Attached files
| file | filename |
|---|---|
| 8-K - 8-K - PACWEST BANCORP | a16-2682_18k.htm |
Exhibit 99.1
|
PRESS RELEASE |
|
|
|
PacWest Bancorp |
|
(NASDAQ: PACW) |
|
Contact: |
Matthew P. Wagner |
Patrick J. Rusnak |
|
|
President and CEO |
Executive Vice President and CFO |
|
Phone: |
310-887-8520 |
714-989-4705 |
|
FOR IMMEDIATE RELEASE |
January 21, 2016 |
PACWEST BANCORP ANNOUNCES RESULTS
FOR THE FOURTH QUARTER AND FULL YEAR 2015
Fourth Quarter 2015 Highlights
· Square 1 Acquisition Closed October 6, 2015
· Net Earnings of $71.8 Million, or $0.60 Per Diluted Share; Adjusted Net Earnings of $83.9 Million, or $0.70 Per Diluted Share
· New Loan and Lease Production of $1.4 Billion for the Quarter
· Core Deposits Increased $3.8 Billion for the Quarter and Represented 67% of Total Deposits
· Core Tax Equivalent Net Interest Margin of 5.10%
Full Year 2015 Highlights
· Net Earnings of $299.6 Million, or $2.79 Per Diluted Share; Adjusted Net Earnings of $287.4 Million, or $2.68 Per Diluted Share
· New Loan and Lease Production of $4.2 Billion for the Year; Organic Growth Rate of 9%
· Core Deposits Increased $4.4 Billion for the Year, Including $3.8 Billion From the Square 1 Acquisition
· Core Tax Equivalent Net Interest Margin of 5.25%
Los Angeles, California . . . PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the fourth quarter of 2015 of $71.8 million, or $0.60 per diluted share, compared to net earnings for the third quarter of 2015 of $69.6 million, or $0.68 per diluted share. Net earnings for the full year 2015 were $299.6 million, or $2.79 per diluted share, compared to net earnings of $168.9 million for the full year 2014, or $1.92 per diluted share. The increase in annual net earnings was due mostly to including the operations of CapitalSource for all of 2015 compared to including its operations in 2014 only from the April 7, 2014 merger date.
When certain income and expense items described below are excluded, adjusted net earnings were $83.9 million, or $0.70 per diluted share, for the fourth quarter of 2015 compared to $65.1 million, or $0.63 per diluted share, for the third quarter of 2015. Adjusted net earnings were $287.4 million, or $2.68 per diluted share, for the full year 2015 compared to $219.7 million, or $2.49 per diluted share, for the full year 2014.
Matt Wagner, President and CEO, commented, “Our strong fourth quarter results capped a year of profitable growth and continued solid operating performance. Our full year 2015 diluted EPS increased 45%, driving our return on assets of 1.70% and return on tangible equity of 15.76%. These exceptional operating results allowed us to distribute more than $215 million of cash dividends to our stockholders in 2015.”
Mr. Wagner continued, “Our entry into the venture capital banking space as a result of the Square 1 acquisition combined with the recent expansion of new commercial construction and multi-family lending groups will help to diversify our loan and lease portfolio along product and geographical lines and contribute toward our targeted upper single-digit portfolio growth. With our strong capital levels and overall sound asset quality metrics we are well positioned for continued success. Our achievements were recently recognized in Forbes magazine’s 2016 List of America’s Best Banks where PacWest was named the second best performing of the 100 largest publicly-traded U.S. banks.”
Patrick Rusnak, Executive Vice President and CFO stated, “Our fourth quarter tax equivalent net interest margin on a core basis of 5.10% reflects proactive steps taken during the third and fourth quarters in connection with the Square 1 acquisition. These actions included a further reduction in time deposits and a restructuring of the acquired investment securities portfolio. Further, Square 1’s core deposits substantially improved our core deposit base driving core deposits as a percentage of total deposits up to 67%, nearly a 20% increase. Our total organic loan and lease portfolio growth for 2015, which excludes merger related and bulk acquisitions, totaled over $800 million, or 7%, driven by growth in cash flow, asset-based and construction lending.”
Mr. Rusnak continued, “Our total oil and gas related credit exposure at year end was $137 million, or less than one percent of total loans and leases, reflecting a reduction of 10% from principal payments received during the fourth quarter. The reserves related to this credit exposure total approximately 8%. We continue to control operating expenses as shown by our efficiency ratio, which declined to 39.3% in the fourth quarter. We are excited about our prospects for 2016 and believe our talented teams will continue to deliver strong results.”
FINANCIAL HIGHLIGHTS
|
|
|
At or For the Three Months Ended |
|
At or For the Year Ended |
| ||||||||||||||
|
|
|
December 31, |
|
September 30, |
|
|
|
December 31, |
|
|
| ||||||||
|
|
|
2015 |
|
2015 |
|
Change |
|
2015 |
|
2014 |
|
Change |
| ||||||
|
|
|
(Dollars in thousands, except per share data) |
| ||||||||||||||||
|
Financial Highlights (1): |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net Earnings |
|
$ |
71,841 |
|
$ |
69,616 |
|
$ |
2,225 |
|
$ |
299,619 |
|
$ |
168,905 |
|
$ |
130,714 |
|
|
Diluted Earnings Per Share |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
(0.08 |
) |
$ |
2.79 |
|
$ |
1.92 |
|
$ |
0.87 |
|
|
Return on Average Assets |
|
1.37 |
% |
1.65 |
% |
(0.28 |
) |
1.70 |
% |
1.27 |
% |
0.43 |
| ||||||
|
Return on Average Tangible Equity (2) |
|
13.14 |
% |
15.09 |
% |
(1.95 |
) |
15.76 |
% |
11.88 |
% |
3.88 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Adjusted Net Earnings (2) |
|
$ |
83,927 |
|
$ |
65,063 |
|
$ |
18,864 |
|
$ |
287,422 |
|
$ |
219,701 |
|
$ |
67,721 |
|
|
Adjusted Diluted Earnings Per Share (2) |
|
$ |
0.70 |
|
$ |
0.63 |
|
$ |
0.07 |
|
$ |
2.68 |
|
$ |
2.49 |
|
$ |
0.19 |
|
|
Adjusted Return on Average Assets (2) |
|
1.60 |
% |
1.55 |
% |
0.05 |
|
1.64 |
% |
1.65 |
% |
(0.01 |
) | ||||||
|
Adjusted Return on Average Tangible Equity (2) |
|
15.35 |
% |
14.10 |
% |
1.25 |
|
15.12 |
% |
15.46 |
% |
(0.34 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net Interest Margin (tax equivalent) |
|
5.22 |
% |
5.46 |
% |
(0.24 |
) |
5.60 |
% |
6.01 |
% |
(0.41 |
) | ||||||
|
Core Net Interest Margin (tax equivalent) (2) |
|
5.10 |
% |
5.19 |
% |
(0.09 |
) |
5.25 |
% |
5.66 |
% |
(0.41 |
) | ||||||
|
Efficiency Ratio |
|
39.3 |
% |
39.6 |
% |
(0.3 |
) |
38.5 |
% |
41.6 |
% |
(3.1 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Total Assets |
|
$ |
21,288,490 |
|
$ |
16,814,105 |
|
$ |
4,474,385 |
|
$ |
21,288,490 |
|
$ |
16,234,605 |
|
$ |
5,053,885 |
|
|
Loans and Leases, Net of Deferred Fees |
|
$ |
14,478,254 |
|
$ |
12,452,205 |
|
$ |
2,026,049 |
|
$ |
14,478,254 |
|
$ |
11,882,432 |
|
$ |
2,595,822 |
|
|
Total Deposits |
|
$ |
15,666,182 |
|
$ |
12,115,763 |
|
$ |
3,550,419 |
|
$ |
15,666,182 |
|
$ |
11,755,128 |
|
$ |
3,911,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Noninterest-Bearing Deposits as Percentage of Total Deposits |
|
39 |
% |
29 |
% |
10 |
|
39 |
% |
25 |
% |
14 |
| ||||||
|
Core Deposits as Percentage of Total Deposits |
|
67 |
% |
56 |
% |
11 |
|
67 |
% |
52 |
% |
15 |
| ||||||
|
Tangible Common Equity Ratio (2) |
|
11.38 |
% |
12.21 |
% |
(0.83 |
) |
11.38 |
% |
12.20 |
% |
(0.82 |
) | ||||||
|
Tangible Book Value Per Share (2) |
|
$ |
17.86 |
|
$ |
17.86 |
|
$ |
— |
|
$ |
17.86 |
|
$ |
17.17 |
|
$ |
0.69 |
|
(1) The operations of Square 1 Financial, Inc. are included from its October 6, 2015, acquisition date.
(2) Non-GAAP measure.
ADJUSTED NET EARNINGS
In evaluating our earnings, certain items are excluded to arrive at adjusted net earnings and adjusted diluted earnings per share, as detailed below:
|
|
|
Three Months Ended |
|
Year Ended |
| ||||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
| ||||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net earnings |
|
$ |
71,841 |
|
$ |
69,616 |
|
$ |
70,999 |
|
$ |
299,619 |
|
$ |
168,905 |
| |
|
Less: |
Tax benefit on discontinued operations |
|
— |
|
— |
|
(47 |
) |
— |
|
(1,114 |
) | |||||
|
Add: |
Tax expense on continuing operations |
|
49,380 |
|
39,777 |
|
43,261 |
|
180,517 |
|
117,005 |
| |||||
|
Pre-tax earnings |
|
121,221 |
|
109,393 |
|
114,213 |
|
480,136 |
|
284,796 |
| ||||||
|
Add: |
Acquisition, integration, and reorganization costs |
|
17,600 |
|
747 |
|
7,381 |
|
21,247 |
|
101,016 |
| |||||
|
Less: |
FDIC loss sharing expense, net |
|
(4,291 |
) |
(4,449 |
) |
(4,360 |
) |
(18,246 |
) |
(31,730 |
) | |||||
|
|
Gain on sale of loans and leases |
|
183 |
|
27 |
|
7 |
|
373 |
|
601 |
| |||||
|
|
Gain on securities |
|
— |
|
655 |
|
— |
|
3,744 |
|
4,841 |
| |||||
|
|
Covered OREO income (expense), net |
|
2,920 |
|
(20 |
) |
(176 |
) |
2,931 |
|
1,172 |
| |||||
|
|
Gain on sale of owned office building |
|
— |
|
— |
|
— |
|
— |
|
1,570 |
| |||||
|
Adjusted pre-tax earnings before accelerated discount accretion |
|
140,009 |
|
113,927 |
|
126,123 |
|
512,581 |
|
409,358 |
| ||||||
|
Less: |
Accelerated discount accretion from early payoffs of acquired loans |
|
5,511 |
|
9,659 |
|
11,421 |
|
51,969 |
|
38,867 |
| |||||
|
Adjusted pre-tax earnings |
|
134,498 |
|
104,268 |
|
114,702 |
|
460,612 |
|
370,491 |
| ||||||
|
|
Tax expense (1) |
|
(50,571 |
) |
(39,205 |
) |
(46,684 |
) |
(173,190 |
) |
(150,790 |
) | |||||
|
Adjusted net earnings |
|
$ |
83,927 |
|
$ |
65,063 |
|
$ |
68,018 |
|
$ |
287,422 |
|
$ |
219,701 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Adjusted diluted earnings per share |
|
$ |
0.70 |
|
$ |
0.63 |
|
$ |
0.66 |
|
$ |
2.68 |
|
$ |
2.49 |
| |
|
Adjusted return on average assets |
|
1.60 |
% |
1.55 |
% |
1.70 |
% |
1.64 |
% |
1.65 |
% | ||||||
(1) Full-year actual effective tax rates of 37.6% used for 2015 periods and 40.7% used for 2014 periods.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income increased by $36.7 million to $229.2 million for the fourth quarter of 2015 compared to $192.5 million for the third quarter of 2015 due to higher average investment and loan balances offset by lower discount accretion on acquired loans. The loan and lease yield for the fourth quarter of 2015 was 6.21% compared to 6.34% for the third quarter of 2015. The decrease in the loan and lease yield was due to lower discount accretion on acquired loans and the yield on new originations being lower than the current portfolio yield. Total discount accretion on acquired loans was $16.1 million in the fourth quarter of 2015 (46 basis points on the loan and lease yield) compared to $17.1 million in the third quarter of 2015 (57 basis points on the loan and lease yield). The decrease in discount accretion was due primarily to lower accelerated accretion from early payoffs.
The tax equivalent net interest margin (“NIM”) for the fourth quarter of 2015 was 5.22% compared to 5.46% for the third quarter of 2015. The decrease in the NIM was due to lower discount accretion on acquired loans and a higher percentage of average lower-yielding assets in the mix. Discount accretion on acquired loans contributed 36 basis points to the NIM in the fourth quarter of 2015 and 48 basis points in the third quarter of 2015.
The cost of total deposits decreased to 0.24% in the fourth quarter from 0.33% in the third quarter due to the increased balance of noninterest-bearing deposits and a lower level of higher-cost time deposits.
Net interest margin information is presented in the following table for the periods indicated:
|
|
|
Three Months Ended |
| ||||
|
|
|
December 31, |
|
September 30, |
| ||
|
|
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
Average Assets: |
|
|
|
|
| ||
|
Loans and leases |
|
$ |
14,031,102 |
|
$ |
12,112,881 |
|
|
Investment securities |
|
3,492,124 |
|
1,806,628 |
| ||
|
Deposits in financial institutions |
|
254,308 |
|
278,973 |
| ||
|
Interest-earning assets |
|
17,777,534 |
|
14,198,482 |
| ||
|
Other assets |
|
3,047,714 |
|
2,491,695 |
| ||
|
Total assets |
|
$ |
20,825,248 |
|
$ |
16,690,177 |
|
|
|
|
|
|
|
| ||
|
Average Liabilities and Stockholders’ Equity: |
|
|
|
|
| ||
|
Interest-bearing deposits |
|
$ |
9,633,393 |
|
$ |
8,993,681 |
|
|
Borrowings |
|
206,236 |
|
70,171 |
| ||
|
Subordinated debentures |
|
435,293 |
|
434,420 |
| ||
|
Interest-bearing liabilities |
|
10,274,922 |
|
9,498,272 |
| ||
|
Noninterest-bearing demand deposits |
|
6,043,900 |
|
3,486,780 |
| ||
|
Other liabilities |
|
160,264 |
|
132,360 |
| ||
|
Total liabilities |
|
16,479,086 |
|
13,117,412 |
| ||
|
Stockholders’ equity |
|
4,346,162 |
|
3,572,765 |
| ||
|
Liabilities and stockholders’ equity |
|
$ |
20,825,248 |
|
$ |
16,690,177 |
|
|
|
|
|
|
|
| ||
|
Time deposits |
|
$ |
4,439,940 |
|
$ |
5,042,768 |
|
|
Total deposits |
|
$ |
15,677,293 |
|
$ |
12,480,461 |
|
|
Funding sources |
|
$ |
16,318,822 |
|
$ |
12,985,052 |
|
|
|
|
|
|
|
| ||
|
Yields on Average Assets: |
|
|
|
|
| ||
|
Loans and leases |
|
6.21 |
% |
6.34 |
% | ||
|
Investment securities (1) |
|
3.23 |
% |
3.67 |
% | ||
|
Interest-earning assets (1) |
|
5.54 |
% |
5.88 |
% | ||
|
|
|
|
|
|
| ||
|
Costs of Average Liabilities: |
|
|
|
|
| ||
|
Total deposits |
|
0.24 |
% |
0.33 |
% | ||
|
Time deposits |
|
0.63 |
% |
0.66 |
% | ||
|
Interest-bearing deposits |
|
0.39 |
% |
0.46 |
% | ||
|
Borrowings |
|
0.31 |
% |
0.41 |
% | ||
|
Subordinated debentures |
|
4.33 |
% |
4.27 |
% | ||
|
Interest-bearing liabilities |
|
0.55 |
% |
0.63 |
% | ||
|
Funding sources |
|
0.35 |
% |
0.46 |
% | ||
|
|
|
|
|
|
| ||
|
Net interest rate spread (1) |
|
4.99 |
% |
5.25 |
% | ||
|
Net interest margin (1) |
|
5.22 |
% |
5.46 |
% | ||
(1) Tax equivalent
The tax equivalent NIM and loan and lease yield are impacted by volatility in accelerated accretion of acquisition discounts due to the prepayment of acquired loans and leases. The effects of this item are shown in the following table for the periods indicated:
|
|
|
Three Months Ended |
|
Three Months Ended |
| |||||
|
|
|
December 31, 2015 |
|
September 30, 2015 |
| |||||
|
|
|
|
|
Loan and |
|
|
|
Loan and |
| |
|
|
|
NIM |
|
Lease Yield |
|
NIM |
|
Lease Yield |
| |
|
Reported |
|
5.22 |
% |
6.21 |
% |
5.46 |
% |
6.34 |
% | |
|
Less: |
Accelerated accretion of acquisition discounts from early payoffs of acquired loans |
|
(0.12 |
)% |
(0.16 |
)% |
(0.27 |
)% |
(0.32 |
)% |
|
Core |
|
5.10 |
% |
6.05 |
% |
5.19 |
% |
6.02 |
% | |
The impact on the tax equivalent net interest income and NIM from all purchase accounting items is set forth in the table below for the periods indicated:
|
|
|
Three Months Ended |
|
Three Months Ended |
| |||||||
|
|
|
December 31, 2015 |
|
September 30, 2015 |
| |||||||
|
|
|
|
|
Impact on |
|
|
|
Impact on |
| |||
|
|
|
Amount |
|
NIM |
|
Amount |
|
NIM |
| |||
|
|
|
(Dollars in thousands) |
| |||||||||
|
|
|
|
|
|
|
|
|
|
| |||
|
Net interest income/NIM |
|
$ |
233,959 |
|
5.22 |
% |
$ |
195,274 |
|
5.46 |
% | |
|
Less: |
Accelerated accretion of acquisition discounts from early payoffs of acquired loans |
|
(5,511 |
) |
(0.12 |
)% |
(9,659 |
) |
(0.27 |
)% | ||
|
|
Remaining accretion of Non-PCI loan acquisition discounts |
|
(10,553 |
) |
(0.24 |
)% |
(7,485 |
) |
(0.21 |
)% | ||
|
|
Total accretion of loan acquisition discounts |
|
(16,064 |
) |
(0.36 |
)% |
(17,144 |
) |
(0.48 |
)% | ||
|
|
Amortization of TruPS discount |
|
1,397 |
|
0.03 |
% |
1,399 |
|
0.04 |
% | ||
|
|
Accretion of time deposits premium |
|
(384 |
) |
(0.01 |
)% |
(576 |
) |
(0.02 |
)% | ||
|
|
|
(15,051 |
) |
(0.34 |
)% |
(16,321 |
) |
(0.46 |
)% | |||
|
Net interest income/NIM - excluding purchase accounting |
|
$ |
218,908 |
|
4.88 |
% |
$ |
178,953 |
|
5.00 |
% | |
Noninterest Income
Noninterest income increased by $12.3 million to $28.1 million for the fourth quarter of 2015 compared to $15.8 million for the third quarter of 2015 due mostly to higher other commissions and fees of $6.3 million, higher leased equipment income of $2.3 million, higher other income of $2.7 million and higher service charges on deposit accounts of $1.3 million. The increase in other commissions and fees was comprised of $3.3 million from loan prepayment fees, $1.7 million from foreign exchange fees and $0.7 million from credit card fee income. The last two items are new revenue streams acquired in the Square 1 acquisition. Leased equipment income increased due to higher average balances and other income increased due to gains from early lease terminations, dividends received on other investments, a miscellaneous recovery and warrant gains. We acquired a portfolio of equity warrants in the Square 1 acquisition, and we continue to receive warrants in connection with extending loan commitments to certain of our customers. Warrants potentially provide gains in the case of a future customer liquidity event. The increase in deposit service charges was due to the acquired Square 1 deposits.
The following table presents details of noninterest income for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
December 31, |
|
September 30, |
|
Increase |
| |||
|
Noninterest Income |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
|
|
(In thousands) |
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Service charges on deposit accounts |
|
$ |
3,901 |
|
$ |
2,601 |
|
$ |
1,300 |
|
|
Other commissions and fees |
|
12,691 |
|
6,376 |
|
6,315 |
| |||
|
Leased equipment income |
|
7,791 |
|
5,475 |
|
2,316 |
| |||
|
Gain on sale of loans and leases |
|
183 |
|
27 |
|
156 |
| |||
|
Gain on securities |
|
— |
|
655 |
|
(655 |
) | |||
|
FDIC loss sharing expense, net |
|
(4,291 |
) |
(4,449 |
) |
158 |
| |||
|
Other income: |
|
|
|
|
|
|
| |||
|
Dividends and realized gains on equity investments |
|
4,886 |
|
4,357 |
|
529 |
| |||
|
Foreign currency translation net losses |
|
(661 |
) |
(373 |
) |
(288 |
) | |||
|
Income recognized on early repayment of leases |
|
802 |
|
12 |
|
790 |
| |||
|
Other |
|
2,756 |
|
1,077 |
|
1,679 |
| |||
|
Total noninterest income |
|
$ |
28,058 |
|
$ |
15,758 |
|
$ |
12,300 |
|
Noninterest Expense
Noninterest expense increased by $32.1 million to $122.3 million for the fourth quarter of 2015 compared to $90.1 million for the third quarter of 2015. The increase was due mostly to higher acquisition, integration and reorganization costs of $16.9 million related to the Square 1 acquisition and integration. All operating expense categories were higher quarter over quarter due mostly to the Square 1 acquisition. Foreclosed assets expense is lower by $7.7 million due to gains of $3.0 million on foreclosed asset sales in the fourth quarter, while the third quarter included a write-down of $4.6 million on an existing foreclosed property.
The following table presents details of noninterest expense for the periods indicated:
|
|
|
Three Months Ended |
| |||||||
|
|
|
December 31, |
|
September 30, |
|
Increase |
| |||
|
Noninterest Expense |
|
2015 |
|
2015 |
|
(Decrease) |
| |||
|
|
|
|
|
(In thousands) |
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Compensation |
|
$ |
58,992 |
|
$ |
48,152 |
|
$ |
10,840 |
|
|
Occupancy |
|
12,194 |
|
10,762 |
|
1,432 |
| |||
|
Data processing |
|
5,585 |
|
4,322 |
|
1,263 |
| |||
|
Other professional services |
|
3,811 |
|
3,396 |
|
415 |
| |||
|
Insurance and assessments |
|
5,450 |
|
3,805 |
|
1,645 |
| |||
|
Intangible asset amortization |
|
4,910 |
|
1,497 |
|
3,413 |
| |||
|
Leased equipment depreciation |
|
4,235 |
|
3,162 |
|
1,073 |
| |||
|
Foreclosed assets (income) expense, net |
|
(3,185 |
) |
4,521 |
|
(7,706 |
) | |||
|
Acquisition, integration and reorganization costs |
|
17,600 |
|
747 |
|
16,853 |
| |||
|
Other expense: |
|
|
|
|
|
|
| |||
|
Loan expense |
|
2,745 |
|
1,494 |
|
1,251 |
| |||
|
Other |
|
9,927 |
|
8,281 |
|
1,646 |
| |||
|
Total noninterest expense |
|
$ |
122,264 |
|
$ |
90,139 |
|
$ |
32,125 |
|
Income Taxes
Our overall effective income tax rate was 40.7% for the fourth quarter of 2015 and 36.4% for the third quarter of 2015. The effective tax rate for the full year 2015 was 37.6%.
BALANCE SHEET HIGHLIGHTS
Loans and Leases
Total loans and leases increased $2.0 billion in the fourth quarter to $14.5 billion at December 31, 2015. The net increase was driven by the acquisition of Square 1 loans of $1.6 billion and fourth quarter originations and purchases of $1.4 billion, offset partially by principal repayments of $910.4 million. For the year ended December 31, 2015, total loans and leases increased $2.6 billion, or approximately 22%. Fourth quarter new production included $96 million of purchased multi-family loans and the third quarter included $132 million of purchased multi-family and student loans.
The following table presents a roll forward of the loan and lease portfolio for the periods indicated:
|
|
|
Three Months Ended |
|
Year Ended |
| |||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
| |||
|
Loan and Lease Roll Forward (1) |
|
2015 |
|
2015 |
|
2015 |
| |||
|
|
|
|
|
(In thousands) |
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Beginning balance |
|
$ |
12,452,205 |
|
$ |
12,034,189 |
|
$ |
11,882,432 |
|
|
New production |
|
1,403,611 |
|
1,070,986 |
|
4,171,172 |
| |||
|
Existing loans and leases: |
|
|
|
|
|
|
| |||
|
Principal repayments, net (2) |
|
(910,445 |
) |
(630,292 |
) |
(3,067,733 |
) | |||
|
Loan and lease sales |
|
(19,610 |
) |
(6,864 |
) |
(30,095 |
) | |||
|
Transfers to foreclosed assets |
|
— |
|
(10,383 |
) |
(13,471 |
) | |||
|
Charge-offs |
|
(1,227 |
) |
(5,431 |
) |
(17,771 |
) | |||
|
Loans acquired through Square 1 acquisition |
|
1,553,720 |
|
— |
|
1,553,720 |
| |||
|
Ending balance |
|
$ |
14,478,254 |
|
$ |
12,452,205 |
|
$ |
14,478,254 |
|
|
|
|
|
|
|
|
|
| |||
|
Weighted average yields on new production |
|
5.29 |
% |
5.16 |
% |
5.47 |
% | |||
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) Includes principal repayments on existing loans, changes in revolving lines of credit (repayments and draws), loan participation sales and other changes within the loan portfolio.
The following table presents the composition of our loan and lease portfolio as of the dates indicated:
|
|
|
December 31, |
|
September 30, |
|
December 31, |
| |||
|
Loan and Lease Portfolio |
|
2015 |
|
2015 |
|
2014 |
| |||
|
|
|
|
|
(In thousands) |
|
|
| |||
|
Real estate mortgage: |
|
|
|
|
|
|
| |||
|
Commercial |
|
$ |
4,642,088 |
|
$ |
4,512,489 |
|
$ |
4,583,350 |
|
|
Residential |
|
1,211,209 |
|
1,177,302 |
|
1,010,022 |
| |||
|
Total real estate mortgage |
|
5,853,297 |
|
5,689,791 |
|
5,593,372 |
| |||
|
Real estate construction and land: |
|
|
|
|
|
|
| |||
|
Commercial |
|
349,436 |
|
229,904 |
|
220,927 |
| |||
|
Residential |
|
184,382 |
|
145,262 |
|
96,749 |
| |||
|
Total real estate construction and land |
|
533,818 |
|
375,166 |
|
317,676 |
| |||
|
Total real estate loans |
|
6,387,115 |
|
6,064,957 |
|
5,911,048 |
| |||
|
Commercial: |
|
|
|
|
|
|
| |||
|
Cash flow |
|
3,073,965 |
|
2,980,650 |
|
2,665,654 |
| |||
|
Asset-based |
|
2,547,665 |
|
2,381,706 |
|
2,234,474 |
| |||
|
Equipment finance |
|
890,349 |
|
894,777 |
|
969,489 |
| |||
|
Venture capital |
|
1,458,013 |
|
— |
|
— |
| |||
|
Total commercial |
|
7,969,992 |
|
6,257,133 |
|
5,869,617 |
| |||
|
Consumer |
|
121,147 |
|
130,115 |
|
101,767 |
| |||
|
Total loans and leases, net of deferred fees |
|
$ |
14,478,254 |
|
$ |
12,452,205 |
|
$ |
11,882,432 |
|
|
|
|
|
|
|
|
|
| |||
|
Total unfunded loan commitments |
|
$ |
3,580,655 |
|
$ |
2,022,046 |
|
$ |
1,921,067 |
|
Production from our recently expanded construction lending team is ramping up resulting in the growth in construction loans in the fourth quarter from the combination of new loans originated and disbursements on previously booked loans. Venture capital loans and unfunded loan commitments showed large increases in the fourth quarter due to the acquired balances from Square 1.
Credit Exposure Affected by Low Oil Prices
At December 31, 2015, PacWest had 24 outstanding loan and lease relationships totaling $137.3 million to borrowers involved in the oil and gas services industry, down from $152.3 million at September 30, 2015. The collateral for these loans and leases primarily includes equipment, such as drilling equipment and transportation vehicles. At December 31, 2015, three relationships totaling $47.1 million were on nonaccrual status and were classified, down from $47.9 million at September 30, 2015. The largest of these relationships had an aggregate outstanding balance of $40.1 million at December 31, 2015. These nonaccrual loans had specific valuation allowances of $6.3 million at December 31, 2015 reflecting a $4.9 million increase during the fourth quarter of 2015. The total reserves related to our oil and gas services industry exposure was approximately 8% at year end.
Deposits and Client Investment Funds
The following table presents the composition of our deposit portfolio as of the dates indicated:
|
|
|
December 31, |
|
September 30, |
|
December 31, |
| |||
|
Deposit Category |
|
2015 |
|
2015 |
|
2014 |
| |||
|
|
|
(Dollars in thousands) |
| |||||||
|
|
|
|
|
|
|
|
| |||
|
Noninterest-bearing demand deposits |
|
$ |
6,171,455 |
|
$ |
3,508,682 |
|
$ |
2,931,352 |
|
|
Interest checking deposits |
|
874,349 |
|
693,632 |
|
732,196 |
| |||
|
Money market deposits |
|
2,782,974 |
|
1,860,983 |
|
1,709,068 |
| |||
|
Savings deposits |
|
742,795 |
|
751,955 |
|
762,961 |
| |||
|
Total core deposits |
|
10,571,573 |
|
6,815,252 |
|
6,135,577 |
| |||
|
Brokered non-maturity deposits |
|
942,253 |
|
713,215 |
|
120,613 |
| |||
|
Total non-maturity deposits |
|
11,513,826 |
|
7,528,467 |
|
6,256,190 |
| |||
|
Time deposits under $100,000 |
|
1,656,227 |
|
1,951,938 |
|
2,467,338 |
| |||
|
Time deposits of $100,000 and over |
|
2,496,129 |
|
2,635,358 |
|
3,031,600 |
| |||
|
Total time deposits |
|
4,152,356 |
|
4,587,296 |
|
5,498,938 |
| |||
|
Total deposits |
|
$ |
15,666,182 |
|
$ |
12,115,763 |
|
$ |
11,755,128 |
|
|
|
|
|
|
|
|
|
| |||
|
Noninterest-bearing demand deposits as percentage of total deposits |
|
39 |
% |
29 |
% |
25 |
% | |||
|
Core deposits as percentage of total deposits |
|
67 |
% |
56 |
% |
52 |
% | |||
At December 31, 2015, core deposits totaled $10.6 billion, or 67% of total deposits, including $6.2 billion of noninterest-bearing demand deposits, or 39% of total deposits. Core deposits obtained in the Square 1 acquisition totaled $3.8 billion.
The following table summarizes the maturities of our time deposits as of the date indicated:
|
|
|
December 31, 2015 |
| |||||||||||
|
|
|
Time Deposits |
|
Time Deposits |
|
Total |
|
|
|
Estimated |
| |||
|
|
|
Under |
|
$100,000 |
|
Time |
|
Contractual |
|
Effective |
| |||
|
Time Deposit Maturities |
|
$100,000 |
|
or More |
|
Deposits |
|
Rate |
|
Rate |
| |||
|
|
|
(Dollars in thousands) |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
Due in three months or less |
|
$ |
589,234 |
|
$ |
784,141 |
|
$ |
1,373,375 |
|
0.60 |
% |
0.58 |
% |
|
Due in over three months through six months |
|
453,763 |
|
821,581 |
|
1,275,344 |
|
0.73 |
% |
0.72 |
% | |||
|
Due in over six months through twelve months |
|
500,658 |
|
763,141 |
|
1,263,799 |
|
0.64 |
% |
0.62 |
% | |||
|
Due in over 12 months through 24 months |
|
82,459 |
|
100,050 |
|
182,509 |
|
0.63 |
% |
0.51 |
% | |||
|
Due in over 24 months |
|
30,113 |
|
27,216 |
|
57,329 |
|
1.03 |
% |
0.84 |
% | |||
|
Total |
|
$ |
1,656,227 |
|
$ |
2,496,129 |
|
$ |
4,152,356 |
|
0.66 |
% |
0.64 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
At September 30, 2015 |
|
$ |
1,951,938 |
|
$ |
2,635,358 |
|
$ |
4,587,296 |
|
0.67 |
% |
0.65 |
% |
In addition to deposit products, we also offer alternative non-depository cash investment options for select clients, including investments managed by Square 1 Asset Management, Inc. (“S1AM”) our registered investment advisor subsidiary, and third-party sweep products. Total client investment funds at December 31, 2015 were $2.0 billion, of which $1.6 billion was managed by S1AM. In conjunction with the integration of Square 1 Bank, approximately $300 million of assets managed by S1AM were transferred into on-balance sheet deposit products during the fourth quarter of 2015.
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
A provision for credit losses of $13.8 million was recorded in the fourth quarter of 2015 compared to $8.7 million in the third quarter of 2015. The fourth quarter provision was comprised of a $15.1 million provision for Non-PCI loans and leases and a negative provision of $1.3 million for PCI loans. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio increased to 0.85% at December 31, 2015 from 0.82% at September 30, 2015. The increase in the reserve for unfunded commitments was due to higher levels of expected unfunded commitments utilization and a higher level of unfunded commitments, excluding any gained in the Square 1 acquisition. The negative provision for PCI loans resulted from increases in actual and expected cash flows, mostly due to payoffs.
The following tables show roll forwards of the allowance for credit losses for the periods indicated:
|
|
|
Three Months Ended December 31, 2015 |
| |||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
|
|
|
| |||||
|
Allowance for Credit |
|
Loans and |
|
Unfunded |
|
Total |
|
PCI |
|
|
| |||||
|
Losses Rollforward |
|
Leases |
|
Commitments |
|
Non-PCI |
|
Loans |
|
Total |
| |||||
|
|
|
(In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Beginning balance |
|
$ |
92,316 |
|
$ |
8,374 |
|
$ |
100,690 |
|
$ |
10,955 |
|
$ |
111,645 |
|
|
Fair value of acquired reserve for unfunded commitments |
|
— |
|
4,746 |
|
4,746 |
|
— |
|
4,746 |
| |||||
|
Charge-offs |
|
(1,153 |
) |
— |
|
(1,153 |
) |
(74 |
) |
(1,227 |
) | |||||
|
Recoveries |
|
2,871 |
|
— |
|
2,871 |
|
38 |
|
2,909 |
| |||||
|
Net recoveries |
|
1,718 |
|
— |
|
1,718 |
|
(36 |
) |
1,682 |
| |||||
|
Provision (negative provision) |
|
11,500 |
|
3,614 |
|
15,114 |
|
(1,342 |
) |
13,772 |
| |||||
|
Ending balance |
|
$ |
105,534 |
|
$ |
16,734 |
|
$ |
122,268 |
|
$ |
9,577 |
|
$ |
131,845 |
|
|
|
|
Three Months Ended September 30, 2015 |
| |||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
|
|
|
| |||||
|
Allowance for Credit |
|
Loans and |
|
Unfunded |
|
Total |
|
PCI |
|
|
| |||||
|
Losses Rollforward |
|
Leases |
|
Commitments |
|
Non-PCI |
|
Loans |
|
Total |
| |||||
|
|
|
(In thousands) |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Beginning balance |
|
$ |
85,047 |
|
$ |
7,874 |
|
$ |
92,921 |
|
$ |
14,328 |
|
$ |
107,249 |
|
|
Charge-offs |
|
(4,312 |
) |
— |
|
(4,312 |
) |
(1,119 |
) |
(5,431 |
) | |||||
|
Recoveries |
|
1,081 |
|
— |
|
1,081 |
|
— |
|
1,081 |
| |||||
|
Net charge-offs |
|
(3,231 |
) |
— |
|
(3,231 |
) |
(1,119 |
) |
(4,350 |
) | |||||
|
Provision (negative provision) |
|
10,500 |
|
500 |
|
11,000 |
|
(2,254 |
) |
8,746 |
| |||||
|
Ending balance |
|
$ |
92,316 |
|
$ |
8,374 |
|
$ |
100,690 |
|
$ |
10,955 |
|
$ |
111,645 |
|
All acquired loans are recorded initially at their estimated fair value including an estimate of credit losses. The table below presents two alternative views of credit risk coverage ratios for Non-PCI loans reflecting adjustments for acquired loans and associated purchase accounting discounts:
|
|
|
December 31, 2015 |
|
September 30, 2015 |
| ||||||||||||
|
|
|
Non-PCI |
|
|
|
|
|
Non-PCI |
|
|
|
|
| ||||
|
|
|
Loans and |
|
Allowance/ |
|
Coverage |
|
Loans and |
|
Allowance/ |
|
Coverage |
| ||||
|
Credit Risk Coverage Ratios |
|
Leases |
|
Discount |
|
Ratio |
|
Leases |
|
Discount |
|
Ratio |
| ||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Ending balance |
|
$ |
14,339,070 |
|
$ |
122,268 |
|
0.85 |
% |
$ |
12,300,057 |
|
$ |
100,690 |
|
0.82 |
% |
|
Acquired loans |
|
(6,030,921 |
) |
(19,127 |
)(1) |
|
|
(5,180,808 |
) |
(12,173 |
)(1) |
|
| ||||
|
Adjusted balance |
|
$ |
8,308,149 |
|
$ |
103,141 |
|
1.24 |
% |
$ |
7,119,249 |
|
$ |
88,517 |
|
1.24 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Ending balance |
|
$ |
14,339,070 |
|
$ |
122,268 |
|
0.85 |
% |
$ |
12,300,057 |
|
$ |
100,690 |
|
0.82 |
% |
|
Unamortized net discount |
|
92,192 |
|
92,192 |
(2) |
|
|
88,690 |
|
88,690 |
(2) |
|
| ||||
|
Adjusted balance |
|
$ |
14,431,262 |
|
$ |
214,460 |
|
1.49 |
% |
$ |
12,388,747 |
|
$ |
189,380 |
|
1.53 |
% |
(1) Allowance attributed to $6.0 billion and $5.2 billion of acquired Non-PCI loans at December 31, 2015 and September 30, 2015, based on the allowance calculation that includes an amount for credit deterioration on acquired loans and leases since their acquisition dates.
(2) Unamortized net discount relates to $6.0 billion and $5.2 billion of acquired Non-PCI loans at December 31, 2015 and September 30, 2015, and is assigned specifically to those loans only. Such discount represents the acquisition date fair value adjustment based on market, liquidity, interest rate risk and credit risk and is being accreted to interest income over the remaining life of the respective loans using the interest method. Use of the interest method results in steadily declining amounts being taken into income in each reporting period. The remaining discount of $92.2 million at December 31, 2015, is expected to be substantially accreted to income by the end of 2018.
Non-PCI loans and leases at December 31, 2015 included $8.3 billion of originated loans and leases that were not obtained through acquisitions. The related allowance for loan and lease losses totaled $90.5 million, or 1.09% of the outstanding balance.
CREDIT QUALITY
The following table presents Non-PCI loan and lease credit quality metrics as of the dates indicated:
|
|
|
December 31, |
|
September 30, |
| ||
|
Non-PCI Credit Quality Metrics |
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Allowance for credit losses |
|
$ |
122,268 |
|
$ |
100,690 |
|
|
Nonaccrual loans and leases (1) |
|
129,019 |
|
107,190 |
| ||
|
Classified loans and leases |
|
391,754 |
|
328,038 |
| ||
|
Performing restructured loans |
|
40,182 |
|
39,956 |
| ||
|
Net charge-offs (recoveries) (for the quarter) |
|
(1,718 |
) |
3,231 |
| ||
|
Provision for credit losses (for the quarter) |
|
15,114 |
|
11,000 |
| ||
|
Allowance for credit losses to loans and leases |
|
0.85 |
% |
0.82 |
% | ||
|
Allowance for credit losses to nonaccrual loans and leases (1) |
|
94.8 |
% |
93.9 |
% | ||
|
Nonaccrual loans and leases to loans and leases |
|
0.90 |
% |
0.87 |
% | ||
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.06 |
% |
1.14 |
% | ||
|
Classified loans and leases to loans and leases |
|
2.73 |
% |
2.67 |
% | ||
(1) The December 31, 2015 and September 30, 2015 amounts include $85.2 million and $54.9 million of acquired loans and leases with no allowance due to the effects of fair value accounting.
The following table presents Non-PCI nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated:
|
|
|
Nonaccrual Loans and Leases |
|
Accruing and |
| ||||||||||||
|
|
|
December 31, 2015 |
|
September 30, 2015 |
|
30-89 Days Past Due |
| ||||||||||
|
|
|
|
|
% of |
|
|
|
% of |
|
December 31, |
|
September 30, |
| ||||
|
|
|
|
|
Loan |
|
|
|
Loan |
|
2015 |
|
2015 |
| ||||
|
|
|
Amount |
|
Category |
|
Amount |
|
Category |
|
Amount |
|
Amount |
| ||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
Real estate mortgage: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Commercial |
|
$ |
52,363 |
|
1.2 |
% |
$ |
25,899 |
|
0.6 |
% |
$ |
1,498 |
|
$ |
1,191 |
|
|
Residential |
|
4,914 |
|
0.4 |
% |
5,922 |
|
0.5 |
% |
3,174 |
|
1,911 |
| ||||
|
Total real estate mortgage |
|
57,277 |
|
1.0 |
% |
31,821 |
|
0.6 |
% |
4,672 |
|
3,102 |
| ||||
|
Real estate construction and land: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Commercial |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
| ||||
|
Residential |
|
372 |
|
0.2 |
% |
374 |
|
0.3 |
% |
— |
|
— |
| ||||
|
Total real estate construction and land |
|
372 |
|
0.1 |
% |
374 |
|
0.1 |
% |
— |
|
— |
| ||||
|
Commercial: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cash flow |
|
15,800 |
|
0.5 |
% |
15,602 |
|
0.5 |
% |
1,118 |
|
11 |
| ||||
|
Asset-based |
|
2,505 |
|
0.1 |
% |
2,861 |
|
0.1 |
% |
1 |
|
82 |
| ||||
|
Equipment finance (1) |
|
51,410 |
|
5.8 |
% |
53,153 |
|
5.9 |
% |
360 |
|
— |
| ||||
|
Venture capital |
|
124 |
|
— |
|
— |
|
— |
|
250 |
|
— |
| ||||
|
Total commercial |
|
69,839 |
|
0.9 |
% |
71,616 |
|
1.1 |
% |
1,729 |
|
93 |
| ||||
|
Consumer |
|
1,531 |
|
1.3 |
% |
3,379 |
|
2.6 |
% |
628 |
|
88 |
| ||||
|
Total Non-PCI loans and leases |
|
$ |
129,019 |
|
0.9 |
% |
$ |
107,190 |
|
0.9 |
% |
$ |
7,029 |
|
$ |
3,283 |
|
(1) Includes nonaccrual leases and loans to companies involved in the oil and gas industries of $47.1 million and $47.9 million at December 31, 2015 and September 30, 2015, respectively.
The following table presents nonperforming assets as of the dates indicated:
|
|
|
December 31, |
|
September 30, |
| ||
|
Nonperforming Assets |
|
2015 |
|
2015 |
| ||
|
|
|
(Dollars in thousands) |
| ||||
|
|
|
|
|
|
| ||
|
Nonaccrual Non-PCI loans and leases |
|
$ |
129,019 |
|
$ |
107,190 |
|
|
Nonaccrual PCI Loans (1) |
|
4,596 |
|
4,823 |
| ||
|
Total nonaccrual loans and leases |
|
133,615 |
|
112,013 |
| ||
|
Non-PCI accruing loan contractually past due 90 days or more |
|
700 |
|
— |
| ||
|
Foreclosed assets, net |
|
22,120 |
|
33,216 |
| ||
|
Total nonperforming assets |
|
$ |
156,435 |
|
$ |
145,229 |
|
|
|
|
|
|
|
| ||
|
Nonaccrual loans and leases to loans and leases |
|
0.92 |
% |
0.90 |
% | ||
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.08 |
% |
1.16 |
% | ||
(1) Represents legacy CapitalSource borrowing relationships placed on nonaccrual status as of the acquisition date.
SQUARE 1 FINANCIAL, INC. ACQUISITION
On October 6, 2015, the acquisition of Square 1 Financial, Inc. (“Square 1”) was consummated in a transaction valued at approximately $815 million. PacWest Bancorp is the surviving company and Pacific Western Bank is the surviving subsidiary bank, with the banking operations of Square 1 conducted under the trade name of Square 1 Bank, a division of Pacific Western Bank.
Under the terms of the merger agreement, Square 1 stockholders received 0.5997 shares of PacWest common stock for each share of Square 1 common stock and holders of stock options and restricted stock units received cash consideration as described in the merger agreement. The total value of the per share merger consideration was $26.37, based on the closing price of PacWest common stock of $43.97 on October 6, 2015.
The following table shows the various purchase accounting adjustments at the acquisition date by category along with accretion/amortization periods:
|
Description |
|
Purchase |
|
Estimated Accretion/ | |
|
|
|
(In thousands) |
|
| |
|
|
|
Debit (Credit) |
|
| |
|
|
|
|
|
| |
|
Loan portfolio discount |
|
$ |
(37,892 |
) |
30 months using a level yield method |
|
Reserve for unfunded commitments |
|
$ |
(4,746 |
) |
30 months based on commitment activity |
|
Core deposit intangible |
|
$ |
42,300 |
|
84 months using an accelerated method |
|
Customer relationship intangible |
|
$ |
3,126 |
|
84 months using an accelerated method |
|
Other intangible assets with definite lives |
|
$ |
1,500 |
|
Straight line over 18 months |
|
Other intangible assets with indefinite lives |
|
$ |
2,100 |
|
Not amortized |
ABOUT PACWEST BANCORP
PacWest Bancorp (“PacWest”) is a bank holding company with over $21 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (“Pacific Western”). The Bank has 80 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Pacific Western provides commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses. Pacific Western offers additional products and services under the brands of its business groups, CapitalSource and Square 1 Bank. CapitalSource provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis. Square 1 Bank offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovation hubs across the United States. For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.
FORWARD LOOKING STATEMENTS
This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, strategies, goals, and projections and including statements about our expectations regarding our acquisition of Square 1, intentions to expand Pacific Western’s lending business, credit loss exposure, profitability, and loan and lease portfolio growth. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such forward-looking statements for a variety of factors, including without limitation:
· changes in economic or competitive market conditions could negatively impact investment or lending opportunities or product pricing and services;
· credit quality deterioration or pronounced and sustained reduction in market values or other economic factors which adversely affect our borrowers’ ability to repay loans and leases;
· higher than anticipated delinquencies, charge-offs, and loan losses;
· compression of spreads on newly originated loans and leases;
· the impact of asset/liability repricing risk and liquidity risk on net interest margin and the value of investments;
· higher than anticipated increases in operating expenses;
· increased costs to manage and sell foreclosed assets;
· reduced demand for our services due to strategic or regulatory reasons;
· our inability to grow deposits or access wholesale funding sources;
· legislative or regulatory requirements or changes could negatively impact our business including an increase to capital requirements;
· loan repayments higher than expected;
· our ability to complete future acquisitions and to successfully integrate such acquired entities, including Square 1, or achieve expected benefits, synergies and/or operating efficiencies within expected time frames or at all;
· business disruption following the Square 1 acquisition;
· changes in our stock price;
· the reaction to the Square 1 acquisition of the Company’s customers, employees and counterparties;
· inability to attract qualified professionals;
· the success and timing of other business strategies; and
· other risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission (“SEC”).
All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
|
December 31, |
|
September 30, |
|
December 31, |
| |||
|
|
|
2015 |
|
2015 |
|
2014 |
| |||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||
|
ASSETS: |
|
|
|
|
|
|
| |||
|
Cash and due from banks |
|
$ |
161,020 |
|
$ |
154,652 |
|
$ |
164,757 |
|
|
Interest-earning deposits in financial institutions |
|
235,466 |
|
81,642 |
|
148,469 |
| |||
|
Total cash and cash equivalents |
|
396,486 |
|
236,294 |
|
313,226 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Securities available-for-sale, at estimated fair value |
|
3,559,437 |
|
1,809,364 |
|
1,567,177 |
| |||
|
Federal Home Loan Bank stock, at cost |
|
19,710 |
|
17,250 |
|
40,609 |
| |||
|
Total investment securities |
|
3,579,147 |
|
1,826,614 |
|
1,607,786 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Non-PCI loans and leases |
|
14,339,070 |
|
12,300,057 |
|
11,613,832 |
| |||
|
PCI loans |
|
189,095 |
|
193,340 |
|
290,852 |
| |||
|
Total gross loans and leases |
|
14,528,165 |
|
12,493,397 |
|
11,904,684 |
| |||
|
Deferred fees and costs |
|
(49,911 |
) |
(41,192 |
) |
(22,252 |
) | |||
|
Total loans and leases, net of deferred fees |
|
14,478,254 |
|
12,452,205 |
|
11,882,432 |
| |||
|
Allowance for loan and lease losses |
|
(115,111 |
) |
(103,271 |
) |
(84,455 |
) | |||
|
Total loans and leases, net |
|
14,363,143 |
|
12,348,934 |
|
11,797,977 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Equipment leased to others under operating leases |
|
197,452 |
|
161,508 |
|
122,506 |
| |||
|
Premises and equipment, net |
|
39,197 |
|
36,475 |
|
36,551 |
| |||
|
Foreclosed assets, net |
|
22,120 |
|
33,216 |
|
43,721 |
| |||
|
Deferred tax asset, net |
|
126,389 |
|
169,760 |
|
284,411 |
| |||
|
Goodwill |
|
2,176,291 |
|
1,728,380 |
|
1,720,479 |
| |||
|
Core deposit and customer relationship intangibles, net |
|
53,220 |
|
12,704 |
|
17,204 |
| |||
|
Other assets |
|
335,045 |
|
260,220 |
|
290,744 |
| |||
|
Total assets |
|
$ |
21,288,490 |
|
$ |
16,814,105 |
|
$ |
16,234,605 |
|
|
|
|
|
|
|
|
|
| |||
|
LIABILITIES: |
|
|
|
|
|
|
| |||
|
Noninterest-bearing deposits |
|
$ |
6,171,455 |
|
$ |
3,508,682 |
|
$ |
2,931,352 |
|
|
Interest-bearing deposits |
|
9,494,727 |
|
8,607,081 |
|
8,823,776 |
| |||
|
Total deposits |
|
15,666,182 |
|
12,115,763 |
|
11,755,128 |
| |||
|
Borrowings |
|
621,914 |
|
552,497 |
|
383,402 |
| |||
|
Subordinated debentures |
|
436,000 |
|
435,417 |
|
433,583 |
| |||
|
Accrued interest payable and other liabilities |
|
166,703 |
|
128,724 |
|
156,262 |
| |||
|
Total liabilities |
|
16,890,799 |
|
13,232,401 |
|
12,728,375 |
| |||
|
STOCKHOLDERS’ EQUITY (1) |
|
4,397,691 |
|
3,581,704 |
|
3,506,230 |
| |||
|
Total liabilities and stockholders’ equity |
|
$ |
21,288,490 |
|
$ |
16,814,105 |
|
$ |
16,234,605 |
|
|
(1) Includes net unrealized gain on securities available-for-sale, net |
|
$ |
27,828 |
|
$ |
24,459 |
|
$ |
26,380 |
|
|
|
|
|
|
|
|
|
| |||
|
Book value per share |
|
$ |
36.22 |
|
$ |
34.76 |
|
$ |
34.03 |
|
|
Tangible book value per share |
|
$ |
17.86 |
|
$ |
17.86 |
|
$ |
17.17 |
|
|
|
|
|
|
|
|
|
| |||
|
Shares outstanding (includes unvested restricted shares of 1,211,951 at December 31, 2015, 988,825 at September 30, 2015, and 1,108,505 at December 31, 2014) |
|
121,413,727 |
|
103,053,694 |
|
103,022,017 |
| |||
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
|
|
|
Three Months Ended |
|
Year Ended |
| |||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
| |||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
219,677 |
|
$ |
193,539 |
|
$ |
197,472 |
|
$ |
819,094 |
|
$ |
657,097 |
|
|
Investment securities |
|
23,648 |
|
13,955 |
|
12,205 |
|
64,368 |
|
47,345 |
| |||||
|
Deposits in financial institutions |
|
172 |
|
178 |
|
19 |
|
476 |
|
333 |
| |||||
|
Total interest income |
|
243,497 |
|
207,672 |
|
209,696 |
|
883,938 |
|
704,775 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Deposits |
|
9,391 |
|
10,400 |
|
9,972 |
|
41,503 |
|
27,332 |
| |||||
|
Borrowings |
|
159 |
|
72 |
|
144 |
|
554 |
|
496 |
| |||||
|
Subordinated debentures |
|
4,748 |
|
4,680 |
|
4,597 |
|
18,535 |
|
14,570 |
| |||||
|
Total interest expense |
|
14,298 |
|
15,152 |
|
14,713 |
|
60,592 |
|
42,398 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net interest income |
|
229,199 |
|
192,520 |
|
194,983 |
|
823,346 |
|
662,377 |
| |||||
|
Provision for credit losses |
|
13,772 |
|
8,746 |
|
2,063 |
|
45,481 |
|
11,499 |
| |||||
|
Net interest income after provision for credit losses |
|
215,427 |
|
183,774 |
|
192,920 |
|
777,865 |
|
650,878 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service charges on deposit accounts |
|
3,901 |
|
2,601 |
|
2,787 |
|
11,688 |
|
11,233 |
| |||||
|
Other commissions and fees |
|
12,691 |
|
6,376 |
|
4,556 |
|
31,586 |
|
18,602 |
| |||||
|
Leased equipment income |
|
7,791 |
|
5,475 |
|
5,382 |
|
24,023 |
|
16,669 |
| |||||
|
Gain on sale of loans and leases |
|
183 |
|
27 |
|
7 |
|
373 |
|
601 |
| |||||
|
Gain on securities |
|
— |
|
655 |
|
— |
|
3,744 |
|
4,841 |
| |||||
|
FDIC loss sharing expense, net |
|
(4,291 |
) |
(4,449 |
) |
(4,360 |
) |
(18,246 |
) |
(31,730 |
) | |||||
|
Other income |
|
7,783 |
|
5,073 |
|
4,331 |
|
31,142 |
|
21,971 |
| |||||
|
Total noninterest income |
|
28,058 |
|
15,758 |
|
12,703 |
|
84,310 |
|
42,187 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Compensation |
|
58,992 |
|
48,152 |
|
45,930 |
|
203,914 |
|
165,499 |
| |||||
|
Occupancy |
|
12,194 |
|
10,762 |
|
10,745 |
|
44,144 |
|
40,606 |
| |||||
|
Data processing |
|
5,585 |
|
4,322 |
|
4,050 |
|
18,617 |
|
14,618 |
| |||||
|
Other professional services |
|
3,811 |
|
3,396 |
|
3,181 |
|
13,760 |
|
11,234 |
| |||||
|
Insurance and assessments |
|
5,450 |
|
3,805 |
|
3,115 |
|
16,996 |
|
10,907 |
| |||||
|
Intangible asset amortization |
|
4,910 |
|
1,497 |
|
1,619 |
|
9,410 |
|
6,268 |
| |||||
|
Leased equipment depreciation |
|
4,235 |
|
3,162 |
|
3,103 |
|
13,603 |
|
9,159 |
| |||||
|
Foreclosed assets (income) expense, net |
|
(3,185 |
) |
4,521 |
|
1,938 |
|
(668 |
) |
5,401 |
| |||||
|
Acquisition, integration and reorganization costs |
|
17,600 |
|
747 |
|
7,381 |
|
21,247 |
|
101,016 |
| |||||
|
Other expense |
|
12,672 |
|
9,775 |
|
10,243 |
|
41,016 |
|
40,884 |
| |||||
|
Total noninterest expense |
|
122,264 |
|
90,139 |
|
91,305 |
|
382,039 |
|
405,592 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Earnings from continuing operations before taxes |
|
121,221 |
|
109,393 |
|
114,318 |
|
480,136 |
|
287,473 |
| |||||
|
Income tax expense |
|
(49,380 |
) |
(39,777 |
) |
(43,261 |
) |
(180,517 |
) |
(117,005 |
) | |||||
|
Net earnings from continuing operations |
|
71,841 |
|
69,616 |
|
71,057 |
|
299,619 |
|
170,468 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loss from discontinued operations before taxes |
|
— |
|
— |
|
(105 |
) |
— |
|
(2,677 |
) | |||||
|
Income tax benefit |
|
— |
|
— |
|
47 |
|
— |
|
1,114 |
| |||||
|
Net loss from discontinued operations |
|
— |
|
— |
|
(58 |
) |
— |
|
(1,563 |
) | |||||
|
Net earnings |
|
$ |
71,841 |
|
$ |
69,616 |
|
$ |
70,999 |
|
$ |
299,619 |
|
$ |
168,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.69 |
|
$ |
2.79 |
|
$ |
1.94 |
|
|
Net earnings |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.69 |
|
$ |
2.79 |
|
$ |
1.92 |
|
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
|
|
|
Three Months Ended |
| ||||||||||||||||||||||
|
|
|
December 31, 2015 |
|
September 30, 2015 |
|
December 31, 2014 |
| ||||||||||||||||||
|
|
|
|
|
Interest |
|
Average |
|
|
|
Interest |
|
Average |
|
|
|
Interest |
|
Average |
| ||||||
|
|
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
|
Average |
|
Income/ |
|
Yield/ |
| ||||||
|
|
|
Balance |
|
Expense |
|
Cost |
|
Balance |
|
Expense |
|
Cost |
|
Balance |
|
Expense |
|
Cost |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||||||||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
PCI loans |
|
$ |
169,772 |
|
$ |
6,345 |
|
14.83 |
% |
$ |
193,094 |
|
$ |
7,505 |
|
15.42 |
% |
$ |
311,061 |
|
$ |
11,247 |
|
14.34 |
% |
|
Non-PCI loans and leases |
|
13,861,330 |
|
213,332 |
|
6.11 |
% |
11,919,787 |
|
186,034 |
|
6.19 |
% |
11,275,512 |
|
186,225 |
|
6.55 |
% | ||||||
|
Total loans and leases |
|
14,031,102 |
|
219,677 |
|
6.21 |
% |
12,112,881 |
|
193,539 |
|
6.34 |
% |
11,586,573 |
|
197,472 |
|
6.76 |
% | ||||||
|
Investment securities (1) |
|
3,492,124 |
|
28,408 |
|
3.23 |
% |
1,806,628 |
|
16,709 |
|
3.67 |
% |
1,591,839 |
|
13,840 |
|
3.45 |
% | ||||||
|
Deposits in financial institutions |
|
254,308 |
|
172 |
|
0.27 |
% |
278,973 |
|
178 |
|
0.25 |
% |
26,971 |
|
19 |
|
0.28 |
% | ||||||
|
Total interest-earning assets |
|
17,777,534 |
|
248,257 |
|
5.54 |
% |
14,198,482 |
|
210,426 |
|
5.88 |
% |
13,205,383 |
|
211,331 |
|
6.35 |
% | ||||||
|
Other assets |
|
3,047,714 |
|
|
|
|
|
2,491,695 |
|
|
|
|
|
2,687,378 |
|
|
|
|
| ||||||
|
Total assets |
|
$ |
20,825,248 |
|
|
|
|
|
$ |
16,690,177 |
|
|
|
|
|
$ |
15,892,761 |
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Interest checking |
|
$ |
889,035 |
|
345 |
|
0.15 |
% |
$ |
787,271 |
|
300 |
|
0.15 |
% |
$ |
702,498 |
|
194 |
|
0.11 |
% | |||
|
Money market |
|
3,557,364 |
|
1,543 |
|
0.17 |
% |
2,417,280 |
|
1,218 |
|
0.20 |
% |
1,788,341 |
|
932 |
|
0.21 |
% | ||||||
|
Savings |
|
747,054 |
|
445 |
|
0.24 |
% |
746,362 |
|
449 |
|
0.24 |
% |
761,073 |
|
572 |
|
0.30 |
% | ||||||
|
Time |
|
4,439,940 |
|
7,058 |
|
0.63 |
% |
5,042,768 |
|
8,433 |
|
0.66 |
% |
5,427,687 |
|
8,274 |
|
0.60 |
% | ||||||
|
Total interest-bearing deposits |
|
9,633,393 |
|
9,391 |
|
0.39 |
% |
8,993,681 |
|
10,400 |
|
0.46 |
% |
8,679,599 |
|
9,972 |
|
0.46 |
% | ||||||
|
Borrowings |
|
206,236 |
|
159 |
|
0.31 |
% |
70,171 |
|
72 |
|
0.41 |
% |
214,053 |
|
144 |
|
0.27 |
% | ||||||
|
Subordinated debentures |
|
435,293 |
|
4,748 |
|
4.33 |
% |
434,420 |
|
4,680 |
|
4.27 |
% |
433,859 |
|
4,597 |
|
4.20 |
% | ||||||
|
Total interest-bearing liabilities |
|
10,274,922 |
|
14,298 |
|
0.55 |
% |
9,498,272 |
|
15,152 |
|
0.63 |
% |
9,327,511 |
|
14,713 |
|
0.63 |
% | ||||||
|
Noninterest-bearing demand deposits |
|
6,043,900 |
|
|
|
|
|
3,486,780 |
|
|
|
|
|
2,900,388 |
|
|
|
|
| ||||||
|
Other liabilities |
|
160,264 |
|
|
|
|
|
132,360 |
|
|
|
|
|
164,571 |
|
|
|
|
| ||||||
|
Total liabilities |
|
16,479,086 |
|
|
|
|
|
13,117,412 |
|
|
|
|
|
12,392,470 |
|
|
|
|
| ||||||
|
Stockholders’ equity |
|
4,346,162 |
|
|
|
|
|
3,572,765 |
|
|
|
|
|
3,500,291 |
|
|
|
|
| ||||||
|
Total liabilities and stockholders’ equity |
|
$ |
20,825,248 |
|
|
|
|
|
$ |
16,690,177 |
|
|
|
|
|
$ |
15,892,761 |
|
|
|
|
| |||
|
Net interest income (2) |
|
|
|
$ |
233,959 |
|
|
|
|
|
$ |
195,274 |
|
|
|
|
|
$ |
196,618 |
|
|
| |||
|
Net interest spread (2) |
|
|
|
|
|
4.99 |
% |
|
|
|
|
5.25 |
% |
|
|
|
|
5.72 |
% | ||||||
|
Net interest margin (2) |
|
|
|
|
|
5.22 |
% |
|
|
|
|
5.46 |
% |
|
|
|
|
5.91 |
% | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Total deposits (3) |
|
$ |
15,677,293 |
|
$ |
9,391 |
|
0.24 |
% |
$ |
12,480,461 |
|
$ |
10,400 |
|
0.33 |
% |
$ |
11,579,987 |
|
$ |
9,972 |
|
0.34 |
% |
|
Funding sources (4) |
|
$ |
16,318,822 |
|
$ |
14,298 |
|
0.35 |
% |
$ |
12,985,052 |
|
$ |
15,152 |
|
0.46 |
% |
$ |
12,227,899 |
|
$ |
14,713 |
|
0.48 |
% |
(1) Includes tax equivalent adjustments of $4.8 million, $2.8 million, and $1.6 million for the three months ended December 31, 2015, September 30, 2015, and December 31, 2014 related to tax exempt income on municipal securities. The federal statutory tax rate utilized was 35% for the periods.
(2) Tax equivalent.
(3) Total deposits is the sum of interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on deposits divided by average total deposits.
(4) Funding sources is the sum of interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated as annualized total interest expense divided by average funding sources.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
| |||||
|
|
|
2015 |
|
2015 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
ASSETS: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Cash and due from banks |
|
$ |
161,020 |
|
$ |
154,652 |
|
$ |
207,598 |
|
$ |
140,873 |
|
$ |
164,757 |
|
|
Interest-earning deposits in financial institutions |
|
235,466 |
|
81,642 |
|
433,033 |
|
250,981 |
|
148,469 |
| |||||
|
Total cash and cash equivalents |
|
396,486 |
|
236,294 |
|
640,631 |
|
391,854 |
|
313,226 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Securities available-for-sale |
|
3,559,437 |
|
1,809,364 |
|
1,698,158 |
|
1,595,409 |
|
1,567,177 |
| |||||
|
Federal Home Loan Bank stock, at cost |
|
19,710 |
|
17,250 |
|
17,250 |
|
28,905 |
|
40,609 |
| |||||
|
Total investment securities |
|
3,579,147 |
|
1,826,614 |
|
1,715,408 |
|
1,624,314 |
|
1,607,786 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Non-PCI loans and leases |
|
14,339,070 |
|
12,300,057 |
|
11,846,314 |
|
12,047,946 |
|
11,613,832 |
| |||||
|
PCI loans |
|
189,095 |
|
193,340 |
|
222,691 |
|
254,346 |
|
290,852 |
| |||||
|
Total gross loans and leases |
|
14,528,165 |
|
12,493,397 |
|
12,069,005 |
|
12,302,292 |
|
11,904,684 |
| |||||
|
Deferred fees and costs |
|
(49,911 |
) |
(41,192 |
) |
(34,816 |
) |
(30,126 |
) |
(22,252 |
) | |||||
|
Total loans and leases, net of deferred fees |
|
14,478,254 |
|
12,452,205 |
|
12,034,189 |
|
12,272,166 |
|
11,882,432 |
| |||||
|
Allowance for loan and lease losses |
|
(115,111 |
) |
(103,271 |
) |
(99,375 |
) |
(92,378 |
) |
(84,455 |
) | |||||
|
Total loans and leases, net |
|
14,363,143 |
|
12,348,934 |
|
11,934,814 |
|
12,179,788 |
|
11,797,977 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equipment leased to others under operating leases |
|
197,452 |
|
161,508 |
|
117,182 |
|
119,959 |
|
122,506 |
| |||||
|
Premises and equipment, net |
|
39,197 |
|
36,475 |
|
35,984 |
|
36,022 |
|
36,551 |
| |||||
|
Foreclosed assets, net |
|
22,120 |
|
33,216 |
|
31,668 |
|
35,940 |
|
43,721 |
| |||||
|
Deferred tax asset, net |
|
126,389 |
|
169,760 |
|
211,556 |
|
236,065 |
|
284,411 |
| |||||
|
Goodwill |
|
2,176,291 |
|
1,728,380 |
|
1,728,380 |
|
1,728,380 |
|
1,720,479 |
| |||||
|
Core deposit and customer relationship intangibles, net |
|
53,220 |
|
12,704 |
|
14,201 |
|
15,703 |
|
17,204 |
| |||||
|
Other assets |
|
335,045 |
|
260,220 |
|
267,196 |
|
275,915 |
|
290,744 |
| |||||
|
Total assets |
|
$ |
21,288,490 |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest-bearing deposits |
|
$ |
6,171,455 |
|
$ |
3,508,682 |
|
$ |
3,396,688 |
|
$ |
3,029,463 |
|
$ |
2,931,352 |
|
|
Interest-bearing deposits |
|
9,494,727 |
|
8,607,081 |
|
9,185,128 |
|
8,904,712 |
|
8,823,776 |
| |||||
|
Total deposits |
|
15,666,182 |
|
12,115,763 |
|
12,581,816 |
|
11,934,175 |
|
11,755,128 |
| |||||
|
Borrowings |
|
621,914 |
|
552,497 |
|
2,751 |
|
618,156 |
|
383,402 |
| |||||
|
Subordinated debentures |
|
436,000 |
|
435,417 |
|
433,944 |
|
431,448 |
|
433,583 |
| |||||
|
Accrued interest payable and other liabilities |
|
166,703 |
|
128,724 |
|
127,019 |
|
126,800 |
|
156,262 |
| |||||
|
Total liabilities |
|
16,890,799 |
|
13,232,401 |
|
13,145,530 |
|
13,110,579 |
|
12,728,375 |
| |||||
|
STOCKHOLDERS’ EQUITY (1) |
|
4,397,691 |
|
3,581,704 |
|
3,551,490 |
|
3,533,361 |
|
3,506,230 |
| |||||
|
Total liabilities and stockholders’ equity |
|
$ |
21,288,490 |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
|
(1) Includes net unrealized gain on securities available-for-sale, net |
|
$ |
27,828 |
|
$ |
24,459 |
|
$ |
16,255 |
|
$ |
28,744 |
|
$ |
26,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Book value per share |
|
$ |
36.22 |
|
$ |
34.76 |
|
$ |
34.46 |
|
$ |
34.29 |
|
$ |
34.03 |
|
|
Tangible book value per share |
|
$ |
17.86 |
|
$ |
17.86 |
|
$ |
17.55 |
|
$ |
17.36 |
|
$ |
17.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Shares outstanding (includes unvested restricted shares) |
|
121,413,727 |
|
103,053,694 |
|
103,051,989 |
|
103,044,257 |
|
103,022,017 |
| |||||
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
|
|
|
Three Months Ended |
| |||||||||||||
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
| |||||
|
|
|
2015 |
|
2015 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
219,677 |
|
$ |
193,539 |
|
$ |
203,781 |
|
$ |
202,097 |
|
$ |
197,472 |
|
|
Investment securities |
|
23,648 |
|
13,955 |
|
14,570 |
|
12,195 |
|
12,205 |
| |||||
|
Deposits in financial institutions |
|
172 |
|
178 |
|
104 |
|
22 |
|
19 |
| |||||
|
Total interest income |
|
243,497 |
|
207,672 |
|
218,455 |
|
214,314 |
|
209,696 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Deposits |
|
9,391 |
|
10,400 |
|
11,233 |
|
10,479 |
|
9,972 |
| |||||
|
Borrowings |
|
159 |
|
72 |
|
88 |
|
235 |
|
144 |
| |||||
|
Subordinated debentures |
|
4,748 |
|
4,680 |
|
4,582 |
|
4,525 |
|
4,597 |
| |||||
|
Total interest expense |
|
14,298 |
|
15,152 |
|
15,903 |
|
15,239 |
|
14,713 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net interest income |
|
229,199 |
|
192,520 |
|
202,552 |
|
199,075 |
|
194,983 |
| |||||
|
Provision for credit losses |
|
13,772 |
|
8,746 |
|
6,529 |
|
16,434 |
|
2,063 |
| |||||
|
Net interest income after provision for credit losses |
|
215,427 |
|
183,774 |
|
196,023 |
|
182,641 |
|
192,920 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Service charges on deposit accounts |
|
3,901 |
|
2,601 |
|
2,612 |
|
2,574 |
|
2,787 |
| |||||
|
Other commissions and fees |
|
12,691 |
|
6,376 |
|
7,123 |
|
5,396 |
|
4,556 |
| |||||
|
Leased equipment income |
|
7,791 |
|
5,475 |
|
5,375 |
|
5,382 |
|
5,382 |
| |||||
|
Gain on sale of loans and leases |
|
183 |
|
27 |
|
163 |
|
— |
|
7 |
| |||||
|
Gain (loss) on securities |
|
— |
|
655 |
|
(186 |
) |
3,275 |
|
— |
| |||||
|
FDIC loss sharing expense, net |
|
(4,291 |
) |
(4,449 |
) |
(5,107 |
) |
(4,399 |
) |
(4,360 |
) | |||||
|
Other income |
|
7,783 |
|
5,073 |
|
9,643 |
|
8,643 |
|
4,331 |
| |||||
|
Total noninterest income |
|
28,058 |
|
15,758 |
|
19,623 |
|
20,871 |
|
12,703 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Noninterest expense: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Compensation |
|
58,992 |
|
48,152 |
|
49,033 |
|
47,737 |
|
45,930 |
| |||||
|
Occupancy |
|
12,194 |
|
10,762 |
|
10,588 |
|
10,600 |
|
10,745 |
| |||||
|
Data processing |
|
5,585 |
|
4,322 |
|
4,402 |
|
4,308 |
|
4,050 |
| |||||
|
Other professional services |
|
3,811 |
|
3,396 |
|
3,332 |
|
3,221 |
|
3,181 |
| |||||
|
Insurance and assessments |
|
5,450 |
|
3,805 |
|
4,716 |
|
3,025 |
|
3,115 |
| |||||
|
Intangible asset amortization |
|
4,910 |
|
1,497 |
|
1,502 |
|
1,501 |
|
1,619 |
| |||||
|
Leased equipment depreciation |
|
4,235 |
|
3,162 |
|
3,103 |
|
3,103 |
|
3,103 |
| |||||
|
Foreclosed assets (income) expense, net |
|
(3,185 |
) |
4,521 |
|
(2,340 |
) |
336 |
|
1,938 |
| |||||
|
Acquisition, integration and reorganization costs |
|
17,600 |
|
747 |
|
900 |
|
2,000 |
|
7,381 |
| |||||
|
Other expense |
|
12,672 |
|
9,775 |
|
10,040 |
|
8,529 |
|
10,243 |
| |||||
|
Total noninterest expense |
|
122,264 |
|
90,139 |
|
85,276 |
|
84,360 |
|
91,305 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Earnings from continuing operations before taxes |
|
121,221 |
|
109,393 |
|
130,370 |
|
119,152 |
|
114,318 |
| |||||
|
Income tax expense |
|
(49,380 |
) |
(39,777 |
) |
(45,287 |
) |
(46,073 |
) |
(43,261 |
) | |||||
|
Net earnings from continuing operations |
|
71,841 |
|
69,616 |
|
85,083 |
|
73,079 |
|
71,057 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loss from discontinued operations before taxes |
|
— |
|
— |
|
— |
|
— |
|
(105 |
) | |||||
|
Income tax benefit |
|
— |
|
— |
|
— |
|
— |
|
47 |
| |||||
|
Net loss from discontinued operations |
|
— |
|
— |
|
— |
|
— |
|
(58 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings |
|
$ |
71,841 |
|
$ |
69,616 |
|
$ |
85,083 |
|
$ |
73,079 |
|
$ |
70,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic and diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.69 |
|
|
Net earnings |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.83 |
|
$ |
0.71 |
|
$ |
0.69 |
|
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
|
|
|
At or For the Three Months Ended |
| |||||||||||||
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
| |||||
|
|
|
2015 |
|
2015 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
Performance Ratios - GAAP: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Return on average assets (1) |
|
1.37 |
% |
1.65 |
% |
2.07 |
% |
1.82 |
% |
1.77 |
% | |||||
|
Return on average equity (1) |
|
6.56 |
% |
7.73 |
% |
9.62 |
% |
8.39 |
% |
8.05 |
% | |||||
|
Yield on average loans and leases |
|
6.21 |
% |
6.34 |
% |
6.75 |
% |
6.80 |
% |
6.76 |
% | |||||
|
Yield on average interest-earning assets (2) |
|
5.54 |
% |
5.88 |
% |
6.35 |
% |
6.40 |
% |
6.35 |
% | |||||
|
Cost of average total deposits |
|
0.24 |
% |
0.33 |
% |
0.37 |
% |
0.36 |
% |
0.34 |
% | |||||
|
Cost of average time deposits |
|
0.63 |
% |
0.66 |
% |
0.68 |
% |
0.65 |
% |
0.60 |
% | |||||
|
Cost of average interest-bearing liabilities |
|
0.55 |
% |
0.63 |
% |
0.66 |
% |
0.64 |
% |
0.63 |
% | |||||
|
Cost of average funding sources |
|
0.35 |
% |
0.46 |
% |
0.50 |
% |
0.49 |
% |
0.48 |
% | |||||
|
Net interest rate spread (2) |
|
4.99 |
% |
5.25 |
% |
5.69 |
% |
5.76 |
% |
5.72 |
% | |||||
|
Net interest margin (2) |
|
5.22 |
% |
5.46 |
% |
5.89 |
% |
5.95 |
% |
5.91 |
% | |||||
|
Noninterest expense as a percentage of average assets (1) |
|
2.33 |
% |
2.14 |
% |
2.08 |
% |
2.10 |
% |
2.28 |
% | |||||
|
Efficiency ratio |
|
39.3 |
% |
39.6 |
% |
38.0 |
% |
36.9 |
% |
38.4 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Performance Ratios - Non-GAAP: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Adjusted return on average assets (1) |
|
1.60 |
% |
1.55 |
% |
1.78 |
% |
1.63 |
% |
1.70 |
% | |||||
|
Adjusted return on average equity (1) |
|
7.66 |
% |
7.22 |
% |
8.25 |
% |
7.51 |
% |
7.71 |
% | |||||
|
Return on average tangible equity (1) |
|
13.14 |
% |
15.09 |
% |
18.90 |
% |
16.50 |
% |
16.00 |
% | |||||
|
Adjusted return on average tangible equity (1) |
|
15.35 |
% |
14.10 |
% |
16.21 |
% |
14.78 |
% |
15.33 |
% | |||||
|
Core net interest margin (2) |
|
5.10 |
% |
5.19 |
% |
5.33 |
% |
5.44 |
% |
5.57 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Average Balances: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Loans and leases |
|
$ |
14,031,102 |
|
$ |
12,112,881 |
|
$ |
12,108,016 |
|
$ |
12,055,682 |
|
$ |
11,586,573 |
|
|
Interest-earning assets |
|
17,777,534 |
|
14,198,482 |
|
13,942,289 |
|
13,701,865 |
|
13,205,383 |
| |||||
|
Total assets |
|
20,825,248 |
|
16,690,177 |
|
16,463,311 |
|
16,296,640 |
|
15,892,761 |
| |||||
|
Noninterest-bearing deposits |
|
6,043,900 |
|
3,486,780 |
|
3,157,129 |
|
2,949,719 |
|
2,900,388 |
| |||||
|
Interest-bearing deposits |
|
9,633,393 |
|
8,993,681 |
|
9,107,937 |
|
8,801,306 |
|
8,679,599 |
| |||||
|
Total deposits |
|
15,677,293 |
|
12,480,461 |
|
12,265,066 |
|
11,751,025 |
|
11,579,987 |
| |||||
|
Borrowings and subordinated debentures |
|
641,529 |
|
504,591 |
|
513,820 |
|
856,664 |
|
647,912 |
| |||||
|
Interest-bearing liabilities |
|
10,274,922 |
|
9,498,272 |
|
9,621,757 |
|
9,657,970 |
|
9,327,511 |
| |||||
|
Funding sources |
|
16,318,822 |
|
12,985,052 |
|
12,778,886 |
|
12,607,689 |
|
12,227,899 |
| |||||
|
Stockholders’ equity |
|
4,346,162 |
|
3,572,765 |
|
3,548,748 |
|
3,533,343 |
|
3,500,291 |
| |||||
(1) Annualized.
(2) Tax equivalent.
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
|
|
|
At or For the Three Months Ended |
| |||||||||||||
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
| |||||
|
|
|
2015 |
|
2015 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
Non-PCI Credit Quality: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Allowance for credit losses to loans and leases |
|
0.85 |
% |
0.82 |
% |
0.78 |
% |
0.72 |
% |
0.66 |
% | |||||
|
Allowance for credit losses to nonaccrual loans and leases |
|
95 |
% |
94 |
% |
71 |
% |
62 |
% |
92 |
% | |||||
|
Nonaccrual loans and leases to loans and leases |
|
0.90 |
% |
0.87 |
% |
1.11 |
% |
1.16 |
% |
0.72 |
% | |||||
|
Nonperforming assets to loans and leases and foreclosed assets |
|
1.06 |
% |
1.14 |
% |
1.37 |
% |
1.45 |
% |
1.09 |
% | |||||
|
Nonperforming assets to total assets |
|
0.71 |
% |
0.84 |
% |
0.98 |
% |
1.05 |
% |
0.78 |
% | |||||
|
Trailing twelve month net charge-offs to average loans and leases |
|
0.06 |
% |
0.04 |
% |
0.06 |
% |
0.07 |
% |
0.02 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
PacWest Bancorp Consolidated Capital: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Tier 1 leverage ratio (1) |
|
11.67 |
% |
12.04 |
% |
11.96 |
% |
11.74 |
% |
12.34 |
% | |||||
|
Common equity tier 1 capital ratio (1) |
|
12.56 |
% |
12.74 |
% |
12.87 |
% |
12.27 |
% |
N/A |
| |||||
|
Tier 1 capital ratio (1) |
|
12.58 |
% |
12.74 |
% |
12.87 |
% |
12.27 |
% |
13.16 |
% | |||||
|
Total capital ratio (1) |
|
15.60 |
% |
16.32 |
% |
16.53 |
% |
15.80 |
% |
16.07 |
% | |||||
|
Tangible common equity ratio (non-GAAP measure) |
|
11.38 |
% |
12.21 |
% |
12.10 |
% |
12.01 |
% |
12.20 |
% | |||||
|
Risk-weighted assets (1) |
|
$ |
17,198,540 |
|
$ |
14,038,839 |
|
$ |
13,569,369 |
|
$ |
13,776,106 |
|
$ |
13,096,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Pacific Western Bank Capital: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Tier 1 leverage ratio (1) |
|
11.40 |
% |
11.56 |
% |
11.65 |
% |
11.53 |
% |
11.70 |
% | |||||
|
Common equity tier 1 capital ratio (1) |
|
12.03 |
% |
12.25 |
% |
12.55 |
% |
12.07 |
% |
N/A |
| |||||
|
Tier 1 capital ratio (1) |
|
12.03 |
% |
12.25 |
% |
12.55 |
% |
12.07 |
% |
12.46 |
% | |||||
|
Total capital ratio (1) |
|
12.78 |
% |
13.05 |
% |
13.35 |
% |
12.80 |
% |
13.16 |
% | |||||
|
Tangible common equity ratio (non-GAAP measure) |
|
10.80 |
% |
11.53 |
% |
11.46 |
% |
11.32 |
% |
11.51 |
% | |||||
(1) Capital information for December 31, 2015 is preliminary.
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
|
|
|
Three Months Ended |
|
Year Ended |
| |||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
| |||||||
|
|
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands, except per share data) |
| |||||||||||||
|
Basic Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
71,841 |
|
$ |
69,616 |
|
$ |
71,057 |
|
$ |
299,619 |
|
$ |
170,468 |
|
|
Less: earnings allocated to unvested restricted stock (1) |
|
(690 |
) |
(649 |
) |
(810 |
) |
(2,892 |
) |
(1,959 |
) | |||||
|
Net earnings from continuing operations allocated to common shares |
|
71,151 |
|
68,967 |
|
70,247 |
|
296,727 |
|
168,509 |
| |||||
|
Net earnings from discontinued operations allocated to common shares |
|
— |
|
— |
|
(57 |
) |
— |
|
(1,545 |
) | |||||
|
Net earnings allocated to common shares |
|
$ |
71,151 |
|
$ |
68,967 |
|
$ |
70,190 |
|
$ |
296,727 |
|
$ |
166,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average basic shares and unvested restricted stock outstanding |
|
120,385 |
|
103,048 |
|
103,045 |
|
107,401 |
|
87,871 |
| |||||
|
Less: weighted-average unvested restricted stock outstanding |
|
(1,133 |
) |
(985 |
) |
(1,132 |
) |
(1,074 |
) |
(1,018 |
) | |||||
|
Weighted-average basic shares outstanding |
|
119,252 |
|
102,063 |
|
101,913 |
|
106,327 |
|
86,853 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.69 |
|
$ |
2.79 |
|
$ |
1.94 |
|
|
Net earnings from discontinued operations |
|
— |
|
— |
|
— |
|
— |
|
(0.02 |
) | |||||
|
Net earnings |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.69 |
|
$ |
2.79 |
|
$ |
1.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted Earnings Per Share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations allocated to common shares |
|
$ |
71,151 |
|
$ |
68,967 |
|
$ |
70,247 |
|
$ |
296,727 |
|
$ |
168,509 |
|
|
Net earnings from discontinued operations allocated to common shares |
|
— |
|
— |
|
(57 |
) |
— |
|
(1,545 |
) | |||||
|
Net earnings allocated to common shares |
|
$ |
71,151 |
|
$ |
68,967 |
|
$ |
70,190 |
|
$ |
296,727 |
|
$ |
166,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Weighted-average basic shares outstanding |
|
119,252 |
|
102,063 |
|
101,913 |
|
106,327 |
|
86,853 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Net earnings from continuing operations |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.69 |
|
$ |
2.79 |
|
$ |
1.94 |
|
|
Net earnings from discontinued operations |
|
— |
|
— |
|
— |
|
— |
|
(0.02 |
) | |||||
|
Net earnings |
|
$ |
0.60 |
|
$ |
0.68 |
|
$ |
0.69 |
|
$ |
2.79 |
|
$ |
1.92 |
|
(1) Represents cash dividends paid to holders of unvested stock, net of estimated forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.
GAAP TO NON-GAAP RECONCILIATION
This press release contains certain non-GAAP financial disclosures for adjusted net earnings, adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted return on average tangible equity, tangible common equity amounts and ratios, tangible book value per share, core net interest margin, and operating expense as a percentage of average assets. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance:
· Adjusted net earnings: To calculate adjusted net earnings, we exclude from net earnings primarily income statement items for which the related assets or liabilities have been completely resolved and are no longer on the balance sheet. As analysts and investors view this measure as an indicator of the Company’s ability to generate recurring earnings, we disclose this amount in addition to net earnings.
· Adjusted return on average assets, adjusted return on average equity, return on average tangible equity, adjusted return on average tangible equity, tangible common equity amounts and ratios, and tangible book value per share: Given that the use of these measures is prevalent among banking regulators, investors and analysts, we disclose them in addition to return on average assets, return on average equity, equity-to-assets ratio, and book value per share, respectively.
Please refer to the tables on the following pages for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
|
|
|
Three Months Ended |
|
Year Ended |
| ||||||||||||
|
Adjusted Net Earnings and |
|
December 31, |
|
September 30, |
|
December 31, |
|
December 31, |
| ||||||||
|
Related Ratios |
|
2015 |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
| ||||||
|
|
|
(Dollars in thousands) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net earnings |
|
$ |
71,841 |
|
$ |
69,616 |
|
$ |
70,999 |
|
$ |
299,619 |
|
$ |
168,905 |
| |
|
Less: |
Tax benefit on discontinued operations |
|
— |
|
— |
|
(47 |
) |
— |
|
(1,114 |
) | |||||
|
Add: |
Tax expense on continuing operations |
|
49,380 |
|
39,777 |
|
43,261 |
|
180,517 |
|
117,005 |
| |||||
|
Pre-tax earnings |
|
121,221 |
|
109,393 |
|
114,213 |
|
480,136 |
|
284,796 |
| ||||||
|
Add: |
Acquisition, integration and reorganization costs |
|
17,600 |
|
747 |
|
7,381 |
|
21,247 |
|
101,016 |
| |||||
|
Less: |
FDIC loss sharing expense, net |
|
(4,291 |
) |
(4,449 |
) |
(4,360 |
) |
(18,246 |
) |
(31,730 |
) | |||||
|
|
Gain on sale of loans and leases |
|
183 |
|
27 |
|
7 |
|
373 |
|
601 |
| |||||
|
|
Gain on securities |
|
— |
|
655 |
|
— |
|
3,744 |
|
4,841 |
| |||||
|
|
Covered OREO income (expense), net |
|
2,920 |
|
(20 |
) |
(176 |
) |
2,931 |
|
1,172 |
| |||||
|
|
Gain on sale of owned office building |
|
— |
|
— |
|
— |
|
— |
|
1,570 |
| |||||
|
Adjusted pre-tax earnings before accelerated discount accretion |
|
140,009 |
|
113,927 |
|
126,123 |
|
512,581 |
|
409,358 |
| ||||||
|
Less: |
Accelerated discount accretion from early payoffs of acquired loans |
|
5,511 |
|
9,659 |
|
11,421 |
|
51,969 |
|
38,867 |
| |||||
|
Adjusted pre-tax earnings |
|
134,498 |
|
104,268 |
|
114,702 |
|
460,612 |
|
370,491 |
| ||||||
|
|
Tax expense (1) |
|
(50,571 |
) |
(39,205 |
) |
(46,684 |
) |
(173,190 |
) |
(150,790 |
) | |||||
|
Adjusted net earnings |
|
$ |
83,927 |
|
$ |
65,063 |
|
$ |
68,018 |
|
$ |
287,422 |
|
$ |
219,701 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Average assets |
|
$ |
20,825,248 |
|
$ |
16,690,177 |
|
$ |
15,892,761 |
|
$ |
17,578,844 |
|
$ |
13,322,388 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Average stockholders’ equity |
|
$ |
4,346,162 |
|
$ |
3,572,765 |
|
$ |
3,500,291 |
|
$ |
3,751,995 |
|
$ |
2,763,726 |
| |
|
Less: |
Average intangible assets |
|
2,177,631 |
|
1,741,902 |
|
1,739,977 |
|
1,850,988 |
|
1,342,286 |
| |||||
|
Average tangible common equity |
|
$ |
2,168,531 |
|
$ |
1,830,863 |
|
$ |
1,760,314 |
|
$ |
1,901,007 |
|
$ |
1,421,440 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Return on average assets (2) |
|
1.37 |
% |
1.65 |
% |
1.77 |
% |
1.70 |
% |
1.27 |
% | ||||||
|
Return on average equity (3) |
|
6.56 |
% |
7.73 |
% |
8.05 |
% |
7.99 |
% |
6.11 |
% | ||||||
|
Return on average tangible equity (4) |
|
13.14 |
% |
15.09 |
% |
16.00 |
% |
15.76 |
% |
11.88 |
% | ||||||
|
Adjusted return on average assets (5) |
|
1.60 |
% |
1.55 |
% |
1.70 |
% |
1.64 |
% |
1.65 |
% | ||||||
|
Adjusted return on average equity (6) |
|
7.66 |
% |
7.22 |
% |
7.71 |
% |
7.66 |
% |
7.95 |
% | ||||||
|
Adjusted return on average tangible equity (7) |
|
15.35 |
% |
14.10 |
% |
15.33 |
% |
15.12 |
% |
15.46 |
% | ||||||
(1) Full-year actual effective rates of 37.6% used for 2015 periods and 40.7% used for 2014 periods.
(2) Annualized net earnings divided by average assets.
(3) Annualized net earnings divided by average stockholders’ equity.
(4) Annualized net earnings divided by average tangible common equity.
(5) Annualized adjusted net earnings divided by average assets.
(6) Annualized adjusted net earnings divided by average stockholders’ equity.
(7) Annualized adjusted net earnings divided by average tangible common equity.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
| |||||
|
Tangible Common Equity Ratio |
|
2015 |
|
2015 |
|
2015 |
|
2015 |
|
2014 |
| |||||
|
|
|
(Dollars in thousands) |
| |||||||||||||
|
PacWest Bancorp Consolidated: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Stockholders’ equity |
|
$ |
4,397,691 |
|
$ |
3,581,704 |
|
$ |
3,551,490 |
|
$ |
3,533,361 |
|
$ |
3,506,230 |
|
|
Less: Intangible assets |
|
2,229,511 |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
| |||||
|
Tangible common equity |
|
$ |
2,168,180 |
|
$ |
1,840,620 |
|
$ |
1,808,909 |
|
$ |
1,789,278 |
|
$ |
1,768,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Total assets |
|
$ |
21,288,490 |
|
$ |
16,814,105 |
|
$ |
16,697,020 |
|
$ |
16,643,940 |
|
$ |
16,234,605 |
|
|
Less: Intangible assets |
|
2,229,511 |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
| |||||
|
Tangible assets |
|
$ |
19,058,979 |
|
$ |
15,073,021 |
|
$ |
14,954,439 |
|
$ |
14,899,857 |
|
$ |
14,496,922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equity to assets ratio |
|
20.66 |
% |
21.30 |
% |
21.27 |
% |
21.23 |
% |
21.60 |
% | |||||
|
Tangible common equity ratio (1) |
|
11.38 |
% |
12.21 |
% |
12.10 |
% |
12.01 |
% |
12.20 |
% | |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Book value per share |
|
$ |
36.22 |
|
$ |
34.76 |
|
$ |
34.46 |
|
$ |
34.29 |
|
$ |
34.03 |
|
|
Tangible book value per share (2) |
|
$ |
17.86 |
|
$ |
17.86 |
|
$ |
17.55 |
|
$ |
17.36 |
|
$ |
17.17 |
|
|
Shares outstanding |
|
121,413,727 |
|
103,053,694 |
|
103,051,989 |
|
103,044,257 |
|
103,022,017 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Pacific Western Bank: |
|
|
|
|
|
|
|
|
|
|
| |||||
|
Stockholders’ equity |
|
$ |
4,276,279 |
|
$ |
3,466,817 |
|
$ |
3,440,715 |
|
$ |
3,410,276 |
|
$ |
3,378,879 |
|
|
Less: Intangible assets |
|
2,229,511 |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
| |||||
|
Tangible common equity |
|
$ |
2,046,768 |
|
$ |
1,725,733 |
|
$ |
1,698,134 |
|
$ |
1,666,193 |
|
$ |
1,641,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Total assets |
|
$ |
21,180,689 |
|
$ |
16,707,072 |
|
$ |
16,555,610 |
|
$ |
16,458,591 |
|
$ |
15,995,719 |
|
|
Less: Intangible assets |
|
2,229,511 |
|
1,741,084 |
|
1,742,581 |
|
1,744,083 |
|
1,737,683 |
| |||||
|
Tangible assets |
|
$ |
18,951,178 |
|
$ |
14,965,988 |
|
$ |
14,813,029 |
|
$ |
14,714,508 |
|
$ |
14,258,036 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
Equity to assets ratio |
|
20.19 |
% |
20.75 |
% |
20.78 |
% |
20.72 |
% |
21.12 |
% | |||||
|
Tangible common equity ratio |
|
10.80 |
% |
11.53 |
% |
11.46 |
% |
11.32 |
% |
11.51 |
% | |||||
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.