATE RELEASE |
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July 15, 2015 |
PACWEST BANCORP ANNOUNCES RESULTS
FOR THE SECOND QUARTER OF 2015
Highlights
· Net Earnings of $85.1 Million, or $0.83 Per Diluted Share; Adjusted Net Earnings of $72.5 Million, or $0.70 Per Diluted Share
· Core Net Interest Margin at 5.27%; Core Tax Equivalent Net Interest Margin at 5.33%
· New Loan and Lease Originations of $658.7 Million
· Core Deposits Increased $387.2 Million in the Quarter and are 52% of Total Deposits
Los Angeles, California . . . PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the second quarter of 2015 of $85.1 million, or $0.83 per diluted share, compared to net earnings for the first quarter of 2015 of $73.1 million, or $0.71 per diluted share. When certain income and expense items described below are excluded, adjusted net earnings were $72.5 million, or $0.70 per diluted share, for the second quarter of 2015 compared to $65.0 million, or $0.63 per diluted share, for the first quarter of 2015. The increase in adjusted net earnings is largely the result of higher adjusted noninterest income and a lower provision for credit losses as compared to the first quarter.
Matt Wagner, President and CEO, commented, “The results of our second quarter on both a reported and adjusted basis continue to demonstrate our sustained earning power and strong capital position. Although the negative net loan and lease growth for the quarter was a disappointment, our first quarter originations were well above our expectations and the current loan and lease pipeline is robust. We continue to expect high single digit growth for the full year.”
Mr. Wagner continued, “Our Non-PCI credit metrics are good. The allowance coverage ratio increased to 0.78%, nonaccruals decreased a bit and classified loans and leases increased. The classified balances move from quarter to quarter due mainly to the relative size of credits within the portfolio. Nevertheless, we believe our credit loss exposure on classified credits is minimal. Our exposure to credits related to support services to the oil and gas industries improved moderately, showing declines in both outstandings and nonaccrual balances.”
Mr. Wagner commented on the status of the Square 1 merger stating “We continue to look forward to closing the Square 1 merger in the fourth quarter of 2015, as we expect regulatory and stockholder approvals to come in the normal course. The integration team, composed of senior employees of both PacWest and Square 1, has been working for months on the integration plan, and we expect once final regulatory approval is received, the integration will be completed quickly.”
Vic Santoro, Executive Vice President and CFO stated, “Second quarter deposit growth was very good, with total deposits increasing $648 million and core deposits increasing $387 million. We were particularly pleased with the deposits generated in the CapitalSource Division, which increased to $456 million at the end of June from $303 million at the end of March. Although we continue to make progress towards our goal of remixing the Bank’s deposit base, the Square 1 merger is expected to accelerate that process.”
Mr. Santoro continued, “Our core net interest margin remains very strong at 5.27%, with the corresponding tax equivalent NIM at 5.33%. We continue to closely control operating expenses as shown by the adjusted efficiency ratio of 40.6% in the second quarter. Our focus for the remainder of 2015 will be loan and lease growth, core deposit growth, expense control and the successful integration of Square 1.”
FINANCIAL HIGHLIGHTS
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At or For the Three Months Ended |
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At or For the Six Months Ended |
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June 30, |
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March 31, |
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June 30, |
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2015 |
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2015 |
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Change |
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2015 |
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2014 |
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Change |
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(Dollars in thousands, except per share data) |
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Financial Highlights: |
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Total Assets |
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$ |
16,697,020 |
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$ |
16,643,940 |
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$ |
53,080 |
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$ |
16,697,020 |
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$ |
15,684,671 |
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$ |
1,012,349 |
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Loans and Leases, Net of Deferred Fees |
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$ |
12,034,189 |
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$ |
12,272,166 |
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$ |
(237,977 |
) |
$ |
12,034,189 |
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$ |
11,190,105 |
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$ |
844,084 |
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Total Deposits |
|
$ |
12,581,816 |
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$ |
11,934,175 |
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$ |
647,641 |
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$ |
12,581,816 |
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$ |
11,667,797 |
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$ |
914,019 |
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|
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Net Earnings |
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$ |
85,083 |
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$ |
73,079 |
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$ |
12,004 |
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$ |
158,162 |
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$ |
35,635 |
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$ |
122,527 |
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Diluted Earnings Per Share |
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$ |
0.83 |
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$ |
0.71 |
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$ |
0.12 |
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$ |
1.54 |
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$ |
0.49 |
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$ |
1.05 |
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Return on Average Assets (1) |
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2.07 |
% |
1.82 |
% |
0.25 |
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1.95 |
% |
0.67 |
% |
1.28 |
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Adjusted Net Earnings (2) |
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$ |
72,503 |
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$ |
65,041 |
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$ |
7,462 |
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$ |
137,545 |
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$ |
84,813 |
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$ |
52,732 |
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Adjusted Diluted Earnings Per Share (2) |
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$ |
0.70 |
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$ |
0.63 |
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$ |
0.07 |
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$ |
1.33 |
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$ |
1.16 |
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$ |
0.17 |
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Adjusted Return on Average Assets (1) (2) |
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1.77 |
% |
1.62 |
% |
0.15 |
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1.69 |
% |
1.58 |
% |
0.11 |
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Return on Average Tangible Equity (1) (2) |
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18.90 |
% |
16.50 |
% |
2.40 |
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17.71 |
% |
6.55 |
% |
11.16 |
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Adjusted Return on Average Tangible Equity (1) (2) |
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16.11 |
% |
14.69 |
% |
1.42 |
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15.40 |
% |
15.59 |
% |
(0.19 |
) | ||||||
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Noninterest-Bearing Deposits as Percentage of Total Deposits |
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26 |
% |
26 |
% |
— |
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26 |
% |
23 |
% |
3 |
| ||||||
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Core Deposits as Percentage of Total Deposits |
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52 |
% |
52 |
% |
— |
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52 |
% |
49 |
% |
3 |
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Tangible Common Equity Ratio (2) |
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12.10 |
% |
12.01 |
% |
0.09 |
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12.10 |
% |
12.14 |
% |
(0.04 |
) | ||||||
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Tangible Book Value Per Share (2) |
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$ |
17.55 |
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$ |
17.36 |
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$ |
0.19 |
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$ |
17.55 |
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$ |
16.42 |
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$ |
1.13 |
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Net Interest Margin |
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5.83 |
% |
5.89 |
% |
(0.06 |
) |
5.86 |
% |
6.14 |
% |
(0.28 |
) | ||||||
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Core Net Interest Margin (2) |
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5.27 |
% |
5.38 |
% |
(0.11 |
) |
5.32 |
% |
5.63 |
% |
(0.31 |
) | ||||||
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Efficiency Ratio |
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38.4 |
% |
38.4 |
% |
— |
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38.4 |
% |
75.2 |
% |
(36.8 |
) | ||||||
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Adjusted Efficiency Ratio (2) |
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40.6 |
% |
40.4 |
% |
0.2 |
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40.5 |
% |
46.9 |
% |
(6.4 |
) | ||||||
(1) Annualized.
(2) Non-GAAP measure.
ADJUSTED NET EARNINGS
In evaluating its earnings, the Company removes certain items to arrive at adjusted net earnings and adjusted diluted earnings per share, as detailed below:
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Three Months Ended |
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Six Months Ended |
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June 30, |
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March 31, |
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June 30, |
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June 30, |
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2015 |
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2015 |
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2014 |
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2015 |
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2014 |
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(Dollars in thousands) |
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Net earnings |
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$ |
85,083 |
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$ |
73,079 |
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$ |
10,555 |
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$ |
158,162 |
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$ |
35,635 |
| |
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Less: |
Tax benefit on discontinued operations |
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— |
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— |
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(476 |
) |
— |
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(1,064 |
) | |||||
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Add: |
Tax expense on continuing operations |
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45,287 |
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46,073 |
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15,552 |
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91,360 |
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30,833 |
| |||||
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Pre-tax earnings |
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130,370 |
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119,152 |
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25,631 |
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249,522 |
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65,404 |
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Add: |
Acquisition, integration, and reorganization costs |
|
900 |
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2,000 |
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86,242 |
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2,900 |
|
88,442 |
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Less: |
FDIC loss sharing expense, net |
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(5,107 |
) |
(4,399 |
) |
(8,525 |
) |
(9,506 |
) |
(19,955 |
) | |||||
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Gain (loss) on sale of loans and leases |
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163 |
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— |
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(485 |
) |
163 |
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(379 |
) | |||||
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(Loss) gain on securities |
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(186 |
) |
3,275 |
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89 |
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3,089 |
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4,841 |
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Covered OREO (expense) income, net |
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12 |
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19 |
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185 |
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31 |
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1,800 |
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Gain on sale of owned office building |
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— |
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— |
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— |
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— |
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1,570 |
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Adjusted pre-tax earnings before accelerated discount accretion |
|
136,388 |
|
122,257 |
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120,609 |
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258,645 |
|
165,969 |
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Less: |
Accelerated discount accretion from early payoffs of acquired loans |
|
19,447 |
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17,352 |
|
15,290 |
|
36,799 |
|
22,945 |
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Adjusted pre-tax earnings |
|
116,941 |
|
104,905 |
|
105,319 |
|
221,846 |
|
143,024 |
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Tax expense (1) |
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(44,438 |
) |
(39,864 |
) |
(42,865 |
) |
(84,301 |
) |
(58,211 |
) | |||||
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Adjusted net earnings |
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$ |
72,503 |
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$ |
65,041 |
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$ |
62,454 |
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$ |
137,545 |
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$ |
84,813 |
| |
|
|
|
|
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|
|
|
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|
|
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Annualized adjusted return on average assets |
|
1.77 |
% |
1.62 |
% |
1.67 |
% |
1.69 |
% |
1.58 |
% | ||||||
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|
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|
|
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Adjusted diluted earnings per share |
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$ |
0.70 |
|
$ |
0.63 |
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$ |
0.63 |
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$ |
1.33 |
|
$ |
1.16 |
| |
(1) Full-year expected effective rate of 38.0% used for 2015 periods and actual effective rate of 40.7% used for 2014 periods.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income increased $3.5 million to $202.6 million for the second quarter of 2015 compared to $199.1 million for the first quarter of 2015 due to increased FHLB dividends, higher average loan and lease balances, higher accelerated discount accretion from early payoffs of acquired loans, and one more day in the second quarter. Net interest margin (“NIM”) for the second quarter of 2015 was 5.83% compared to 5.89% for the first quarter of 2015, and the loan and lease yield was 6.75% compared to 6.80% for the first quarter of 2015. The decreases in the NIM and loan yield were both due to higher nonaccrual loan and lease average balances in the second quarter and the payoffs of higher-yielding loans and leases. Accelerated discount accretion from early payoffs of acquired loans was $19.4 million in the second quarter of 2015 (64 basis points on the loan and lease yield) compared to $17.4 million in the first quarter of 2015 (58 basis points on the loan and lease yield).
The cost of total deposits increased to 0.37% from 0.36% in the prior quarter due primarily to a $0.5 million decrease in the amount of premium accretion on the time deposits acquired in the CapitalSource merger. The repricing of maturing time deposits at current rates and new time deposit production resulted in the decline in the weighted average contractual interest rate on time deposits to 0.71% at June 30, 2015 from 0.72% at March 31, 2015.
Net interest margin information is presented in the following table for the periods indicated:
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Three Months Ended |
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|
|
June 30, |
|
March 31, |
| ||
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Net Interest Margin |
|
2015 |
|
2015 |
| ||
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|
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(Dollars in thousands) |
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Average Assets: |
|
|
|
|
| ||
|
Loans and leases |
|
$ |
12,108,016 |
|
$ |
12,055,682 |
|
|
Investment securities |
|
1,672,590 |
|
1,613,422 |
| ||
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Deposits in financial institutions |
|
161,683 |
|
32,761 |
| ||
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Interest-earning assets |
|
13,942,289 |
|
13,701,865 |
| ||
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Other assets |
|
2,521,022 |
|
2,594,775 |
| ||
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Total assets |
|
$ |
16,463,311 |
|
$ |
16,296,640 |
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|
|
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Average Liabilities and Stockholders’ Equity: |
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| ||
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Interest-bearing deposits |
|
$ |
9,107,937 |
|
$ |
8,801,306 |
|
|
Borrowings |
|
81,164 |
|
424,061 |
| ||
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Subordinated debentures |
|
432,656 |
|
432,603 |
| ||
|
Interest-bearing liabilities |
|
9,621,757 |
|
9,657,970 |
| ||
|
Noninterest-bearing demand deposits |
|
3,157,129 |
|
2,949,719 |
| ||
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Other liabilities |
|
135,677 |
|
155,608 |
| ||
|
Total liabilities |
|
12,914,563 |
|
12,763,297 |
| ||
|
Stockholders’ equity |
|
3,548,748 |
|
3,533,343 |
| ||
|
Liabilities and stockholders’ equity |
|
$ |
16,463,311 |
|
$ |
16,296,640 |
|
|
|
|
|
|
|
| ||
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Time deposits |
|
$ |
5,559,903 |
|
$ |
5,481,886 |
|
|
Total deposits |
|
$ |
12,265,066 |
|
$ |
11,751,025 |
|
|
Funding sources |
|
$ |
12,778,886 |
|
$ |
12,607,689 |
|
|
|
|
|
|
|
| ||
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Yields on Average Assets: |
|
|
|
|
| ||
|
Loans and leases |
|
6.75 |
% |
6.80 |
% | ||
|
Investment securities (1) |
|
3.49 |
% |
3.07 |
% | ||
|
Interest-earning assets |
|
6.28 |
% |
6.34 |
% | ||
|
|
|
|
|
|
| ||
|
Costs of Average Liabilities: |
|
|
|
|
| ||
|
Total deposits |
|
0.37 |
% |
0.36 |
% | ||
|
Time deposits |
|
0.68 |
% |
0.65 |
% | ||
|
Interest-bearing deposits |
|
0.49 |
% |
0.48 |
% | ||
|
Borrowings |
|
0.43 |
% |
0.22 |
% | ||
|
Subordinated debentures |
|
4.25 |
% |
4.24 |
% | ||
|
Interest-bearing liabilities |
|
0.66 |
% |
0.64 |
% | ||
|
Funding sources |
|
0.50 |
% |
0.49 |
% | ||
|
|
|
|
|
|
| ||
|
Net interest rate spread |
|
5.62 |
% |
5.70 |
% | ||
|
Net interest margin |
|
5.83 |
% |
5.89 |
% | ||
|
Tax equivalent net interest margin |
|
5.89 |
% |
5.95 |
% | ||
(1) Tax equivalent yields were 4.01% and 3.52%, respectively.
The NIM and loan and lease yield are impacted by volatility in accelerated accretion of acquisition discounts from early payoffs of acquired loans. The effects of this item are shown in the following table for the periods indicated:
|
|
|
Three Months Ended |
|
Three Months Ended |
| |||||
|
|
|
June 30, 2015 |
|
March 31, 2015 |
| |||||
|
|
|
|
|
Loan and |
|
|
|
Loan and |
| |
|
|
|
NIM |
|
Lease Yield |
|
NIM |
|
Lease Yield |
| |
|
Reported |
|
5.83 |
% |
6.75 |
% |
5.89 |
% |
6.80 |
% | |
|
Less: |
Accelerated accretion of acquisition discounts from early payoffs of acquired loans |
|
(0.56 |
)% |
(0.64 |
)% |
(0.51 |
)% |
(0.58 |
)% |
|
Core (non-GAAP measure) |
|
5.27 |
% |
6.11 |
% |
5.38 |
% |
6.22 |
% | |
The impact on the NIM from all purchase accounting items is detailed in the table below for the periods indicated:
|
|
|
Three Months Ended |
|
Three Months Ended |
| |||||||
|
|
|
June 30, 2015 |
|
March 31, 2015 |
| |||||||
|
|
|
|
|
Impact on |
|
|
|
Impact on |
| |||
|
|
|
Amount |
|
NIM |
|
Amount |
|
NIM |
| |||
|
|
|
(Dollars in thousands) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
| |||
|
Net interest income/NIM as reported |
|
$ |
202,552 |
|
5.83 |
% |
$ |
199,075 |
|
5.89 |
% | |
|
Less: |
Accelerated accretion of acquisition discounts from early payoffs of acquired loans |
|
(19,447 |
) |
(0.56 |
)% |
(17,352 |
) |
(0.51 |
)% | ||
|
|
Remaining accretion of Non-PCI loan acquisition discounts |
|
(9,195 |
) |
(0.26 |
)% |
(11,245 |
) |
(0.33 |
)% | ||
|
|
Amortization of TruPS discount |
|
1,400 |
|
0.04 |
% |
1,401 |
|
0.04 |
% | ||
|
|
Accretion of time deposits premium |
|
(799 |
) |
(0.02 |
)% |
(1,285 |
) |
(0.04 |
)% | ||
|
|
|
(28,041 |
) |
(0.80 |
)% |
(28,481 |
) |
(0.84 |
)% | |||
|
Net interest income/NIM excluding purchase accounting |
|
$ |
174,511 |
|
5.03 |
% |
$ |
170,594 |
|
5.05 |
% | |
Noninterest Income
Noninterest income decreased by $1.3 million to $19.6 million for the second quarter of 2015 compared to $20.9 million for the first quarter of 2015 due mostly to lower foreign currency translation net gains (losses) and lower gains (losses) on sale of securities offset by higher dividends and realized gains on equity investments and higher other commissions and fees. Foreign currency translation net gains (losses) decreased $4.0 million from the prior quarter and are based upon movement of the U.S. Dollar against various foreign currencies, principally the Euro. We hedged our Euro-denominated trust preferred issuance in June to reduce the related foreign currency translation volatility. The gain on sale of securities was $3.3 million for the first quarter of 2015 compared to a net loss of $0.2 million for the second quarter; all sales related to on-going portfolio risk management activities. Dividends and realized gains on equity investments tend to fluctuate from period to period based upon actual dividends received and sales activity. The second quarter included the sale of three equity investments at a net gain of $6.0 million; there were no similar sales in the first quarter. The $1.7 million increase in other commissions and fees was due to higher loan prepayment fees and is driven by the level of loan payoff activity.
The following table presents details of noninterest income for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
June 30, |
|
March 31, |
|
Increase |
| |||
|
Noninterest Income |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
(In thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Service charges on deposit accounts |
|
$ |
2,612 |
|
$ |
2,574 |
|
$ |
38 |
|
|
Other commissions and fees |
|
7,123 |
|
5,396 |
|
1,727 |
| |||
|
Leased equipment income |
|
5,375 |
|
5,382 |
|
(7 |
) | |||
|
Gain on sale of loans and leases |
|
163 |
|
— |
|
163 |
| |||
|
(Loss) gain on securities |
|
(186 |
) |
3,275 |
|
(3,461 |
) | |||
|
FDIC loss sharing expense, net |
|
(5,107 |
) |
(4,399 |
) |
(708 |
) | |||
|
Other income: |
|
|
|
|
|
|
| |||
|
Dividends and realized gains on equity investments |
|
8,169 |
|
3,477 |
|
4,692 |
| |||
|
Foreign currency translation net (losses) gains |
|
(1,377 |
) |
2,597 |
|
(3,974 |
) | |||
|
Income recognized on early repayment of leases |
|
1,648 |
|
736 |
|
912 |
| |||
|
Other |
|
1,203 |
|
1,833 |
|
(630 |
) | |||
|
Total noninterest income |
|
$ |
19,623 |
|
$ |
20,871 |
|
$ |
(1,248 |
) |
The following table presents the details of FDIC loss sharing expense for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
June 30, |
|
March 31, |
|
Increase |
| |||
|
FDIC Loss Sharing Expense, Net |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
(In thousands) |
| |||||||
|
Loss on FDIC loss sharing asset |
|
$ |
(725 |
) |
$ |
(278 |
) |
$ |
(447 |
) |
|
FDIC loss sharing asset amortization, net |
|
(4,286 |
) |
(4,015 |
) |
(271 |
) | |||
|
Net reimbursement from (to) FDIC for covered OREOs |
|
7 |
|
(3 |
) |
10 |
| |||
|
Other |
|
(103 |
) |
(103 |
) |
— |
| |||
|
FDIC loss sharing expense, net |
|
$ |
(5,107 |
) |
$ |
(4,399 |
) |
$ |
(708 |
) |
Noninterest Expense
Noninterest expense increased by $0.9 million to $85.3 million for the second quarter of 2015 compared to $84.4 million for the first quarter of 2015. The increase was due mostly to higher insurance and assessments expense of $1.7 million, higher compensation expense of $1.3 million and higher loan-related expense of $1.1 million, offset by lower foreclosed assets expense of $2.7 million and lower acquisition, integration and reorganization costs of $1.1 million. Insurance and assessments expense increased due to the FDIC insurance assessment being calculated under the “large-bank” method starting in the second quarter. Compensation expense increased due to higher stock-based compensation expense, staff pay raises that took effect towards the end of the first quarter and higher incentive accruals. Loan-related expense increased due to lower recoveries of legal costs specifically and lower loan-related expenses generally. The first quarter included a $1.7 million recovery of legal costs compared to a $0.6 million recovery in the second quarter related to the same matter. Foreclosed assets expense decreased due to higher gain on sale of foreclosed assets in the second quarter. Acquisition, integration and reorganization costs will fluctuate from period to period based on the timing and amount of acquisition and integration activities related to the pending acquisition of Square 1 Financial, Inc.
The following table presents details of noninterest expense for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
June 30, |
|
March 31, |
|
Increase |
| |||
|
Noninterest Expense |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
(In thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Compensation |
|
$ |
49,033 |
|
$ |
47,737 |
|
$ |
1,296 |
|
|
Occupancy |
|
10,588 |
|
10,600 |
|
(12 |
) | |||
|
Data processing |
|
4,402 |
|
4,308 |
|
94 |
| |||
|
Other professional services |
|
3,332 |
|
3,221 |
|
111 |
| |||
|
Insurance and assessments |
|
4,716 |
|
3,025 |
|
1,691 |
| |||
|
Intangible asset amortization |
|
1,502 |
|
1,501 |
|
1 |
| |||
|
Leased equipment depreciation |
|
3,103 |
|
3,103 |
|
— |
| |||
|
Foreclosed assets expense (income), net |
|
(2,340 |
) |
336 |
|
(2,676 |
) | |||
|
Acquisition, integration and reorganization costs |
|
900 |
|
2,000 |
|
(1,100 |
) | |||
|
Other expense: |
|
|
|
|
|
|
| |||
|
Loan expense |
|
1,486 |
|
339 |
|
1,147 |
| |||
|
Other |
|
8,554 |
|
8,190 |
|
364 |
| |||
|
Total noninterest expense |
|
$ |
85,276 |
|
$ |
84,360 |
|
$ |
916 |
|
Income Taxes
Our overall effective income tax rate was 34.7% for the second quarter of 2015 and 38.7% for the first quarter of 2015. The decline in the effective rate is related to utilization of a portion of the capital loss carryforward and adjustments to certain deferred tax assets. We expect that the effective tax rate for calendar year 2015 will be approximately 38.0%.
BALANCE SHEET HIGHLIGHTS
Loans and Leases
Total loans and leases decreased $238.0 million in the second quarter to $12.0 billion at June 30, 2015. Second quarter originations of $658.7 million were offset by payoffs and principal repayments of $889.7 million resulting in the net decrease.
The following table presents a roll forward of the loan and lease portfolio for the periods indicated:
|
|
|
Three Months Ended |
| ||||
|
|
|
June 30, |
|
March 31, |
| ||
|
Loan and Lease Roll Forward (1) |
|
2015 |
|
2015 |
| ||
|
|
|
(In thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Beginning balance |
|
$ |
12,272,166 |
|
$ |
11,882,432 |
|
|
Originations |
|
658,669 |
|
1,037,906 |
| ||
|
Existing loans and leases: |
|
|
|
|
| ||
|
Principal repayments, net (2) |
|
(889,708 |
) |
(637,288 |
) | ||
|
Loan and lease sales |
|
(3,621 |
) |
— |
| ||
|
Transfers to foreclosed assets |
|
(2,694 |
) |
(394 |
) | ||
|
Charge-offs |
|
(623 |
) |
(10,490 |
) | ||
|
Ending balance |
|
$ |
12,034,189 |
|
$ |
12,272,166 |
|
(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 a roll forward of the loan and lease portfolio by business segment for the period indicated:
|
|
|
Three Months Ended June 30, 2015 |
| |||||||
|
|
|
Community |
|
National |
|
|
| |||
|
Loan and Lease Roll Forward by Segment |
|
Banking |
|
Lending |
|
Total |
| |||
|
|
|
(In thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Beginning balance |
|
$ |
3,349,928 |
|
$ |
8,922,238 |
|
$ |
12,272,166 |
|
|
Originations |
|
79,760 |
|
578,909 |
|
658,669 |
| |||
|
Existing loans and leases: |
|
|
|
|
|
|
| |||
|
Transfers between segments |
|
(90,021 |
) |
90,021 |
|
— |
| |||
|
Principal repayments, net |
|
(234,714 |
) |
(654,994 |
) |
(889,708 |
) | |||
|
Loan and lease sales |
|
— |
|
(3,621 |
) |
(3,621 |
) | |||
|
Transfers to foreclosed assets |
|
(2,694 |
) |
— |
|
(2,694 |
) | |||
|
Charge-offs |
|
(425 |
) |
(198 |
) |
(623 |
) | |||
|
Ending balance |
|
$ |
3,101,834 |
|
$ |
8,932,355 |
|
$ |
12,034,189 |
|
|
|
|
|
|
|
|
|
| |||
|
Weighted average yields on originations for the quarters ended: |
|
|
|
|
|
|
| |||
|
June 30, 2015 |
|
5.17 |
% |
6.00 |
% |
5.89 |
% | |||
|
March 31, 2015 |
|
5.28 |
% |
5.84 |
% |
5.76 |
% | |||
|
December 31, 2014 |
|
5.09 |
% |
5.76 |
% |
5.67 |
% | |||
|
September 30, 2014 |
|
4.73 |
% |
5.56 |
% |
5.34 |
% | |||
The following table presents the composition of our loan and lease portfolio as of the dates indicated:
|
|
|
June 30, |
|
March 31, |
| ||
|
Loan and Lease Portfolio |
|
2015 |
|
2015 |
| ||
|
|
|
(In thousands) |
| ||||
|
Real estate mortgage: |
|
|
|
|
| ||
|
Hospitality |
|
$ |
607,468 |
|
$ |
622,310 |
|
|
SBA |
|
401,832 |
|
392,704 |
| ||
|
Commercial real estate |
|
2,465,129 |
|
2,742,593 |
| ||
|
Healthcare real estate |
|
1,127,111 |
|
1,097,910 |
| ||
|
Multi-family |
|
832,418 |
|
749,661 |
| ||
|
Other |
|
193,821 |
|
209,703 |
| ||
|
Total real estate mortgage |
|
5,627,779 |
|
5,814,881 |
| ||
|
Real estate construction and land: |
|
|
|
|
| ||
|
Residential |
|
119,825 |
|
122,338 |
| ||
|
Commercial |
|
225,133 |
|
208,259 |
| ||
|
Total real estate construction and land |
|
344,958 |
|
330,597 |
| ||
|
Commercial: |
|
|
|
|
| ||
|
Collateralized |
|
371,954 |
|
394,576 |
| ||
|
Unsecured |
|
120,415 |
|
143,585 |
| ||
|
Asset-based |
|
1,840,514 |
|
1,719,835 |
| ||
|
Cash flow |
|
2,691,743 |
|
2,818,293 |
| ||
|
Equipment finance |
|
904,488 |
|
914,015 |
| ||
|
SBA |
|
45,769 |
|
42,426 |
| ||
|
Total commercial |
|
5,974,883 |
|
6,032,730 |
| ||
|
Consumer |
|
86,569 |
|
93,958 |
| ||
|
Total loans and leases, net of deferred fees |
|
$ |
12,034,189 |
|
$ |
12,272,166 |
|
Credit Exposure Affected by Low Oil Prices
During the latter half of 2014, oil prices declined significantly. During 2015, per-barrel prices have remained low. As oil prices began to decline, we increased our credit monitoring of loans and leases where borrowers and lessees are affected by low oil prices.
At June 30, 2015, we had 29 outstanding loan and lease relationships totaling $177.2 million to borrowers involved in the oil and gas industry, down from $181.4 million at March 31, 2015. The obligors under these loans and leases provide industrial support services to the oil and gas industries. The collateral for these loans and leases primarily includes equipment, such as drilling equipment and transportation vehicles, used directly and indirectly in these activities. At June 30, 2015, four relationships totaling $64.2 million were on nonaccrual status and were classified, down from $65.1 million at March 31, 2015.
Deposits
The following table presents the composition of our deposit portfolio as of the dates indicated:
|
|
|
June 30, 2015 |
|
March 31, 2015 |
| ||||||
|
|
|
|
|
% of |
|
|
|
% of |
| ||
|
Deposit Category |
|
Amount |
|
Total |
|
Amount |
|
Total |
| ||
|
|
|
(Dollars in thousands) |
| ||||||||
|
|
|
|
|
|
|
|
|
|
| ||
|
Noninterest-bearing demand deposits |
|
$ |
3,396,688 |
|
26 |
% |
$ |
3,029,463 |
|
26 |
% |
|
Interest checking deposits |
|
722,231 |
|
6 |
% |
739,073 |
|
6 |
% | ||
|
Money market deposits |
|
1,722,633 |
|
14 |
% |
1,682,123 |
|
14 |
% | ||
|
Savings deposits |
|
743,054 |
|
6 |
% |
746,741 |
|
6 |
% | ||
|
Total core deposits |
|
6,584,606 |
|
52 |
% |
6,197,400 |
|
52 |
% | ||
|
Brokered non-maturity deposits |
|
651,925 |
|
5 |
% |
155,976 |
|
1 |
% | ||
|
Total non-maturity deposits |
|
7,236,531 |
|
57 |
% |
6,353,376 |
|
53 |
% | ||
|
Time deposits under $100,000 |
|
2,328,109 |
|
19 |
% |
2,562,078 |
|
22 |
% | ||
|
Time deposits of $100,000 and over |
|
3,017,176 |
|
24 |
% |
3,018,721 |
|
25 |
% | ||
|
Total time deposits |
|
5,345,285 |
|
43 |
% |
5,580,799 |
|
47 |
% | ||
|
Total deposits |
|
$ |
12,581,816 |
|
100 |
% |
$ |
11,934,175 |
|
100 |
% |
At June 30, 2015, core deposits totaled $6.6 billion, or 52% of total deposits, including $3.4 billion of noninterest-bearing demand deposits, or 26% of total deposits. Deposits obtained from CapitalSource Division borrowers totaled $455.5 million at June 30, 2015, of which $441.8 million were core deposits.
The following table summarizes the maturities of our time deposits as of the date indicated:
|
|
|
June 30, 2015 |
| |||||||||||
|
|
|
Time Deposits |
|
Time Deposits |
|
Total |
|
|
|
Estimated |
| |||
|
|
|
Under |
|
$100,000 |
|
Time |
|
Contractual |
|
Effective |
| |||
|
Time Deposit Maturities |
|
$100,000 |
|
or More |
|
Deposits |
|
Rate |
|
Rate |
| |||
|
|
|
(Dollars in thousands) |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Due in three months or less |
|
$ |
850,820 |
|
$ |
1,287,366 |
|
$ |
2,138,186 |
|
0.65 |
% |
0.63 |
% |
|
Due in over three months through six months |
|
467,525 |
|
365,480 |
|
833,005 |
|
0.57 |
% |
0.53 |
% | |||
|
Due in over six months through twelve months |
|
838,723 |
|
1,147,809 |
|
1,986,532 |
|
0.81 |
% |
0.78 |
% | |||
|
Due in over 12 months through 24 months |
|
128,086 |
|
181,988 |
|
310,074 |
|
0.81 |
% |
0.70 |
% | |||
|
Due in over 24 months |
|
42,955 |
|
34,533 |
|
77,488 |
|
1.04 |
% |
0.78 |
% | |||
|
Total |
|
$ |
2,328,109 |
|
$ |
3,017,176 |
|
$ |
5,345,285 |
|
0.71 |
% |
0.69 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
At March 31, 2015 |
|
$ |
2,562,078 |
|
$ |
3,018,721 |
|
$ |
5,580,799 |
|
0.72 |
% |
0.68 |
% |
The remaining purchase accounting premium on acquired CapitalSource time deposits was $1.7 million at June 30, 2015, of which $0.9 million will be recognized as a reduction of interest expense in the remainder of 2015.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
We made a provision for credit losses of $6.5 million in the second quarter of 2015 and $16.4 million in the first quarter of 2015 in accordance with our allowance methodology, which takes into consideration new loan and lease fundings, commitments to make loans and leases and underlying credit quality trends. The second quarter provision was comprised of a $5.0 million provision for Non-PCI loans and leases and a provision of $1.5 million for PCI loans. The $6.5 million provision, combined with net recoveries of $1.5 million, increased the allowance for credit losses by $8.0 million in the second quarter. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio increased to 0.78% at June 30th from 0.72% at March 31st. The provision for PCI loans results from decreases in expected cash flows on such loans.
The following tables show roll forwards of the allowance for credit losses for the periods indicated:
|
|
|
Three Months Ended June 30, 2015 |
| |||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
|
|
|
| |||||
|
Allowance for Credit |
|
Loans and |
|
Unfunded |
|
Total |
|
PCI |
|
|
| |||||
|
Losses Rollforward |
|
Leases |
|
Commitments |
|
Non-PCI |
|
Loans |
|
Total |
| |||||
|
|
|
(In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Beginning balance |
|
$ |
79,680 |
|
$ |
6,874 |
|
$ |
86,554 |
|
$ |
12,698 |
|
$ |
99,252 |
|
|
Charge-offs |
|
(623 |
) |
— |
|
(623 |
) |
— |
|
(623 |
) | |||||
|
Recoveries |
|
1,990 |
|
— |
|
1,990 |
|
101 |
|
2,091 |
| |||||
|
Net recoveries |
|
1,367 |
|
— |
|
1,367 |
|
101 |
|
1,468 |
| |||||
|
Provision |
|
4,000 |
|
1,000 |
|
5,000 |
|
1,529 |
|
6,529 |
| |||||
|
Ending balance |
|
$ |
85,047 |
|
$ |
7,874 |
|
$ |
92,921 |
|
$ |
14,328 |
|
$ |
107,249 |
|
|
|
|
Three Months Ended March 31, 2015 |
| |||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
|
|
|
| |||||
|
Allowance for Credit |
|
Loans and |
|
Unfunded |
|
Total |
|
PCI |
|
|
| |||||
|
Losses Rollforward |
|
Leases |
|
Commitments |
|
Non-PCI |
|
Loans |
|
Total |
| |||||
|
|
|
(In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Beginning balance |
|
$ |
70,456 |
|
$ |
6,311 |
|
$ |
76,767 |
|
$ |
13,999 |
|
$ |
90,766 |
|
|
Charge-offs |
|
(9,911 |
) |
— |
|
(9,911 |
) |
(579 |
) |
(10,490 |
) | |||||
|
Recoveries |
|
2,531 |
|
— |
|
2,531 |
|
11 |
|
2,542 |
| |||||
|
Net charge-offs |
|
(7,380 |
) |
— |
|
(7,380 |
) |
(568 |
) |
(7,948 |
) | |||||
|
Provision (negative provision) |
|
16,604 |
|
563 |
|
17,167 |
|
(733 |
) |
16,434 |
| |||||
|
Ending balance |
|
$ |
79,680 |
|
$ |
6,874 |
|
$ |
86,554 |
|
$ |
12,698 |
|
$ |
99,252 |
|
Non-PCI loans and leases at June 30, 2015, include $6.3 billion of originated loans and leases that were not obtained through acquisitions. The allowance for loan and lease losses related to these loans and leases totals $72.4 million, or 1.16% of the outstanding balance.
All acquired loans are recorded initially at their estimated fair value with such initial fair value including an estimate of credit losses. Two additional credit coverage ratios shown in the table below are presented to give an indication of overall credit risk coverage:
|
|
|
June 30, 2015 |
|
March 31, 2015 |
| ||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
Non-PCI |
|
|
|
|
| ||||
|
Credit Risk Coverage Ratios |
|
Loans and |
|
Allowance/ |
|
Coverage |
|
Loans and |
|
Allowance/ |
|
Coverage |
| ||||
|
(Excludes PCI Loans) |
|
Leases |
|
Discount |
|
Ratio |
|
Leases |
|
Discount |
|
Ratio |
| ||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Ending balance |
|
$ |
11,846,314 |
|
$ |
92,921 |
|
0.78 |
% |
$ |
12,047,946 |
|
$ |
86,554 |
|
0.72 |
% |
|
Acquired loans |
|
(5,587,662 |
) |
(12,697 |
)(1) |
|
|
(6,152,731 |
) |
(8,962 |
)(1) |
|
| ||||
|
Adjusted balance |
|
$ |
6,258,652 |
|
$ |
80,224 |
|
1.28 |
% |
$ |
5,895,215 |
|
$ |
77,592 |
|
1.32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Ending balance |
|
$ |
11,846,314 |
|
$ |
92,921 |
|
0.78 |
% |
$ |
12,047,946 |
|
$ |
86,554 |
|
0.72 |
% |
|
Unamortized net discount |
|
103,302 |
|
103,302 |
(2) |
|
|
130,845 |
|
130,845 |
(2) |
|
| ||||
|
Adjusted balance |
|
$ |
11,949,616 |
|
$ |
196,223 |
|
1.64 |
% |
$ |
12,178,791 |
|
$ |
217,399 |
|
1.79 |
% |
(1) Allowance attributed to $5.6 billion and $6.2 billion of acquired Non-PCI loans at June 30, 2015 and March 31, 2015, based on the allowance calculation that includes an amount for credit deterioration on acquired loans and leases since their acquisition dates.
(2) Unamortized net discount relates to $5.6 billion and $6.2 billion of acquired Non-PCI loans at June 30, 2015 and March 31, 2015, and is assigned specifically to those loans only. Such discount represents the acquisition date fair value adjustment based on market, liquidity, interest rate risk and credit risk and is being accreted to interest income over the remaining life of the respective loans using the interest method. Use of the interest method results in steadily declining amounts being taken into income in each reporting period. Assuming all of these loans continue to make payments according to their terms and there are no prepayments and no deterioration in credit quality, the remaining discount of $103.3 million at June 30, 2015 is expected to be fully accreted to income by the end of 2018.
The decrease in adjusted coverage ratios results from the combination of newly originated loans being provided for at a rate lower than the current coverage ratio and normal and accelerated accretion of unamortized discount.
CREDIT QUALITY
The following table presents our Non-PCI loan and lease credit quality metrics as of the dates indicated:
|
|
|
June 30, |
|
March 31, |
| ||
|
Non-PCI Credit Quality Metrics |
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Allowance for credit losses |
|
$ |
92,921 |
|
$ |
86,554 |
|
|
Nonaccrual loans and leases (1) |
|
131,178 |
|
139,334 |
| ||
|
Classified loans and leases (2) |
|
379,988 |
|
333,182 |
| ||
|
Performing restructured loans |
|
38,203 |
|
35,975 |
| ||
|
Net charge-offs (recoveries) (for the quarter) |
|
(1,367 |
) |
7,380 |
| ||
|
Provision for credit losses (for the quarter) |
|
5,000 |
|
17,167 |
| ||
|
Allowance for credit losses to loans and leases |
|
0.78 |
% |
0.72 |
% | ||
|
Allowance for credit losses to nonaccrual loans and leases (1) |
|
70.8 |
% |
62.1 |
% | ||
|
Nonaccrual loans and leases to loans and leases |
|
1.11 |
% |
1.16 |
% | ||
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.37 |
% |
1.45 |
% | ||
|
Classified loans and leases to loans and leases |
|
3.21 |
% |
2.77 |
% | ||
(1) At June 30, 2015 and March 31, 2015 includes $56.1 million and $62.7 million of acquired loans and leases with no allowance due to fair value accounting.
(2) One classified loan with a recorded balance of $31.1 million at June 30, 2015, was reduced to $15.1 million as a result of a July refinancing.
The following table presents our Non-PCI nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated:
|
|
|
Nonaccrual Loans and Leases |
|
Accruing and |
| ||||||||||||
|
|
|
June 30, 2015 |
|
March 31, 2015 |
|
30-89 Days Past Due |
| ||||||||||
|
|
|
|
|
% of |
|
|
|
% of |
|
June 30, |
|
March 31, |
| ||||
|
|
|
|
|
Loan |
|
|
|
Loan |
|
2015 |
|
2015 |
| ||||
|
|
|
Amount |
|
Category |
|
Amount |
|
Category |
|
Amount |
|
Amount |
| ||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
Real estate mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Hospitality |
|
$ |
7,894 |
|
1 |
% |
$ |
8,088 |
|
1 |
% |
$ |
— |
|
$ |
— |
|
|
SBA |
|
10,141 |
|
3 |
% |
10,919 |
|
3 |
% |
2,272 |
|
3,310 |
| ||||
|
Other |
|
16,213 |
|
— |
|
18,328 |
|
— |
|
2,482 |
|
3,009 |
| ||||
|
Total real estate mortgage |
|
34,248 |
|
1 |
% |
37,335 |
|
1 |
% |
4,754 |
|
6,319 |
| ||||
|
Real estate construction and land: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Residential |
|
377 |
|
— |
|
379 |
|
— |
|
— |
|
— |
| ||||
|
Commercial |
|
— |
|
— |
|
453 |
|
— |
|
— |
|
— |
| ||||
|
Total real estate construction and land |
|
377 |
|
— |
|
832 |
|
— |
|
— |
|
— |
| ||||
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Collateralized |
|
3,761 |
|
1 |
% |
3,601 |
|
1 |
% |
131 |
|
1,397 |
| ||||
|
Unsecured |
|
537 |
|
— |
|
594 |
|
— |
|
— |
|
— |
| ||||
|
Asset-based |
|
40 |
|
— |
|
4,159 |
|
— |
|
— |
|
— |
| ||||
|
Cash flow |
|
14,605 |
|
1 |
% |
15,172 |
|
1 |
% |
— |
|
— |
| ||||
|
Equipment finance (1) |
|
71,130 |
|
8 |
% |
71,039 |
|
8 |
% |
915 |
|
7,751 |
| ||||
|
SBA |
|
3,068 |
|
7 |
% |
3,128 |
|
7 |
% |
— |
|
614 |
| ||||
|
Total commercial |
|
93,141 |
|
2 |
% |
97,693 |
|
2 |
% |
1,046 |
|
9,762 |
| ||||
|
Consumer |
|
3,412 |
|
4 |
% |
3,474 |
|
4 |
% |
1 |
|
9 |
| ||||
|
Total Non-PCI loans and leases |
|
$ |
131,178 |
|
1 |
% |
$ |
139,334 |
|
1 |
% |
$ |
5,801 |
|
$ |
16,090 |
|
(1) Includes nonaccrual leases and loans to companies involved in the oil and gas industries of $64.2 million and $65.1 million at June 30, 2015 and March 31, 2015, respectively.
The following table presents our nonperforming assets as of the dates indicated:
|
|
|
June 30, |
|
March 31, |
| ||
|
Nonperforming Assets |
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Nonaccrual Non-PCI loans and leases |
|
$ |
131,178 |
|
$ |
139,334 |
|
|
Nonaccrual PCI Loans (1) |
|
6,016 |
|
23,331 |
| ||
|
Total nonaccrual loans and leases |
|
137,194 |
|
162,665 |
| ||
|
Foreclosed assets, net |
|
31,668 |
|
35,940 |
| ||
|
Total nonperforming assets |
|
$ |
168,862 |
|
$ |
198,605 |
|
|
|
|
|
|
|
| ||
|
Nonaccrual loans and leases to loans and leases |
|
1.14 |
% |
1.32 |
% | ||
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.40 |
% |
1.61 |
% | ||
(1) Represents legacy CapitalSource borrowing relationships placed on nonaccrual status as of the acquisition date.
SQUARE 1 FINANCIAL, INC. MERGER ANNOUNCEMENT
On March 2, 2015, PacWest announced the signing of a definitive agreement and plan of merger (the “Agreement”) whereby PacWest and Square 1 Financial, Inc. (“Square 1”) will merge in a transaction valued at approximately $875 million. The combined company will be called PacWest Bancorp and the combined subsidiary bank will be called Pacific Western Bank, with the banking operations of Square 1 conducted under the trade name of Square 1 Bank, a division of Pacific Western Bank.
Under the terms of the Agreement, Square 1 stockholders will receive 0.5997 shares of PacWest common stock for each share of Square 1 common stock and holders of stock options, restricted stock units, and warrants will receive cash based on the approximate value of the merger consideration. The total value of the per share merger consideration was $27.49, based on the closing price of PacWest common stock of $45.84 on February 27, 2015, the last trading day before the transaction was announced.
As of June 30, 2015, on a pro forma consolidated basis, the combined company would have had approximately $21.1 billion in assets with 80 branches throughout California and one in North Carolina. The transaction, currently expected to close in the fourth quarter of 2015, is subject to customary conditions, including the approval of bank regulatory authorities and the Square 1 stockholders.
ABOUT PACWEST BANCORP
PacWest Bancorp is a bank holding company with over $16 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (“Pacific Western”). Through 80 full-service branches located throughout the state of California, Pacific Western provides commercial banking services, including real estate, construction, and commercial loans, to small and medium-sized businesses. Pacific Western and its CapitalSource Division deliver the full spectrum of financing solutions nationwide across numerous industries and property types. For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.
FORWARD LOOKING STATEMENTS
This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, strategies, goals, and projections and including statements about our expectations regarding our pending merger between the Company and Square 1, credit loss exposure, deposit growth, loan and lease portfolio growth, operating expenses and effective tax rates. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such forward-looking statements for a variety of factors, including without limitation:
· the Company’s ability to complete future acquisitions, including the Square 1 merger, and to successfully integrate such acquired entities or achieve expected benefits, synergies and/or operating efficiencies within expected time frames or at all;
· the Company’s ability to obtain regulatory approvals and meet other closing conditions to the Square 1 merger on the expected terms and schedule;
· delay in closing the Square 1 merger;
· business disruption following the proposed Square 1 merger;
· changes in the Company’s stock price before completion of the Square 1 merger, including as a result of the financial performance of the Company or Square 1 prior to closing;
· the reaction to the Square 1 merger of the companies’ customers, employees and counterparties;
· higher than anticipated loan losses;
· credit quality deterioration or pronounced and sustained reduction in market values or other economic factors which adversely affect our borrowers’ ability to repay loans and leases;
· changes in economic or competitive market conditions could negatively impact investment or lending opportunities or product pricing and services;
· reduced demand for our services due to strategic or regulatory reasons;
· our ability to grow deposits and access wholesale funding sources;
· legislative or regulatory requirements or changes adversely affected the Company’s business including an increase to capital requirements;
· loan repayments higher than expected;
· higher than anticipated increases in operating expenses;
· increased litigation;
· asset workout or loan servicing expenses;
· higher compensation costs and professional fees to retain and/or incent employees;
· changes in tax laws or regulations affecting our business;
· our inability to generate sufficient earnings;
· tax planning or disallowance of tax benefits by tax authorities;
· changes in tax filing jurisdictions or entity classifications; and
· other risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission (“SEC”).
All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION AND WHERE TO FIND IT
Investors and security holders are urged to carefully review and consider each of PacWest Bancorp’s and Square 1’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by PacWest with the SEC may be obtained free of charge at PacWest’s website at www.pacwestbancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from PacWest by requesting them in writing to PacWest Bancorp, c/o Pacific Western Bank, 130 S. State College Blvd., Brea, CA 92821, Attention: Investor Relations, telephone (714) 671-6800, or via e-mail to investor-relations@pacwestbancorp.com.
The documents filed by Square 1 with the SEC may be obtained free of charge at Square 1’s website at www.square1bank.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Square 1 by requesting them in writing to Square 1 Financial, c/o Square 1 Bank, 406 Blackwell Street, Suite 240, Durham, NC 27701; Attention: Investor Relations, or by telephone at Phone: (866) 355-0468.
PacWest has filed a registration statement with the SEC which includes a proxy statement of Square 1 and a prospectus of PacWest, and each party will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of Square 1 are urged to carefully read the entire registration statement and proxy statement/prospectus, as well as any amendments or supplements to these documents, because they contain important information about the proposed transaction. A definitive proxy statement/prospectus has been sent to the stockholders of Square 1 seeking the required stockholder approvals. Investors and security holders are able to obtain the registration statement and the proxy statement/prospectus free of charge from the SEC’s website or from PacWest or Square 1 by writing to the addresses provided for each company set forth in the paragraphs above.
PacWest, Square 1, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from Square 1 stockholders in favor of the approval of the transaction. Information about the directors and executive officers of PacWest and their ownership of PacWest common stock is set forth in the proxy statement for PacWest’s 2015 annual meeting of stockholders, as previously filed with the SEC. Information about the directors and executive officers of Square 1 and their ownership of Square 1 common stock is set forth in the proxy statement for Square 1’s 2014 annual meeting of stockholders, as previously filed with the SEC. Stockholders may obtain additional information regarding the interests of such participants by reading the registration statement and the proxy statement/prospectus.
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
|
June 30, |
|
March 31, |
|
December 31, |
| |||
|
|
|
2015 |
|
2015 |
|
2014 |
| |||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||
|
ASSETS: |
|
|
|
|
|
|
| |||
|
Cash and due from banks |
|
$ |
209,598 |
|
$ |
140,873 |
|
$ |
164,757 |
|
|
Interest-earning deposits in financial institutions |
|
431,033 |
|
250,981 |
|
148,469 |
| |||
|
Total cash and cash equivalents |
|
640,631 |
|
391,854 |
|
313,226 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Securities available-for-sale, at estimated fair value |
|
1,698,158 |
|
1,595,409 |
|
1,567,177 |
| |||
|
Federal Home Loan Bank stock, at cost |
|
17,250 |
|
28,905 |
|
40,609 |
| |||
|
Total investment securities |
|
1,715,408 |
|
1,624,314 |
|
1,607,786 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Non-PCI loans and leases |
|
11,846,314 |
|
12,047,946 |
|
11,613,832 |
| |||
|
PCI loans |
|
222,691 |
|
254,346 |
|
290,852 |
| |||
|
Total gross loans and leases |
|
12,069,005 |
|
12,302,292 |
|
11,904,684 |
| |||
|
Deferred fees and costs |
|
(34,816 |
) |
(30,126 |
) |
(22,252 |
) | |||
|
Total loans and leases, net of deferred fees |
|
12,034,189 |
|
12,272,166 |
|
11,882,432 |
| |||
|
Allowance for loan and lease losses |
|
(99,375 |
) |
(92,378 |
) |
(84,455 |
) | |||
|
Total loans and leases, net |
|
11,934,814 |
|
12,179,788 |
|
11,797,977 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Equipment leased to others under operating leases |
|
117,182 |
|
119,959 |
|
122,506 |
| |||
|
Premises and equipment, net |
|
35,984 |
|
36,022 |
|
36,551 |
| |||
|
Foreclosed assets, net |
|
31,668 |
|
35,940 |
|
43,721 |
| |||
|
Deferred tax asset, net |
|
211,556 |
|
236,065 |
|
284,411 |
| |||
|
Goodwill |
|
1,728,380 |
|
1,728,380 |
|
1,720,479 |
| |||
|
Core deposit and customer relationship intangibles, net |
|
14,201 |
|
15,703 |
|
17,204 |
| |||
|
Other assets |
|
267,196 |
|
275,915 |
|
290,744 |
| |||
|
Total assets |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
|
|
|
|
|
|
|
|
| |||
|
LIABILITIES: |
|
|
|
|
|
|
| |||
|
Noninterest-bearing deposits |
|
$ |
3,396,688 |
|
$ |
3,029,463 |
|
$ |
2,931,352 |
|
|
Interest-bearing deposits |
|
9,185,128 |
|
8,904,712 |
|
8,823,776 |
| |||
|
Total deposits |
|
12,581,816 |
|
11,934,175 |
|
11,755,128 |
| |||
|
Borrowings |
|
2,751 |
|
618,156 |
|
383,402 |
| |||
|
Subordinated debentures |
|
433,944 |
|
431,448 |
|
433,583 |
| |||
|
Accrued interest payable and other liabilities |
|
127,019 |
|
126,800 |
|
156,262 |
| |||
|
Total liabilities |
|
13,145,530 |
|
13,110,579 |
|
12,728,375 |
| |||
|
STOCKHOLDERS’ EQUITY (1) |
|
3,551,490 |
|
3,533,361 |
|
3,506,230 |
| |||
|
Total liabilities and stockholders’ equity |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
|
(1) Includes net unrealized gain on securities available-for-sale, net |
|
$ |
16,255 |
|
$ |
28,744 |
|
$ |
26,380 |
|
|
|
|
|
|
|
|
|
| |||
|
Book value per share |
|
$ |
34.46 |
|
$ |
34.29 |
|
$ |
34.03 |
|
|
Tangible book value per share |
|
$ |
17.55 |
|
$ |
17.36 |
|
$ |
17.17 |
|
|
|
|
|
|
|
|
|
| |||
|
Shares outstanding (includes unvested restricted shares of 990,259 at June 30, 2015, 1,129,445 at March 31, 2015, and 1,108,505 at December 31, 2014) |
|
103,051,989 |
|
103,044,257 |
|
103,022,017 |
| |||
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
|
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||||
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
| |||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
203,781 |
|
$ |
202,097 |
|
$ |
192,201 |
|
$ |
405,878 |
|
$ |
269,664 |
|
|
Investment securities |
|
14,570 |
|
12,195 |
|
11,986 |
|
26,765 |
|
22,809 |
| |||||
|
Deposits in financial institutions |
|
104 |
|
22 |
|
176 |
|
126 |
|
250 |
| |||||
|
Total interest income |
|
218,455 |
|
214,314 |
|
204,363 |
|
432,769 |
|
292,723 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Deposits |
|
11,233 |
|
10,479 |
|
7,313 |
|
21,712 |
|
8,538 |
| |||||
|
Borrowings |
|
88 |
|
235 |
|
199 |
|
323 |
|
278 |
| |||||
|
Subordinated debentures |
|
4,582 |
|
4,525 |
|
4,318 |
|
9,107 |
|
5,359 |
| |||||
|
Total interest expense |
|
15,903 |
|
15,239 |
|
11,830 |
|
31,142 |
|
14,175 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net interest income |
|
202,552 |
|
199,075 |
|
192,533 |
|
401,627 |
|
278,548 |
| |||||
|
Provision for credit losses |
|
6,529 |
|
16,434 |
|
5,030 |
|
22,963 |
|
4,386 |
| |||||
|
Net interest income after provision for credit losses |
|
196,023 |
|
182,641 |
|
187,503 |
|
378,664 |
|
274,162 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service charges on deposit accounts |
|
2,612 |
|
2,574 |
|
2,719 |
|
5,186 |
|
5,721 |
| |||||
|
Other commissions and fees |
|
7,123 |
|
5,396 |
|
5,743 |
|
12,519 |
|
7,675 |
| |||||
|
Leased equipment income |
|
5,375 |
|
5,382 |
|
5,672 |
|
10,757 |
|
5,672 |
| |||||
|
Gain (loss) on sale of loans and leases |
|
163 |
|
— |
|
(485 |
) |
163 |
|
(379 |
) | |||||
|
(Loss) gain on securities |
|
(186 |
) |
3,275 |
|
89 |
|
3,089 |
|
4,841 |
| |||||
|
FDIC loss sharing expense, net |
|
(5,107 |
) |
(4,399 |
) |
(8,525 |
) |
(9,506 |
) |
(19,955 |
) | |||||
|
Other income |
|
9,643 |
|
8,643 |
|
3,266 |
|
18,286 |
|
9,595 |
| |||||
|
Total noninterest income |
|
19,623 |
|
20,871 |
|
8,479 |
|
40,494 |
|
13,170 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Compensation |
|
49,033 |
|
47,737 |
|
45,081 |
|
96,770 |
|
73,708 |
| |||||
|
Occupancy |
|
10,588 |
|
10,600 |
|
11,078 |
|
21,188 |
|
18,673 |
| |||||
|
Data processing |
|
4,402 |
|
4,308 |
|
4,099 |
|
8,710 |
|
6,639 |
| |||||
|
Other professional services |
|
3,332 |
|
3,221 |
|
2,843 |
|
6,553 |
|
4,366 |
| |||||
|
Insurance and assessments |
|
4,716 |
|
3,025 |
|
3,179 |
|
7,741 |
|
4,772 |
| |||||
|
Intangible asset amortization |
|
1,502 |
|
1,501 |
|
1,677 |
|
3,003 |
|
3,041 |
| |||||
|
Leased equipment depreciation |
|
3,103 |
|
3,103 |
|
3,095 |
|
6,206 |
|
3,095 |
| |||||
|
Foreclosed assets expense (income), net |
|
(2,340 |
) |
336 |
|
497 |
|
(2,004 |
) |
(1,364 |
) | |||||
|
Acquisition, integration and reorganization costs |
|
900 |
|
2,000 |
|
86,242 |
|
2,900 |
|
88,442 |
| |||||
|
Other expense |
|
10,040 |
|
8,529 |
|
11,409 |
|
18,569 |
|
17,992 |
| |||||
|
Total noninterest expense |
|
85,276 |
|
84,360 |
|
169,200 |
|
169,636 |
|
219,364 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Earnings from continuing operations before taxes |
|
130,370 |
|
119,152 |
|
26,782 |
|
249,522 |
|
67,968 |
| |||||
|
Income tax expense |
|
(45,287 |
) |
(46,073 |
) |
(15,552 |
) |
(91,360 |
) |
(30,833 |
) | |||||
|
Net earnings from continuing operations |
|
85,083 |
|
73,079 |
|
11,230 |
|
158,162 |
|
37,135 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loss from discontinued operations before taxes |
|
— |
|
— |
|
(1,151 |
) |
— |
|
(2,564 |
) | |||||
|
Income tax benefit |
|
— |
|
— |
|
476 |
|
— |
|
1,064 |
| |||||
|
Net loss from discontinued operations |
|
— |
|
— |
|
(675 |
) |
— |
|
(1,500 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings |
|
$ |
85,083 |
|
$ |
73,079 |
|
$ |
10,555 |
|
$ |
158,162 |
|
$ |
35,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.11 |
|
$ |
1.54 |
|
$ |
0.51 |
|
|
Net earnings |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.10 |
|
$ |
1.54 |
|
$ |
0.49 |
|
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
|
|
|
Three Months Ended |
| ||||||||||||||||||||||
|
|
|
June 30, 2015 |
|
March 31, 2015 |
|
June 30, 2014 |
| ||||||||||||||||||
|
|
|
|
|
Interest |
|
Average |
|
|
|
Interest |
|
Average |
|
|
|
Interest |
|
Average |
| ||||||
|
|
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
| ||||||
|
|
|
Balance |
|
Expense |
|
Cost |
|
Balance |
|
Expense |
|
Cost |
|
Balance |
|
Expense |
|
Cost |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||||||||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
PCI loans |
|
$ |
228,217 |
|
$ |
7,894 |
|
13.87 |
% |
$ |
260,648 |
|
$ |
10,165 |
|
15.82 |
% |
$ |
375,194 |
|
$ |
14,104 |
|
15.08 |
% |
|
Non-PCI loans and leases |
|
11,879,799 |
|
195,887 |
|
6.61 |
% |
11,795,034 |
|
191,932 |
|
6.60 |
% |
10,125,327 |
|
178,097 |
|
7.06 |
% | ||||||
|
Total loans and leases |
|
12,108,016 |
|
203,781 |
|
6.75 |
% |
12,055,682 |
|
202,097 |
|
6.80 |
% |
10,500,521 |
|
192,201 |
|
7.34 |
% | ||||||
|
Investment securities (1) |
|
1,672,590 |
|
14,570 |
|
3.49 |
% |
1,613,422 |
|
12,195 |
|
3.07 |
% |
1,606,848 |
|
11,986 |
|
2.99 |
% | ||||||
|
Deposits in financial institutions |
|
161,683 |
|
104 |
|
0.26 |
% |
32,761 |
|
22 |
|
0.27 |
% |
276,095 |
|
176 |
|
0.26 |
% | ||||||
|
Total interest-earning assets |
|
13,942,289 |
|
218,455 |
|
6.28 |
% |
13,701,865 |
|
214,314 |
|
6.34 |
% |
12,383,464 |
|
204,363 |
|
6.62 |
% | ||||||
|
Other assets |
|
2,521,022 |
|
|
|
|
|
2,594,775 |
|
|
|
|
|
2,653,637 |
|
|
|
|
| ||||||
|
Total assets |
|
$ |
16,463,311 |
|
|
|
|
|
$ |
16,296,640 |
|
|
|
|
|
$ |
15,037,101 |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Interest checking |
|
$ |
741,966 |
|
202 |
|
0.11 |
% |
$ |
726,748 |
|
194 |
|
0.11 |
% |
$ |
601,958 |
|
77 |
|
0.05 |
% | |||
|
Money market |
|
2,065,190 |
|
1,088 |
|
0.21 |
% |
1,836,094 |
|
945 |
|
0.21 |
% |
1,691,115 |
|
874 |
|
0.21 |
% | ||||||
|
Savings |
|
740,878 |
|
555 |
|
0.30 |
% |
756,578 |
|
571 |
|
0.31 |
% |
722,808 |
|
548 |
|
0.30 |
% | ||||||
|
Time |
|
5,559,903 |
|
9,388 |
|
0.68 |
% |
5,481,886 |
|
8,769 |
|
0.65 |
% |
5,613,601 |
|
5,814 |
|
0.42 |
% | ||||||
|
Total interest-bearing deposits |
|
9,107,937 |
|
11,233 |
|
0.49 |
% |
8,801,306 |
|
10,479 |
|
0.48 |
% |
8,629,482 |
|
7,313 |
|
0.34 |
% | ||||||
|
Borrowings |
|
81,164 |
|
88 |
|
0.43 |
% |
424,061 |
|
235 |
|
0.22 |
% |
39,931 |
|
199 |
|
2.00 |
% | ||||||
|
Subordinated debentures |
|
432,656 |
|
4,582 |
|
4.25 |
% |
432,603 |
|
4,525 |
|
4.24 |
% |
409,934 |
|
4,318 |
|
4.22 |
% | ||||||
|
Total interest-bearing liabilities |
|
9,621,757 |
|
15,903 |
|
0.66 |
% |
9,657,970 |
|
15,239 |
|
0.64 |
% |
9,079,347 |
|
11,830 |
|
0.52 |
% | ||||||
|
Noninterest-bearing demand deposits |
|
3,157,129 |
|
|
|
|
|
2,949,719 |
|
|
|
|
|
2,546,540 |
|
|
|
|
| ||||||
|
Other liabilities |
|
135,677 |
|
|
|
|
|
155,608 |
|
|
|
|
|
178,196 |
|
|
|
|
| ||||||
|
Total liabilities |
|
12,914,563 |
|
|
|
|
|
12,763,297 |
|
|
|
|
|
11,804,083 |
|
|
|
|
| ||||||
|
Stockholders’ equity |
|
3,548,748 |
|
|
|
|
|
3,533,343 |
|
|
|
|
|
3,233,018 |
|
|
|
|
| ||||||
|
Total liabilities and stockholders’ equity |
|
$ |
16,463,311 |
|
|
|
|
|
$ |
16,296,640 |
|
|
|
|
|
$ |
15,037,101 |
|
|
|
|
| |||
|
Net interest income |
|
|
|
$ |
202,552 |
|
|
|
|
|
$ |
199,075 |
|
|
|
|
|
$ |
192,533 |
|
|
| |||
|
Net interest spread |
|
|
|
|
|
5.62 |
% |
|
|
|
|
5.70 |
% |
|
|
|
|
6.10 |
% | ||||||
|
Net interest margin |
|
|
|
|
|
5.83 |
% |
|
|
|
|
5.89 |
% |
|
|
|
|
6.24 |
% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Total deposits (2) |
|
$ |
12,265,066 |
|
$ |
11,233 |
|
0.37 |
% |
$ |
11,751,025 |
|
$ |
10,479 |
|
0.36 |
% |
$ |
11,176,022 |
|
$ |
7,313 |
|
0.26 |
% |
|
Funding sources (3) |
|
$ |
12,778,886 |
|
$ |
15,903 |
|
0.50 |
% |
$ |
12,607,689 |
|
$ |
15,239 |
|
0.49 |
% |
$ |
11,625,887 |
|
$ |
11,830 |
|
0.41 |
% |
|
(1) |
The tax equivalent yield on investment securities was 4.01%, 3.52%, and 3.39% for the three months ended June 30, 2015, March 31, 2015, and June 30, 2014. |
|
(2) |
Total deposits is the sum of interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits. |
|
(3) |
Funding sources is the sum of interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated as annualized total interest expense divided by average funding sources. |
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| |||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
ASSETS: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Cash and due from banks |
|
$ |
209,598 |
|
$ |
140,873 |
|
$ |
164,757 |
|
$ |
145,463 |
|
$ |
243,583 |
|
|
Interest-earning deposits in financial institutions |
|
431,033 |
|
250,981 |
|
148,469 |
|
115,399 |
|
119,782 |
| |||||
|
Total cash and cash equivalents |
|
640,631 |
|
391,854 |
|
313,226 |
|
260,862 |
|
363,365 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Securities available-for-sale |
|
1,698,158 |
|
1,595,409 |
|
1,567,177 |
|
1,539,681 |
|
1,552,115 |
| |||||
|
Federal Home Loan Bank stock, at cost |
|
17,250 |
|
28,905 |
|
40,609 |
|
45,602 |
|
49,983 |
| |||||
|
Total investment securities |
|
1,715,408 |
|
1,624,314 |
|
1,607,786 |
|
1,585,283 |
|
1,602,098 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Non-PCI loans and leases |
|
11,846,314 |
|
12,047,946 |
|
11,613,832 |
|
11,239,964 |
|
10,802,053 |
| |||||
|
PCI loans |
|
222,691 |
|
254,346 |
|
290,852 |
|
351,431 |
|
398,471 |
| |||||
|
Total gross loans and leases |
|
12,069,005 |
|
12,302,292 |
|
11,904,684 |
|
11,591,395 |
|
11,200,524 |
| |||||
|
Deferred fees and costs |
|
(34,816 |
) |
(30,126 |
) |
(22,252 |
) |
(16,510 |
) |
(10,419 |
) | |||||
|
Total loans and leases, net of deferred fees |
|
12,034,189 |
|
12,272,166 |
|
11,882,432 |
|
11,574,885 |
|
11,190,105 |
| |||||
|
Allowance for loan and lease losses |
|
(99,375 |
) |
(92,378 |
) |
(84,455 |
) |
(81,899 |
) |
(82,149 |
) | |||||
|
Total loans and leases, net |
|
11,934,814 |
|
12,179,788 |
|
11,797,977 |
|
11,492,986 |
|
11,107,956 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equipment leased to others under operating leases |
|
117,182 |
|
119,959 |
|
122,506 |
|
125,119 |
|
127,289 |
| |||||
|
Premises and equipment, net |
|
35,984 |
|
36,022 |
|
36,551 |
|
38,368 |
|
40,440 |
| |||||
|
Foreclosed assets, net |
|
31,668 |
|
35,940 |
|
43,721 |
|
40,524 |
|
53,821 |
| |||||
|
Deferred tax asset, net |
|
211,556 |
|
236,065 |
|
284,411 |
|
331,176 |
|
342,105 |
| |||||
|
Goodwill |
|
1,728,380 |
|
1,728,380 |
|
1,720,479 |
|
1,722,129 |
|
1,725,153 |
| |||||
|
Core deposit and customer relationship intangibles, net |
|
14,201 |
|
15,703 |
|
17,204 |
|
18,822 |
|
20,431 |
| |||||
|
Other assets |
|
267,196 |
|
275,915 |
|
290,744 |
|
322,881 |
|
302,013 |
| |||||
|
Total assets |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
$ |
15,938,150 |
|
$ |
15,684,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest-bearing deposits |
|
$ |
3,396,688 |
|
$ |
3,029,463 |
|
$ |
2,931,352 |
|
$ |
2,842,488 |
|
$ |
2,701,434 |
|
|
Interest-bearing deposits |
|
9,185,128 |
|
8,904,712 |
|
8,823,776 |
|
8,680,949 |
|
8,966,363 |
| |||||
|
Total deposits |
|
12,581,816 |
|
11,934,175 |
|
11,755,128 |
|
11,523,437 |
|
11,667,797 |
| |||||
|
Borrowings |
|
2,751 |
|
618,156 |
|
383,402 |
|
363,672 |
|
4,596 |
| |||||
|
Subordinated debentures |
|
433,944 |
|
431,448 |
|
433,583 |
|
433,545 |
|
434,878 |
| |||||
|
Accrued interest payable and other liabilities |
|
127,019 |
|
126,800 |
|
156,262 |
|
139,445 |
|
139,663 |
| |||||
|
Total liabilities |
|
13,145,530 |
|
13,110,579 |
|
12,728,375 |
|
12,460,099 |
|
12,246,934 |
| |||||
|
STOCKHOLDERS’ EQUITY (1) |
|
3,551,490 |
|
3,533,361 |
|
3,506,230 |
|
3,478,051 |
|
3,437,737 |
| |||||
|
Total liabilities and stockholders’ equity |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
$ |
15,938,150 |
|
$ |
15,684,671 |
|
|
(1) Includes net unrealized gain on securities available-for-sale, net |
|
$ |
16,255 |
|
$ |
28,744 |
|
$ |
26,380 |
|
$ |
20,821 |
|
$ |
20,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Book value per share |
|
$ |
34.46 |
|
$ |
34.29 |
|
$ |
34.03 |
|
$ |
33.76 |
|
$ |
33.37 |
|
|
Tangible book value per share |
|
$ |
17.55 |
|
$ |
17.36 |
|
$ |
17.17 |
|
$ |
16.86 |
|
$ |
16.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Shares outstanding (includes unvested restricted shares) |
|
103,051,989 |
|
103,044,257 |
|
103,022,017 |
|
103,027,830 |
|
103,033,449 |
| |||||
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
|
|
|
Three Months Ended |
| |||||||||||||
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| |||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
203,781 |
|
$ |
202,097 |
|
$ |
197,472 |
|
$ |
189,961 |
|
$ |
192,201 |
|
|
Investment securities |
|
14,570 |
|
12,195 |
|
12,205 |
|
12,331 |
|
11,986 |
| |||||
|
Deposits in financial institutions |
|
104 |
|
22 |
|
19 |
|
64 |
|
176 |
| |||||
|
Total interest income |
|
218,455 |
|
214,314 |
|
209,696 |
|
202,356 |
|
204,363 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Deposits |
|
11,233 |
|
10,479 |
|
9,972 |
|
8,822 |
|
7,313 |
| |||||
|
Borrowings |
|
88 |
|
235 |
|
144 |
|
74 |
|
199 |
| |||||
|
Subordinated debentures |
|
4,582 |
|
4,525 |
|
4,597 |
|
4,614 |
|
4,318 |
| |||||
|
Total interest expense |
|
15,903 |
|
15,239 |
|
14,713 |
|
13,510 |
|
11,830 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net interest income |
|
202,552 |
|
199,075 |
|
194,983 |
|
188,846 |
|
192,533 |
| |||||
|
Provision for credit losses |
|
6,529 |
|
16,434 |
|
2,063 |
|
5,050 |
|
5,030 |
| |||||
|
Net interest income after provision for credit losses |
|
196,023 |
|
182,641 |
|
192,920 |
|
183,796 |
|
187,503 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service charges on deposit accounts |
|
2,612 |
|
2,574 |
|
2,787 |
|
2,725 |
|
2,719 |
| |||||
|
Other commissions and fees |
|
7,123 |
|
5,396 |
|
4,556 |
|
6,371 |
|
5,743 |
| |||||
|
Leased equipment income |
|
5,375 |
|
5,382 |
|
5,382 |
|
5,615 |
|
5,672 |
| |||||
|
Gain (loss) on sale of loans and leases |
|
163 |
|
— |
|
7 |
|
973 |
|
(485 |
) | |||||
|
(Loss) gain on securities |
|
(186 |
) |
3,275 |
|
— |
|
— |
|
89 |
| |||||
|
FDIC loss sharing expense, net |
|
(5,107 |
) |
(4,399 |
) |
(4,360 |
) |
(7,415 |
) |
(8,525 |
) | |||||
|
Other income |
|
9,643 |
|
8,643 |
|
4,331 |
|
8,045 |
|
3,266 |
| |||||
|
Total noninterest income |
|
19,623 |
|
20,871 |
|
12,703 |
|
16,314 |
|
8,479 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Compensation |
|
49,033 |
|
47,737 |
|
45,930 |
|
45,861 |
|
45,081 |
| |||||
|
Occupancy |
|
10,588 |
|
10,600 |
|
10,745 |
|
11,188 |
|
11,078 |
| |||||
|
Data processing |
|
4,402 |
|
4,308 |
|
4,050 |
|
3,929 |
|
4,099 |
| |||||
|
Other professional services |
|
3,332 |
|
3,221 |
|
3,181 |
|
3,687 |
|
2,843 |
| |||||
|
Insurance and assessments |
|
4,716 |
|
3,025 |
|
3,115 |
|
3,020 |
|
3,179 |
| |||||
|
Intangible asset amortization |
|
1,502 |
|
1,501 |
|
1,619 |
|
1,608 |
|
1,677 |
| |||||
|
Leased equipment depreciation |
|
3,103 |
|
3,103 |
|
3,103 |
|
2,961 |
|
3,095 |
| |||||
|
Foreclosed assets expense (income), net |
|
(2,340 |
) |
336 |
|
1,938 |
|
4,827 |
|
497 |
| |||||
|
Acquisition, integration and reorganization costs |
|
900 |
|
2,000 |
|
7,381 |
|
5,193 |
|
86,242 |
| |||||
|
Other expense |
|
10,040 |
|
8,529 |
|
10,243 |
|
12,649 |
|
11,409 |
| |||||
|
Total noninterest expense |
|
85,276 |
|
84,360 |
|
91,305 |
|
94,923 |
|
169,200 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Earnings from continuing operations before taxes |
|
130,370 |
|
119,152 |
|
114,318 |
|
105,187 |
|
26,782 |
| |||||
|
Income tax expense |
|
(45,287 |
) |
(46,073 |
) |
(43,261 |
) |
(42,911 |
) |
(15,552 |
) | |||||
|
Net earnings from continuing operations |
|
85,083 |
|
73,079 |
|
71,057 |
|
62,276 |
|
11,230 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loss from discontinued operations before taxes |
|
— |
|
— |
|
(105 |
) |
(8 |
) |
(1,151 |
) | |||||
|
Income tax benefit |
|
— |
|
— |
|
47 |
|
3 |
|
476 |
| |||||
|
Net loss from discontinued operations |
|
— |
|
— |
|
(58 |
) |
(5 |
) |
(675 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings |
|
$ |
85,083 |
|
$ |
73,079 |
|
$ |
70,999 |
|
$ |
62,271 |
|
$ |
10,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.69 |
|
$ |
0.60 |
|
$ |
0.11 |
|
|
Net earnings |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.69 |
|
$ |
0.60 |
|
$ |
0.10 |
|
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
|
|
|
At or For the Three Months Ended |
| |||||||||||||
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| |||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
Performance Ratios - GAAP: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Return on average assets (1) |
|
2.07 |
% |
1.82 |
% |
1.77 |
% |
1.57 |
% |
0.28 |
% | |||||
|
Return on average equity (1) |
|
9.62 |
% |
8.39 |
% |
8.05 |
% |
7.13 |
% |
1.31 |
% | |||||
|
Yield on average loans and leases |
|
6.75 |
% |
6.80 |
% |
6.76 |
% |
6.68 |
% |
7.34 |
% | |||||
|
Yield on average interest-earning assets |
|
6.28 |
% |
6.34 |
% |
6.30 |
% |
6.19 |
% |
6.62 |
% | |||||
|
Cost of average total deposits |
|
0.37 |
% |
0.36 |
% |
0.34 |
% |
0.30 |
% |
0.26 |
% | |||||
|
Cost of average time deposits |
|
0.68 |
% |
0.65 |
% |
0.60 |
% |
0.51 |
% |
0.42 |
% | |||||
|
Cost of average interest-bearing liabilities |
|
0.66 |
% |
0.64 |
% |
0.63 |
% |
0.58 |
% |
0.52 |
% | |||||
|
Cost of average funding sources |
|
0.50 |
% |
0.49 |
% |
0.48 |
% |
0.44 |
% |
0.41 |
% | |||||
|
Net interest rate spread |
|
5.62 |
% |
5.70 |
% |
5.67 |
% |
5.61 |
% |
6.10 |
% | |||||
|
Net interest margin |
|
5.83 |
% |
5.89 |
% |
5.86 |
% |
5.78 |
% |
6.24 |
% | |||||
|
Noninterest expense as a percentage of average assets (1) |
|
2.08 |
% |
2.10 |
% |
2.28 |
% |
2.40 |
% |
4.51 |
% | |||||
|
Efficiency ratio |
|
38.4 |
% |
38.4 |
% |
44.0 |
% |
46.3 |
% |
84.2 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Performance Ratios - Non-GAAP: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Adjusted return on average assets (1) |
|
1.77 |
% |
1.62 |
% |
1.70 |
% |
1.69 |
% |
1.67 |
% | |||||
|
Adjusted return on average equity (1) |
|
8.19 |
% |
7.47 |
% |
7.71 |
% |
7.66 |
% |
7.75 |
% | |||||
|
Return on average tangible equity (1) |
|
18.90 |
% |
16.50 |
% |
16.00 |
% |
14.36 |
% |
2.65 |
% | |||||
|
Adjusted return on average tangible equity (1) |
|
16.11 |
% |
14.69 |
% |
15.33 |
% |
15.42 |
% |
15.71 |
% | |||||
|
Core net interest margin |
|
5.27 |
% |
5.38 |
% |
5.52 |
% |
5.64 |
% |
5.74 |
% | |||||
|
Adjusted efficiency ratio |
|
40.6 |
% |
40.4 |
% |
41.7 |
% |
43.1 |
% |
42.7 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Average Balances: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
12,108,016 |
|
$ |
12,055,682 |
|
$ |
11,586,573 |
|
$ |
11,285,689 |
|
$ |
10,500,521 |
|
|
Interest-earning assets |
|
13,942,289 |
|
13,701,865 |
|
13,205,383 |
|
12,969,776 |
|
12,383,464 |
| |||||
|
Total assets |
|
16,463,311 |
|
16,296,640 |
|
15,892,761 |
|
15,716,539 |
|
15,037,101 |
| |||||
|
Noninterest-bearing deposits |
|
3,157,129 |
|
2,949,719 |
|
2,900,388 |
|
2,778,260 |
|
2,546,540 |
| |||||
|
Interest-bearing deposits |
|
9,107,937 |
|
8,801,306 |
|
8,679,599 |
|
8,778,642 |
|
8,629,482 |
| |||||
|
Total deposits |
|
12,265,066 |
|
11,751,025 |
|
11,579,987 |
|
11,556,902 |
|
11,176,022 |
| |||||
|
Borrowings and subordinated debentures |
|
513,820 |
|
856,664 |
|
647,912 |
|
531,336 |
|
449,865 |
| |||||
|
Interest-bearing liabilities |
|
9,621,757 |
|
9,657,970 |
|
9,327,511 |
|
9,309,978 |
|
9,079,347 |
| |||||
|
Funding sources |
|
12,778,886 |
|
12,607,689 |
|
12,227,899 |
|
12,088,238 |
|
11,625,887 |
| |||||
|
Stockholders’ equity |
|
3,548,748 |
|
3,533,343 |
|
3,500,291 |
|
3,465,119 |
|
3,233,018 |
| |||||
(1) Annualized.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
|
|
|
At or For the Three Months Ended |
| ||||||||
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
|
|
|
2015 |
|
2015 |
|
2014 |
|
2014 |
|
2014 |
|
|
|
|
(Dollars in thousands) |
| ||||||||
|
Non-PCI Credit Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses to loans and leases |
|
0.78 |
% |
0.72 |
% |
0.66 |
% |
0.61 |
% |
0.67 |
% |
|
Allowance for credit losses to nonaccrual loans and leases |
|
71 |
% |
62 |
% |
92 |
% |
78 |
% |
75 |
% |
|
Nonaccrual loans and leases to loans and leases |
|
1.11 |
% |
1.16 |
% |
0.72 |
% |
0.79 |
% |
0.90 |
% |
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.37 |
% |
1.45 |
% |
1.09 |
% |
1.15 |
% |
1.39 |
% |
|
Nonperforming assets to total assets |
|
0.98 |
% |
1.05 |
% |
0.78 |
% |
0.81 |
% |
0.96 |
% |
|
Trailing twelve month net charge-offs to average loans and leases |
|
0.06 |
% |
0.07 |
% |
0.02 |
% |
0.09 |
% |
0.05 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PacWest Bancorp Consolidated Capital Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
|
11.96 |
% |
11.74 |
% |
12.34 |
% |
12.17 |
% |
12.40 |
% |
|
Common equity tier 1 capital ratio |
|
12.87 |
% |
12.27 |
% |
N/A |
|
N/A |
|
N/A |
|
|
Tier 1 risk-based capital ratio |
|
12.87 |
% |
12.27 |
% |
13.16 |
% |
13.24 |
% |
13.15 |
% |
|
Total risk-based capital ratio |
|
16.53 |
% |
15.80 |
% |
16.07 |
% |
16.24 |
% |
16.25 |
% |
|
Tangible common equity ratio (non-GAAP measure) |
|
12.10 |
% |
12.01 |
% |
12.20 |
% |
12.24 |
% |
12.14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Western Bank Capital Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital ratio |
|
11.65 |
% |
11.53 |
% |
11.70 |
% |
11.74 |
% |
11.71 |
% |
|
Common equity tier 1 capital ratio |
|
12.55 |
% |
12.07 |
% |
N/A |
|
N/A |
|
N/A |
|
|
Tier 1 risk-based capital ratio |
|
12.55 |
% |
12.07 |
% |
12.46 |
% |
12.74 |
% |
12.58 |
% |
|
Total risk-based capital ratio |
|
13.35 |
% |
12.80 |
% |
13.16 |
% |
13.44 |
% |
13.32 |
% |
|
Tangible common equity ratio (non-GAAP measure) |
|
11.46 |
% |
11.32 |
% |
11.51 |
% |
11.60 |
% |
11.39 |
% |
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
|
|
|
Three Months Ended |
|
Six Months Ended |
| |||||||||||
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
| |||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Basic Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
85,083 |
|
$ |
73,079 |
|
$ |
11,230 |
|
$ |
158,162 |
|
$ |
37,135 |
|
|
Less: earnings allocated to unvested restricted stock (1) |
|
(807 |
) |
(819 |
) |
(290 |
) |
(1,570 |
) |
(424 |
) | |||||
|
Net earnings from continuing operations allocated to common shares |
|
84,276 |
|
72,260 |
|
10,940 |
|
156,592 |
|
36,711 |
| |||||
|
Net earnings from discontinued operations allocated to common shares |
|
— |
|
— |
|
(675 |
) |
— |
|
(1,500 |
) | |||||
|
Net earnings allocated to common shares |
|
$ |
84,276 |
|
$ |
72,260 |
|
$ |
10,265 |
|
$ |
156,592 |
|
$ |
35,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average basic shares and unvested restricted stock outstanding |
|
103,030 |
|
103,035 |
|
98,817 |
|
103,033 |
|
72,454 |
| |||||
|
Less: weighted-average unvested restricted stock outstanding |
|
(1,060 |
) |
(1,122 |
) |
(678 |
) |
(1,091 |
) |
(911 |
) | |||||
|
Weighted-average basic shares outstanding |
|
101,970 |
|
101,913 |
|
98,139 |
|
101,942 |
|
71,543 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.11 |
|
$ |
1.54 |
|
$ |
0.51 |
|
|
Net earnings from discontinued operations |
|
— |
|
— |
|
(0.01 |
) |
— |
|
(0.02 |
) | |||||
|
Net earnings |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.10 |
|
$ |
1.54 |
|
$ |
0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations allocated to common shares |
|
$ |
84,276 |
|
$ |
72,260 |
|
$ |
10,940 |
|
$ |
156,592 |
|
$ |
36,711 |
|
|
Net earnings from discontinued operations allocated to common shares |
|
— |
|
— |
|
(675 |
) |
— |
|
(1,500 |
) | |||||
|
Net earnings allocated to common shares |
|
$ |
84,276 |
|
$ |
72,260 |
|
$ |
10,265 |
|
$ |
156,592 |
|
$ |
35,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average basic shares outstanding |
|
101,970 |
|
101,913 |
|
98,139 |
|
101,942 |
|
71,543 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.11 |
|
$ |
1.54 |
|
$ |
0.51 |
|
|
Net earnings from discontinued operations |
|
— |
|
— |
|
(0.01 |
) |
— |
|
(0.02 |
) | |||||
|
Net earnings |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.10 |
|
$ |
1.54 |
|
$ |
0.49 |
|
(1) Represents cash dividends paid to holders of unvested stock, net of estimated forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.
GAAP TO NON-GAAP RECONCILIATION
This press release contains certain non-GAAP financial disclosures for adjusted net earnings, adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted return on average tangible equity, tangible common equity amounts and ratios, tangible book value per share, adjusted efficiency ratio, core net interest margin, and operating expense as a percentage of average assets. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance:
· Adjusted net earnings: To calculate adjusted net earnings, we exclude from net earnings primarily income statement items for which the related assets or liabilities have been completely resolved and are no longer on the balance sheet. As analysts and investors view this measure as an indicator of the Company’s ability to generate recurring earnings, we disclose this amount in addition to net earnings.
· Adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted return on average tangible equity, tangible common equity amounts and ratios, and tangible book value per share: Given that the use of these measures is prevalent among banking regulators, investors and analysts, we disclose them in addition to return on average assets, return on average equity, equity-to-assets ratio, and book value per share, respectively.
· Adjusted efficiency ratio: We disclose this measure in addition to efficiency ratio as it shows the trend in recurring overhead-related noninterest expense relative to recurring net revenues.
Please refer to the tables on the following pages for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
|
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||||||
|
Adjusted Net Earnings |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
| ||||||||
|
and Related Ratios |
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net earnings |
|
$ |
85,083 |
|
$ |
73,079 |
|
$ |
10,555 |
|
$ |
158,162 |
|
$ |
35,635 |
| |
|
Less: |
Tax benefit on discontinued operations |
|
— |
|
— |
|
(476 |
) |
— |
|
(1,064 |
) | |||||
|
Add: |
Tax expense on continuing operations |
|
45,287 |
|
46,073 |
|
15,552 |
|
91,360 |
|
30,833 |
| |||||
|
Pre-tax earnings |
|
130,370 |
|
119,152 |
|
25,631 |
|
249,522 |
|
65,404 |
| ||||||
|
Add: |
Acquisition, integration and reorganization costs |
|
900 |
|
2,000 |
|
86,242 |
|
2,900 |
|
88,442 |
| |||||
|
Less: |
FDIC loss sharing expense, net |
|
(5,107 |
) |
(4,399 |
) |
(8,525 |
) |
(9,506 |
) |
(19,955 |
) | |||||
|
|
Gain (loss) on sale of loans and leases |
|
163 |
|
— |
|
(485 |
) |
163 |
|
(379 |
) | |||||
|
|
(Loss) gain on securities |
|
(186 |
) |
3,275 |
|
89 |
|
3,089 |
|
4,841 |
| |||||
|
|
Covered OREO (expense) income, net |
|
12 |
|
19 |
|
185 |
|
31 |
|
1,800 |
| |||||
|
|
Gain on sale of owned office building |
|
— |
|
— |
|
— |
|
— |
|
1,570 |
| |||||
|
Adjusted pre-tax earnings before accelerated discount accretion |
|
136,388 |
|
122,257 |
|
120,609 |
|
258,645 |
|
165,969 |
| ||||||
|
Less: |
Accelerated discount accretion from early payoffs of acquired loans |
|
19,447 |
|
17,352 |
|
15,290 |
|
36,799 |
|
22,945 |
| |||||
|
Adjusted pre-tax earnings |
|
116,941 |
|
104,905 |
|
105,319 |
|
221,846 |
|
143,024 |
| ||||||
|
|
Tax expense (1) |
|
(44,438 |
) |
(39,864 |
) |
(42,865 |
) |
(84,301 |
) |
(58,211 |
) | |||||
|
Adjusted net earnings |
|
$ |
72,503 |
|
$ |
65,041 |
|
$ |
62,454 |
|
$ |
137,545 |
|
$ |
84,813 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Average assets |
|
$ |
16,463,311 |
|
$ |
16,296,640 |
|
$ |
15,037,101 |
|
$ |
16,380,436 |
|
$ |
10,798,982 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Average stockholders’ equity |
|
$ |
3,548,748 |
|
$ |
3,533,343 |
|
$ |
3,233,018 |
|
$ |
3,541,088 |
|
$ |
2,032,830 |
| |
|
Less: |
Average intangible assets |
|
1,743,340 |
|
1,737,441 |
|
1,638,267 |
|
1,740,407 |
|
935,684 |
| |||||
|
Average tangible common equity |
|
$ |
1,805,408 |
|
$ |
1,795,902 |
|
$ |
1,594,751 |
|
$ |
1,800,681 |
|
$ |
1,097,146 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Return on average assets (2) |
|
2.07 |
% |
1.82 |
% |
0.28 |
% |
1.95 |
% |
0.67 |
% | ||||||
|
Adjusted return on average assets (3) |
|
1.77 |
% |
1.62 |
% |
1.67 |
% |
1.69 |
% |
1.58 |
% | ||||||
|
Return on average equity (4) |
|
9.62 |
% |
8.39 |
% |
1.31 |
% |
9.01 |
% |
3.54 |
% | ||||||
|
Adjusted return on average equity (5) |
|
8.19 |
% |
7.47 |
% |
7.75 |
% |
7.83 |
% |
8.41 |
% | ||||||
|
Return on average tangible equity (6) |
|
18.90 |
% |
16.50 |
% |
2.65 |
% |
17.71 |
% |
6.55 |
% | ||||||
|
Adjusted return on average tangible equity (7) |
|
16.11 |
% |
14.69 |
% |
15.71 |
% |
15.40 |
% |
15.59 |
% | ||||||
(1) Full-year expected effective rate of 38.0% used for 2015 periods and actual effective rate of 40.7% used for 2014 periods.
(2) Annualized net earnings divided by average assets.
(3) Annualized adjusted net earnings divided by average assets.
(4) Annualized net earnings divided by average stockholders’ equity.
(5) Annualized adjusted net earnings divided by average stockholders’ equity.
(6) Annualized net earnings divided by average tangible common equity.
(7) Annualized adjusted net earnings divided by average tangible common equity.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
|
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||||||
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
| ||||||||
|
Adjusted Efficiency Ratio |
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Noninterest expense |
|
$ |
85,276 |
|
$ |
84,360 |
|
$ |
169,200 |
|
$ |
169,636 |
|
$ |
219,364 |
| |
|
Less: |
Acquisition, integration, and reorganization costs |
|
900 |
|
2,000 |
|
86,242 |
|
2,900 |
|
88,442 |
| |||||
|
|
Covered OREO expense (income), net |
|
(12 |
) |
(19 |
) |
(185 |
) |
(31 |
) |
(1,800 |
) | |||||
|
Adjusted noninterest expense |
|
$ |
84,388 |
|
$ |
82,379 |
|
$ |
83,143 |
|
$ |
166,767 |
|
$ |
132,722 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net interest income |
|
$ |
202,552 |
|
$ |
199,075 |
|
$ |
192,533 |
|
$ |
401,627 |
|
$ |
278,548 |
| |
|
Noninterest income |
|
19,623 |
|
20,871 |
|
8,479 |
|
40,494 |
|
13,170 |
| ||||||
|
Net revenues |
|
222,175 |
|
219,946 |
|
201,012 |
|
442,121 |
|
291,718 |
| ||||||
|
Less: |
Accelerated discount accretion from early payoffs of acquired loans |
|
19,447 |
|
17,352 |
|
15,290 |
|
36,799 |
|
22,945 |
| |||||
|
|
FDIC loss sharing expense, net |
|
(5,107 |
) |
(4,399 |
) |
(8,525 |
) |
(9,506 |
) |
(19,955 |
) | |||||
|
|
Gain (loss) on sale of loans and leases |
|
163 |
|
— |
|
(485 |
) |
163 |
|
(379 |
) | |||||
|
|
(Loss) gain on securities |
|
(186 |
) |
3,275 |
|
89 |
|
3,089 |
|
4,841 |
| |||||
|
|
Gain on sale of owned office building |
|
— |
|
— |
|
— |
|
— |
|
1,570 |
| |||||
|
Adjusted net revenues |
|
$ |
207,858 |
|
$ |
203,718 |
|
$ |
194,643 |
|
$ |
411,576 |
|
$ |
282,696 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Base efficiency ratio (1) |
|
38.4 |
% |
38.4 |
% |
84.2 |
% |
38.4 |
% |
75.2 |
% | ||||||
|
Adjusted efficiency ratio (2) |
|
40.6 |
% |
40.4 |
% |
42.7 |
% |
40.5 |
% |
46.9 |
% | ||||||
(1) Noninterest expense divided by net revenues.
(2) Adjusted noninterest expense divided by adjusted net revenues.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
| |||||
|
Tangible Common Equity Ratio |
|
2015 |
|
2015 |
|
2014 |
|
2014 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
PacWest Bancorp Consolidated: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Stockholders’ equity |
|
$ |
3,551,490 |
|
$ |
3,533,361 |
|
$ |
3,506,230 |
|
$ |
3,478,051 |
|
$ |
3,437,737 |
|
|
Less: Intangible assets |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,951 |
|
1,745,584 |
| |||||
|
Tangible common equity |
|
$ |
1,808,909 |
|
$ |
1,789,278 |
|
$ |
1,768,547 |
|
$ |
1,737,100 |
|
$ |
1,692,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Total assets |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
$ |
15,938,150 |
|
$ |
15,684,671 |
|
|
Less: Intangible assets |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,951 |
|
1,745,584 |
| |||||
|
Tangible assets |
|
$ |
14,954,439 |
|
$ |
14,899,857 |
|
$ |
14,496,922 |
|
$ |
14,197,199 |
|
$ |
13,939,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equity to assets ratio |
|
21.27 |
% |
21.23 |
% |
21.60 |
% |
21.82 |
% |
21.92 |
% | |||||
|
Tangible common equity ratio (1) |
|
12.10 |
% |
12.01 |
% |
12.20 |
% |
12.24 |
% |
12.14 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Book value per share |
|
$ |
34.46 |
|
$ |
34.29 |
|
$ |
34.03 |
|
$ |
33.76 |
|
$ |
33.37 |
|
|
Tangible book value per share (2) |
|
$ |
17.55 |
|
$ |
17.36 |
|
$ |
17.17 |
|
$ |
16.86 |
|
$ |
16.42 |
|
|
Shares outstanding |
|
103,051,989 |
|
103,044,257 |
|
103,022,017 |
|
103,027,830 |
|
103,033,449 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Pacific Western Bank: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Stockholders’ equity |
|
$ |
3,440,715 |
|
$ |
3,410,276 |
|
$ |
3,378,879 |
|
$ |
3,356,943 |
|
$ |
3,298,713 |
|
|
Less: Intangible assets |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,951 |
|
1,745,584 |
| |||||
|
Tangible common equity |
|
$ |
1,698,134 |
|
$ |
1,666,193 |
|
$ |
1,641,196 |
|
$ |
1,615,992 |
|
$ |
1,553,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Total assets |
|
$ |
16,555,610 |
|
$ |
16,458,591 |
|
$ |
15,995,719 |
|
$ |
15,675,291 |
|
$ |
15,376,245 |
|
|
Less: Intangible assets |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
|
1,740,951 |
|
1,745,584 |
| |||||
|
Tangible assets |
|
$ |
14,813,029 |
|
$ |
14,714,508 |
|
$ |
14,258,036 |
|
$ |
13,934,340 |
|
$ |
13,630,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equity to assets ratio |
|
20.78 |
% |
20.72 |
% |
21.12 |
% |
21.42 |
% |
21.45 |
% | |||||
|
Tangible common equity ratio |
|
11.46 |
% |
11.32 |
% |
11.51 |
% |
11.60 |
% |
11.39 |
% | |||||
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.