Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - PACWEST BANCORP | tm2024794d1_ex99-2.htm |
| 8-K - FORM 8-K - PACWEST BANCORP | tm2024794-1_8k.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: |
303-802-8900 |
714-989-4705 | ||
| Contact: | William Black | |||
|
Executive Vice President |
||||
|
Strategy and Corporate Development |
||||
| Phone: | 919-597-7466 |
| FOR IMMEDIATE RELEASE | July 16, 2020 |
PACWEST BANCORP ANNOUNCES RESULTS
FOR THE SECOND QUARTER 2020
Significant Items
| • | Net Earnings of $33.2 Million, or $0.28 Per Diluted Share |
| • | Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $166.2 Million |
| • | Funded $1.2 Billion of Paycheck Protection Program Loans (“PPP”) in Q2 |
| • | Core Deposits Up $3.5 Billion or 22% in Q2; Represents 85% of Total Deposits |
| • | Tax Equivalent Net Interest Margin of 4.20% Compared to 4.31% in Q1 |
| • | Cost of Average Total Deposits Decreased 34 Basis Points from Q1 to 25 Basis Points |
| • | Quarter Includes $6.6 Million of Prepayment Penalties Related to Early Payoff of FHLB Term Advances and $7.7 Million of Gain on Sale of Securities |
Los Angeles, California . . . PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the second quarter of 2020 of $33.2 million, or $0.28 per diluted share, compared to a net loss for the first quarter of 2020 of $1.43 billion, or $12.23 per diluted share. The increase in net earnings in the second quarter was due primarily to a $1.47 billion goodwill impairment charge in the first quarter.
Matt Wagner, President and CEO, commented, “Our focus continues to be the health and safety of our employees while assisting our customers during the COVID-19 pandemic. We assisted our customers by funding over 4,100 PPP loans in the second quarter totaling over $1.2 billion, while granting loan payment modifications on approximately $1.8 billion, or 9% of loans and leases, most during May and June. The ultimate resolution of these modified loans is largely dependent on how long the pandemic impacts consumer demand and business activity. ”
Mr. Wagner added, “We continued enhanced monitoring of our loan portfolios and saw less loan migration to special mention during the second quarter after being proactive in downgrading loans in the first quarter. We recorded another significant provision for credit losses largely due to deterioration in the macro-economic variables used in our CECL forecast.”
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Mr. Wagner continued, “Our operations remain healthy and continue to produce increasing revenues while generating internal capital. PPNR increased by $5.3 million in the second quarter to $166.2 million, which resulted in a PPNR return on average assets of 2.51%. These solid operating earnings highlight the resilience of our business as we continue to navigate the challenging economic conditions.”
FINANCIAL HIGHLIGHTS
| At or For the | At or For the | |||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | March 31, | Increase | June 30, | Increase | ||||||||||||||||||||
| Financial Highlights | 2020 | 2020 | (Decrease) | 2020 | 2019 | (Decrease) | ||||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||||||
| Net earnings (loss) | $ | 33,204 | $ | (1,433,111 | ) | $ | 1,466,315 | $ | (1,399,907 | ) | $ | 240,729 | $ | (1,640,636 | ) | |||||||||
| Diluted earnings (loss) per share | $ | 0.28 | $ | (12.23 | ) | $ | 12.51 | $ | (11.98 | ) | $ | 1.99 | $ | (13.97 | ) | |||||||||
| Return on average assets | 0.50 | % | (21.27 | )% | 21.77 | (10.48 | )% | 1.88 | % | (12.36 | ) | |||||||||||||
| Pre-provision, pre-goodwill impairment, pre-tax net revenue ("PPNR") (1) | $ | 166,172 | $ | 160,877 | $ | 5,295 | $ | 327,049 | $ | 346,017 | $ | (18,968 | ) | |||||||||||
| PPNR return on average assets (1) | 2.51 | % | 2.39 | % | 0.12 | 2.45 | % | 2.70 | % | (0.25 | ) | |||||||||||||
| Return on average tangible equity (1) | 6.39 | % | 6.88 | % | (0.49 | ) | 6.64 | % | 22.79 | % | (16.15 | ) | ||||||||||||
| Net interest margin ("NIM") (tax equivalent) | 4.20 | % | 4.31 | % | (0.11 | ) | 4.26 | % | 4.70 | % | (0.44 | ) | ||||||||||||
| Yield on average loans and leases (tax equivalent) | 5.01 | % | 5.54 | % | (0.53 | ) | 5.27 | % | 6.21 | % | (0.94 | ) | ||||||||||||
| Cost of average total deposits | 0.25 | % | 0.59 | % | (0.34 | ) | 0.41 | % | 0.77 | % | (0.36 | ) | ||||||||||||
| Efficiency ratio | 42.9 | % | 40.6 | % | 2.3 | 41.8 | % | 42.0 | % | (0.2 | ) | |||||||||||||
| Total assets | $ | 27,365,738 | $ | 26,143,267 | $ | 1,222,471 | $ | 27,365,738 | $ | 26,344,414 | $ | 1,021,324 | ||||||||||||
| Loans and leases held for investment, net of deferred fees | $ | 19,694,631 | $ | 19,745,305 | $ | (50,674 | ) | $ | 19,694,631 | $ | 18,472,852 | $ | 1,221,779 | |||||||||||
| Noninterest-bearing demand deposits | $ | 8,629,543 | $ | 7,510,218 | $ | 1,119,325 | $ | 8,629,543 | $ | 7,299,213 | $ | 1,330,330 | ||||||||||||
| Core deposits | $ | 19,535,814 | $ | 16,050,522 | $ | 3,485,292 | $ | 19,535,814 | $ | 15,617,488 | $ | 3,918,326 | ||||||||||||
| Total deposits | $ | 22,928,579 | $ | 19,575,837 | $ | 3,352,742 | $ | 22,928,579 | $ | 18,805,756 | $ | 4,122,823 | ||||||||||||
| As percentage of total deposits: | ||||||||||||||||||||||||
| Noninterest-bearing demand deposits | 38 | % | 38 | % | - | 38 | % | 39 | % | (1 | ) | |||||||||||||
| Core deposits | 85 | % | 82 | % | 3 | 85 | % | 83 | % | 2 | ||||||||||||||
| Equity to assets ratio | 12.62 | % | 12.97 | % | (0.35 | ) | 12.62 | % | 18.42 | % | (5.80 | ) | ||||||||||||
| Tangible common equity ratio (1) | 8.93 | % | 9.10 | % | (0.17 | ) | 8.93 | % | 9.50 | % | (0.57 | ) | ||||||||||||
| Book value per share | $ | 29.17 | $ | 28.75 | $ | 0.42 | $ | 29.17 | $ | 40.49 | $ | (11.32 | ) | |||||||||||
| Tangible book value per share (1) | $ | 19.80 | $ | 19.31 | $ | 0.49 | $ | 19.80 | $ | 18.83 | $ | 0.97 | ||||||||||||
(1) Non-GAAP measure.
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INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income increased by $4.5 million to $254.3 million for the second quarter of 2020 compared to $249.7 million for the first quarter of 2020 due mainly to a lower cost of average interest-bearing liabilities and a higher balance of average loans and leases, partially offset by a lower yield on average loans and leases and securities. The tax equivalent yield on average loans and leases was 5.01% for the second quarter of 2020 compared to 5.54% for the first quarter of 2020. The decrease in the yield on average loans and leases was due principally to lower market rates, a lower rate on loan production from the impact of the PPP loans, and lower loan discount accretion. Excluding the PPP loans, which have a coupon rate of 1%, the tax equivalent yield on average loans and leases was 5.10%.
The tax equivalent NIM was 4.20% for the second quarter of 2020 compared to 4.31% for the first quarter of 2020. The decrease in the NIM was due mainly to lower market rates resulting in lower loan and lease and security yields, a lower rate on loan production from the impact of the PPP loans, and lower loan discount accretion, offset partially by the lower cost of average interest-bearing liabilities. Excluding the PPP loans, the tax equivalent NIM was 4.25%.
The cost of average total deposits decreased to 0.25% for the second quarter of 2020 from 0.59% for the first quarter of 2020. The lower cost of average interest-bearing deposits reflected actions taken to reduce deposit rates in light of the two emergency interest rate cuts by the Federal Reserve in March of 2020. The cost of deposits at June 30, 2020 was 0.19%.
Provision for Credit Losses
The following table presents details of the provision for credit losses for the periods indicated:
| Three Months Ended | ||||||||||||
| June 30, | March 31, | Increase | ||||||||||
| Provision for Credit Losses | 2020 | 2020 | (Decrease) | |||||||||
| (In thousands) | ||||||||||||
| Addition to allowance for loan and lease losses | $ | 93,000 | $ | 98,000 | $ | (5,000 | ) | |||||
| Addition to reserve for unfunded loan commitments | 27,000 | 14,000 | 13,000 | |||||||||
| Total provision for credit losses | $ | 120,000 | $ | 112,000 | $ | 8,000 | ||||||
The provision for credit losses was $120.0 million for the second quarter of 2020, up $8.0 million from the first quarter of 2020, driven by reserve builds that reflected significant deterioration and continued uncertainty in the key macro-economic forecast variables such as unemployment and GDP as a result of the impact of COVID-19.
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Noninterest Income
The following table presents details of noninterest income for the periods indicated:
| Three Months Ended | ||||||||||||
| June 30, | March 31, | Increase | ||||||||||
| Noninterest Income | 2020 | 2020 | (Decrease) | |||||||||
| (In thousands) | ||||||||||||
| Service charges on deposit accounts | $ | 2,004 | $ | 2,658 | $ | (654 | ) | |||||
| Other commissions and fees | 10,111 | 9,721 | 390 | |||||||||
| Leased equipment income | 12,037 | 12,251 | (214 | ) | ||||||||
| Gain on sale of loans and leases | 346 | 87 | 259 | |||||||||
| Gain on sale of securities | 7,715 | 182 | 7,533 | |||||||||
| Other income: | ||||||||||||
| Dividends and gains on equity investments | 2,947 | 28 | 2,919 | |||||||||
| Warrant income | 1,973 | 837 | 1,136 | |||||||||
| Other | 1,725 | 3,336 | (1,611 | ) | ||||||||
| Total noninterest income | $ | 38,858 | $ | 29,100 | $ | 9,758 | ||||||
Noninterest income increased by $9.8 million to $38.9 million for the second quarter of 2020 compared to $29.1 million for the first quarter of 2020 due primarily to a $7.5 million increase in gain on sale of securities and a $2.9 million increase in dividends and gains on equity investments, partially offset by a $1.6 million decrease in other income. The increase in gain on sale of securities resulted from the sale of $122 million of securities in the second quarter. The increase in dividends and gains on equity investments resulted from increases in the fair value of equity investments still held and a $1.5 million gain on the sale of an equity investment. The decrease in other income was primarily due to $1.1 million of bankruptcy proceeds received on a former credit in the first quarter.
Noninterest Expense
The following table presents details of noninterest expense for the periods indicated:
| Three Months Ended | ||||||||||||
| June 30, | March 31, | Increase | ||||||||||
| Noninterest Expense | 2020 | 2020 | (Decrease) | |||||||||
| (In thousands) | ||||||||||||
| Compensation | $ | 61,910 | $ | 61,282 | $ | 628 | ||||||
| Occupancy | 14,494 | 14,207 | 287 | |||||||||
| Data processing | 7,102 | 6,454 | 648 | |||||||||
| Other professional services | 4,146 | 4,258 | (112 | ) | ||||||||
| Insurance and assessments | 9,373 | 4,249 | 5,124 | |||||||||
| Intangible asset amortization | 3,882 | 3,948 | (66 | ) | ||||||||
| Leased equipment depreciation | 7,102 | 7,205 | (103 | ) | ||||||||
| Foreclosed assets (income) expense, net | (146 | ) | 66 | (212 | ) | |||||||
| Customer related expense | 4,408 | 3,932 | 476 | |||||||||
| Loan expense | 3,379 | 2,650 | 729 | |||||||||
| Other | 11,315 | 9,719 | 1,596 | |||||||||
| Total operating expense | 126,965 | 117,970 | 8,995 | |||||||||
| Goodwill impairment | - | 1,470,000 | (1,470,000 | ) | ||||||||
| Total noninterest expense | $ | 126,965 | $ | 1,587,970 | $ | (1,461,005 | ) | |||||
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Noninterest expense decreased by $1.46 billion to $127.0 million for the second quarter of 2020 compared to $1.59 billion for the first quarter of 2020 attributable primarily to a $1.47 billion goodwill impairment charge in the first quarter. Excluding the goodwill impairment charge, noninterest expense increased by $9.0 million to $127.0 million. This increase was mainly due to a $5.1 million increase in insurance and assessments expense, a $1.6 million increase in other expense, a $0.7 million increase in loan expense, and a $0.6 million increase in data processing expense. The increase in insurance and assessments expense was due to an increase in FDIC assessment expense resulting from an increase in our assessment rate due primarily to the first quarter loss from the goodwill impairment charge. The higher assessment rate will continue for one year. The increase in other expense was due to $6.6 million in prepayment penalties incurred from the early payoff of $750 million of FHLB term advances, partially offset by the reversal of a $1.5 million accrual for operational loss contingencies and decreases in various business expenses due to less activity as a result of COVID-19. The FHLB term advances had a weighted average interest rate of 0.96% and the prepayment decision was made after the significant drop in market rates in March and the expectation of continued low rates for an extended time. The increase in loan expense was due primarily to higher loan-related legal and workout expenses. The increase in data processing expense was due to a one-time expense to create systems for the origination and loan documentation submissions necessary for the Paycheck Protection Program.
Income Taxes
The effective income tax rate was 28.1% for the second quarter of 2020 compared to (0.8)% for the first quarter of 2020. Excluding non-deductible goodwill impairment, the effective income tax rate for the first quarter of 2020 was 24.5%. Excluding the non-deductible goodwill impairment, the effective tax rate for the full year 2020 is currently estimated to be in the range of 26-28%. The higher effective tax rate in the second quarter was mainly due to tax expense related to restricted stock vestings combined with benefits recorded in the first quarter related to the filing of amended state returns.
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BALANCE SHEET HIGHLIGHTS
Loans and Leases
The following table presents roll forwards of loans and leases held for investment, net of deferred fees, for the periods indicated:
| Three Months Ended | Six Months Ended | |||||||||||
| Roll Forward of Loans and Leases Held | June 30, | March 31, | June 30, | |||||||||
| for Investment, Net of Deferred Fees (1) | 2020 | 2020 | 2020 | |||||||||
| (Dollars in thousands) | ||||||||||||
| Balance, beginning of period | $ | 19,745,305 | $ | 18,846,872 | $ | 18,846,872 | ||||||
| Additions: | ||||||||||||
| Production | 1,802,956 | 789,746 | 2,592,702 | |||||||||
| Disbursements | 800,458 | 1,997,080 | 2,797,538 | |||||||||
| Total production and disbursements | 2,603,414 | 2,786,826 | 5,390,240 | |||||||||
| Reductions: | ||||||||||||
| Payoffs | (612,837 | ) | (812,707 | ) | (1,425,544 | ) | ||||||
| Paydowns | (2,022,376 | ) | (1,053,705 | ) | (3,076,081 | ) | ||||||
| Total payoffs and paydowns | (2,635,213 | ) | (1,866,412 | ) | (4,501,625 | ) | ||||||
| Sales | (3,089 | ) | - | (3,089 | ) | |||||||
| Transfers to foreclosed assets | - | (1,776 | ) | (1,776 | ) | |||||||
| Charge-offs | (15,786 | ) | (20,205 | ) | (35,991 | ) | ||||||
| Total reductions | (2,654,088 | ) | (1,888,393 | ) | (4,542,481 | ) | ||||||
| Net (decrease) increase | (50,674 | ) | 898,433 | 847,759 | ||||||||
| Balance, end of period | $ | 19,694,631 | $ | 19,745,305 | $ | 19,694,631 | ||||||
| Weighted average rate on production (2) | 2.33 | % | 4.31 | % | 2.93 | % | ||||||
| (1) | Includes direct financing leases but excludes equipment leased to others under operating leases. |
| (2) | The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees. Amortized fees added approximately 21 basis points to loan yields in 2020. |
Loans and leases held for investment, net of deferred fees, decreased by $50.7 million in the second quarter of 2020 to $19.7 billion at June 30, 2020. We funded $1.2 billion of PPP loans in the second quarter and continued ongoing fundings in the construction loan class, however, this was more than offset by paydowns on existing credits in the venture capital and asset-based loan portfolio classes. Many borrowers who drew down on their loans in the first quarter to ensure liquidity during the COVID-19 pandemic paid back the funds in the second quarter as the economy began to reopen. In addition, our venture banking equity funds business saw balances decline $662.7 million in the second quarter after growing $203.2 million in the first quarter, as drawdowns by equity funds in late March were repaid during the second quarter. The weighted average rate on production decreased to 2.33% since most of the loan production related to PPP loans at a coupon rate of 1%. Excluding PPP loans, the weighted average rate on production was 5.39%.
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The following table presents the composition of loans and leases held for investment by loan portfolio segment and class, net of deferred fees, as of the dates indicated:
| June 30, 2020 | March 31, 2020 | June 30, 2019 | ||||||||||||||||||||||
| % of | % of | % of | ||||||||||||||||||||||
| Loan and Lease Portfolio | Balance | Total | Balance | Total | Balance | Total | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Real estate mortgage: | ||||||||||||||||||||||||
| Commercial | $ | 4,222,075 | 22 | % | $ | 4,220,649 | 21 | % | $ | 4,435,274 | 24 | % | ||||||||||||
| Income producing and other | ||||||||||||||||||||||||
| residential | 3,733,659 | 19 | % | 3,788,295 | 19 | % | 3,640,752 | 20 | % | |||||||||||||||
| Total real estate mortgage | 7,955,734 | 41 | % | 8,008,944 | 40 | % | 8,076,026 | 44 | % | |||||||||||||||
| Real estate construction and land: | ||||||||||||||||||||||||
| Commercial | 1,167,609 | 6 | % | 1,087,505 | 6 | % | 972,891 | 5 | % | |||||||||||||||
| Residential | 2,172,919 | 11 | % | 1,792,748 | 9 | % | 1,403,239 | 8 | % | |||||||||||||||
| Total real estate construction and land | 3,340,528 | 17 | % | 2,880,253 | 15 | % | 2,376,130 | 13 | % | |||||||||||||||
| Total real estate | 11,296,262 | 58 | % | 10,889,197 | 55 | % | 10,452,156 | 57 | % | |||||||||||||||
| Commercial: | ||||||||||||||||||||||||
| Asset-based | 3,412,431 | 17 | % | 3,938,402 | 20 | % | 3,606,007 | 19 | % | |||||||||||||||
| Venture capital | 1,814,341 | 9 | % | 2,715,837 | 14 | % | 2,194,743 | 12 | % | |||||||||||||||
| Other commercial | 2,760,278 | 14 | % | 1,771,985 | 9 | % | 1,773,564 | 10 | % | |||||||||||||||
| Total commercial | 7,987,050 | 40 | % | 8,426,224 | 43 | % | 7,574,314 | 41 | % | |||||||||||||||
| Consumer | 411,319 | 2 | % | 429,884 | 2 | % | 446,382 | 2 | % | |||||||||||||||
| Total loans and leases held for investment, net of deferred fees | $ | 19,694,631 | 100 | % | $ | 19,745,305 | 100 | % | $ | 18,472,852 | 100 | % | ||||||||||||
| Total unfunded loan commitments | $ | 7,745,921 | $ | 7,697,724 | $ | 7,610,899 | ||||||||||||||||||
Allowance for Credit Losses
The following tables present roll forwards of the allowance for credit losses for the periods indicated:
| Three Months Ended June 30, 2020 | ||||||||||||
| Allowance for | Reserve for | Total | ||||||||||
| Allowance for Credit | Loan and | Unfunded Loan | Allowance for | |||||||||
| Losses Rollforward | Lease Losses | Commitments | Credit Losses | |||||||||
| (In thousands) | ||||||||||||
| Beginning balance | $ | 221,292 | $ | 53,571 | $ | 274,863 | ||||||
| Charge-offs | (15,786 | ) | - | (15,786 | ) | |||||||
| Recoveries | 2,544 | - | 2,544 | |||||||||
| Net charge-offs | (13,242 | ) | - | (13,242 | ) | |||||||
| Provision | 93,000 | 27,000 | 120,000 | |||||||||
| Ending balance | $ | 301,050 | $ | 80,571 | $ | 381,621 | ||||||
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| Three Months Ended March 31, 2020 | ||||||||||||
| Allowance for | Reserve for | Total | ||||||||||
| Allowance for Credit | Loan and | Unfunded Loan | Allowance for | |||||||||
| Losses Rollforward | Lease Losses | Commitments | Credit Losses | |||||||||
| (In thousands) | ||||||||||||
| Beginning balance | $ | 138,785 | $ | 35,861 | $ | 174,646 | ||||||
| Charge-offs | (20,205 | ) | - | (20,205 | ) | |||||||
| Recoveries | 1,095 | - | 1,095 | |||||||||
| Net charge-offs | (19,110 | ) | - | (19,110 | ) | |||||||
| Provision | 98,000 | 14,000 | 112,000 | |||||||||
| Cumulative effect of change in accounting principle - CECL | 3,617 | 3,710 | 7,327 | |||||||||
| Ending balance | $ | 221,292 | $ | 53,571 | $ | 274,863 | ||||||
The allowance for credit losses increased by $106.8 million in the second quarter of 2020 to $381.6 million at June 30, 2020. Substantially all of the increase in the allowance for credit losses during the second quarter was attributable to deterioration in the macro-economic variables used in our CECL forecast. Net charge-offs decreased from $19.1 million in the first quarter to $13.2 million in the second quarter.
The allowance for credit losses as a percentage of loans and leases held for investment was 1.94% at June 30, 2020 and 1.39% at March 31, 2020. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.53% at June 30, 2020 and 1.12% at March 31, 2020. The allowance for credit losses and allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding PPP loans that are fully guaranteed and do not carry any allowance, was 2.06% and 1.63% at June 30, 2020, respectively.
Gross charge-offs for the second quarter of 2020 were $15.8 million and included $6.5 million for venture capital loans, $5.0 million for other commercial loans, and $4.2 million for commercial real estate mortgage loans compared to gross charge-offs for the first quarter of 2020 of $20.2 million that included $11.5 million for an asset-based oil industry loan and $7.3 million for other commercial loans.
Recoveries for the second quarter of 2020 were $2.5 million and included $2.3 million for other commercial loans compared to recoveries for the first quarter of 2020 of $1.1 million that included $0.4 million for other commercial loans and $0.4 million for asset-based loans.
For the second quarter of 2020 and first quarter of 2020, annualized net charge-offs to average loans and leases were 0.27% and 0.40%, respectively.
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Deposits and Client Investment Funds
The following table presents the composition of our deposit portfolio as of the dates indicated:
| June 30, 2020 | March 31, 2020 | June 30, 2019 | ||||||||||||||||||||||
| % of | % of | % of | ||||||||||||||||||||||
| Deposit Composition | Balance | Total | Balance | Total | Balance | Total | ||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 8,629,543 | 38 | % | $ | 7,510,218 | 38 | % | $ | 7,299,213 | 39 | % | ||||||||||||
| Interest checking | 4,858,168 | 21 | % | 3,333,147 | 17 | % | 3,220,353 | 17 | % | |||||||||||||||
| Money market | 5,498,150 | 24 | % | 4,712,118 | 24 | % | 4,578,083 | 24 | % | |||||||||||||||
| Savings | 549,953 | 2 | % | 495,039 | 3 | % | 519,839 | 3 | % | |||||||||||||||
| Total core deposits | 19,535,814 | 85 | % | 16,050,522 | 82 | % | 15,617,488 | 83 | % | |||||||||||||||
| Non-core non-maturity deposits | 1,217,266 | 5 | % | 836,157 | 4 | % | 436,833 | 2 | % | |||||||||||||||
| Total non-maturity deposits | 20,753,080 | 90 | % | 16,886,679 | 86 | % | 16,054,321 | 85 | % | |||||||||||||||
| Time deposits $250,000 and under | 1,522,928 | 7 | % | 2,086,188 | 11 | % | 2,284,023 | 12 | % | |||||||||||||||
| Time deposits over $250,000 | 652,571 | 3 | % | 602,970 | 3 | % | 467,412 | 3 | % | |||||||||||||||
| Total time deposits | 2,175,499 | 10 | % | 2,689,158 | 14 | % | 2,751,435 | 15 | % | |||||||||||||||
| Total deposits | $ | 22,928,579 | 100 | % | $ | 19,575,837 | 100 | % | $ | 18,805,756 | 100 | % | ||||||||||||
At June 30, 2020, core deposits totaled $19.5 billion, or 85% of total deposits, including $8.6 billion of noninterest-bearing demand deposits, or 38% of total deposits. Core deposits increased by $3.5 billion in the second quarter driven by PPP loan proceeds being deposited into customers’ accounts and venture banking which saw deposits increase by $2.0 billion to a record $8.7 billion as of June 30, 2020.
In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds at June 30, 2020 were $1.4 billion, of which $1.1 billion was managed by PWAM.
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CREDIT QUALITY
The following table presents loan and lease credit quality metrics as of the dates indicated:
| June 30, | March 31, | Increase | ||||||||||
| Credit Quality Metrics | 2020 | 2020 | (Decrease) | |||||||||
| (Dollars in thousands) | ||||||||||||
| NPAs and Performing TDRs: | ||||||||||||
| Nonaccrual loans and leases held for investment (1) | $ | 166,113 | $ | 95,602 | $ | 70,511 | ||||||
| Accruing loans contractually past due 90 days or more | - | - | - | |||||||||
| Foreclosed assets, net | 1,449 | 1,701 | (252 | ) | ||||||||
| Total nonperforming assets ("NPAs") | $ | 167,562 | $ | 97,303 | $ | 70,259 | ||||||
| Performing TDRs held for investment | $ | 15,037 | $ | 8,978 | $ | 6,059 | ||||||
| Nonaccrual loans and leases held for investment to loans and leases held for investment | 0.84 | % | 0.48 | % | ||||||||
| Nonperforming assets to loans and leases held for investment and foreclosed assets | 0.85 | % | 0.49 | % | ||||||||
| Loan and Lease Credit Risk Ratings: | ||||||||||||
| Pass | $ | 18,635,004 | $ | 18,698,942 | $ | (63,938 | ) | |||||
| Special mention | 766,397 | 898,658 | (132,261 | ) | ||||||||
| Classified | 293,230 | 147,705 | 145,525 | |||||||||
| Total loans and leases held for investment, net of deferred fees | $ | 19,694,631 | $ | 19,745,305 | $ | (50,674 | ) | |||||
| Classified loans and leases held for investment to loans and leases held for investment | 1.49 | % | 0.75 | % | ||||||||
| Allowance for Credit Losses: | ||||||||||||
| Allowance for credit losses | $ | 381,621 | $ | 274,863 | $ | 106,758 | ||||||
| Provision for credit losses (for the quarter) | $ | 120,000 | $ | 112,000 | $ | 8,000 | ||||||
| Net charge-offs (for the quarter) | $ | 13,242 | $ | 19,110 | $ | (5,868 | ) | |||||
| Net charge-offs to average loans and leases (for the quarter) | 0.27 | % | 0.40 | % | ||||||||
| Allowance for credit losses to loans and leases held for investment | 1.94 | % | 1.39 | % | ||||||||
| Allowance for credit losses to nonaccrual loans and leases held for investment | 229.7 | % | 287.5 | % | ||||||||
(1) Nonaccrual loans include guaranteed amounts of $16.2 million at June 30, 2020 and $16.0 million at March 31, 2020.
Page 10
Nonaccrual, classified, and special mention loans and leases fluctuate from period to period as a result of loan repayments and our ongoing active portfolio monitoring, including loan downgrades.
During the second quarter of 2020, classified loans and leases increased by $145.5 million, while special mention loans and leases decreased by $132.3 million. The increase in classified loans and leases and the decrease in special mention loans and leases was due primarily to three security monitoring loans totaling $119.2 million and two retail real estate loans totaling $42.0 million migrating out of special mention and into the classified category.
The following table presents nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by loan portfolio segment and class as of the dates indicated:
| June 30, 2020 | March 31, 2020 | Increase (Decrease) | ||||||||||||||||||||||
| Accruing | Accruing | Accruing | ||||||||||||||||||||||
| and 30-89 | and 30-89 | and 30-89 | ||||||||||||||||||||||
| Days Past | Days Past | Days Past | ||||||||||||||||||||||
| Nonaccrual | Due | Nonaccrual | Due | Nonaccrual | Due | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Real estate mortgage: | ||||||||||||||||||||||||
| Commercial | $ | 61,771 | $ | - | $ | 19,088 | $ | 1,807 | $ | 42,683 | $ | (1,807 | ) | |||||||||||
| Income producing and other residential | 2,207 | - | 2,308 | 1,064 | (101 | ) | (1,064 | ) | ||||||||||||||||
| Total real estate mortgage | 63,978 | - | 21,396 | 2,871 | 42,582 | (2,871 | ) | |||||||||||||||||
| Real estate construction and land: | ||||||||||||||||||||||||
| Commercial | 337 | - | 351 | - | (14 | ) | - | |||||||||||||||||
| Residential | - | 1,021 | - | 241 | - | 780 | ||||||||||||||||||
| Total real estate construction and land | 337 | 1,021 | 351 | 241 | (14 | ) | 780 | |||||||||||||||||
| Commercial: | ||||||||||||||||||||||||
| Asset-based | 19,013 | 3,697 | 17,104 | - | 1,909 | 3,697 | ||||||||||||||||||
| Venture capital | 8,270 | 1,924 | 18,612 | 183 | (10,342 | ) | 1,741 | |||||||||||||||||
| Other commercial | 73,995 | 191 | 37,726 | 4,393 | 36,269 | (4,202 | ) | |||||||||||||||||
| Total commercial | 101,278 | 5,812 | 73,442 | 4,576 | 27,836 | 1,236 | ||||||||||||||||||
| Consumer | 520 | 1,067 | 413 | 518 | 107 | 549 | ||||||||||||||||||
| Total held for investment | $ | 166,113 | $ | 7,900 | $ | 95,602 | $ | 8,206 | $ | 70,511 | $ | (306 | ) | |||||||||||
During the second quarter of 2020, nonaccrual loans and leases increased by $70.5 million due primarily to two retail real estate loans and one security monitoring loan.
Page 11
CAPITAL
The following table presents certain actual capital ratios and ratios excluding PPP loans:
| June 30, 2020 | ||||||||||||
| Excluding | March 31, | |||||||||||
| PPP | 2020 | |||||||||||
| Actual (1) | Loans (1) | Actual | ||||||||||
| PacWest Bancorp Consolidated: | ||||||||||||
| Tier 1 leverage capital ratio | 8.93 | % | 9.22 | %(3) | 8.63 | % | ||||||
| Common equity tier 1 capital ratio | 9.97 | % | 9.97 | % | 9.22 | % | ||||||
| Total capital ratio | 13.18 | % | 13.18 | % | 12.07 | % | ||||||
| Tangible common equity ratio (2) | 8.93 | % | 9.36 | %(3) | 9.10 | % | ||||||
| (1) Capital information for June 30, 2020 is preliminary. | |||||
| (2) Non-GAAP measure. | |||||
| (3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted. | |||||
STOCK REPURCHASE PROGRAM
During the second quarter of 2020, there were no stock repurchases. On April 21, 2020, we announced that stock repurchases were suspended indefinitely.
ABOUT PACWEST BANCORP
PacWest Bancorp (“PacWest”) is a bank holding company with over $27 billion in assets headquartered in Los Angeles, California, with executive offices in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 74 full-service branches located in California, one branch located in Durham, North Carolina, and one branch located in Denver, Colorado. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.
Page 12
FORWARD LOOKING STATEMENTS
This communication contains certain forward-looking information about PacWest Bancorp that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. The COVID-19 pandemic is adversely affecting PacWest Bancorp, its employees, customers and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity and prospects is uncertain. The length of the COVID-19 pandemic and the severity of its impact on key macro-economic indicators such as unemployment and GDP may have a material impact on our allowance for credit losses and related provision for credit losses. Continued deterioration in general business and economic conditions could adversely affect PacWest Bancorp’s revenues and the values of its assets, including goodwill, and liabilities, lead to a tightening of credit, and increase stock price volatility. In addition, PacWest Bancorp’s results could be adversely affected by changes in interest rates, sustained high unemployment rates, deterioration in the credit quality of its loan portfolio or in the value of the collateral securing those loans, deterioration in the value of its investment securities, and legal and regulatory developments. Actual results may differ materially from those set forth or implied in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by the Company with the U.S. Securities and Exchange Commission.
We are under no obligation (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.
Page 13
| PACWEST BANCORP AND SUBSIDIARIES | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2020 | 2020 | 2019 | ||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||
| ASSETS: | ||||||||||||
| Cash and due from banks | $ | 174,059 | $ | 172,570 | $ | 185,075 | ||||||
| Interest-earning deposits in financial institutions | 1,747,077 | 439,690 | 422,663 | |||||||||
| Total cash and cash equivalents | 1,921,136 | 612,260 | 607,738 | |||||||||
| Securities available-for-sale, at estimated fair value | 3,851,141 | 3,757,663 | 3,807,244 | |||||||||
| Federal Home Loan Bank stock, at cost | 17,250 | 54,244 | 43,146 | |||||||||
| Total investment securities | 3,868,391 | 3,811,907 | 3,850,390 | |||||||||
| Gross loans and leases held for investment | 19,780,476 | 19,806,394 | 18,532,740 | |||||||||
| Deferred fees, net | (85,845 | ) | (61,089 | ) | (59,888 | ) | ||||||
| Total loans and leases held for investment, net of deferred fees | 19,694,631 | 19,745,305 | 18,472,852 | |||||||||
| Allowance for loan and lease losses | (301,050 | ) | (221,292 | ) | (135,037 | ) | ||||||
| Total loans and leases held for investment, net | 19,393,581 | 19,524,013 | 18,337,815 | |||||||||
| Equipment leased to others under operating leases | 295,191 | 306,530 | 300,668 | |||||||||
| Premises and equipment, net | 42,299 | 39,799 | 38,162 | |||||||||
| Foreclosed assets, net | 1,449 | 1,701 | 1,472 | |||||||||
| Goodwill | 1,078,670 | 1,078,670 | 2,548,670 | |||||||||
| Core deposit and customer relationship intangibles, net | 30,564 | 34,446 | 47,380 | |||||||||
| Other assets | 734,457 | 733,941 | 612,119 | |||||||||
| Total assets | $ | 27,365,738 | $ | 26,143,267 | $ | 26,344,414 | ||||||
| LIABILITIES: | ||||||||||||
| Noninterest-bearing deposits | $ | 8,629,543 | $ | 7,510,218 | $ | 7,299,213 | ||||||
| Interest-bearing deposits | 14,299,036 | 12,065,619 | 11,506,543 | |||||||||
| Total deposits | 22,928,579 | 19,575,837 | 18,805,756 | |||||||||
| Borrowings | 60,000 | 2,295,000 | 1,913,059 | |||||||||
| Subordinated debentures | 460,772 | 458,994 | 456,112 | |||||||||
| Accrued interest payable and other liabilities | 463,489 | 423,047 | 317,477 | |||||||||
| Total liabilities | 23,912,840 | 22,752,878 | 21,492,404 | |||||||||
| STOCKHOLDERS' EQUITY (1) | 3,452,898 | 3,390,389 | 4,852,010 | |||||||||
| Total liabilities and stockholders’ equity | $ | 27,365,738 | $ | 26,143,267 | $ | 26,344,414 | ||||||
| Book value per share | $ | 29.17 | $ | 28.75 | $ | 40.49 | ||||||
| Tangible book value per share (2) | $ | 19.80 | $ | 19.31 | $ | 18.83 | ||||||
| Shares outstanding | 118,374,603 | 117,916,789 | 119,829,104 | |||||||||
| (1) Includes net unrealized gain on securities | ||||||||||||
| available-for-sale, net | $ | 145,038 | $ | 90,916 | $ | 73,066 | ||||||
| (2) Non-GAAP measure. |
Page 14
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans and leases | $ | 247,851 | $ | 262,278 | $ | 284,236 | $ | 510,129 | $ | 558,465 | ||||||||||
| Investment securities | 26,038 | 27,446 | 28,948 | 53,484 | 58,628 | |||||||||||||||
| Deposits in financial institutions | 186 | 1,608 | 1,349 | 1,794 | 1,999 | |||||||||||||||
| Total interest income | 274,075 | 291,332 | 314,533 | 565,407 | 619,092 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 13,075 | 28,247 | 38,720 | 41,322 | 72,955 | |||||||||||||||
| Borrowings | 1,319 | 6,778 | 7,210 | 8,097 | 14,920 | |||||||||||||||
| Subordinated debentures | 5,402 | 6,560 | 7,705 | 11,962 | 15,443 | |||||||||||||||
| Total interest expense | 19,796 | 41,585 | 53,635 | 61,381 | 103,318 | |||||||||||||||
| Net interest income | 254,279 | 249,747 | 260,898 | 504,026 | 515,774 | |||||||||||||||
| Provision for credit losses | 120,000 | 112,000 | 8,000 | 232,000 | 12,000 | |||||||||||||||
| Net interest income after | ||||||||||||||||||||
| provision for credit losses | 134,279 | 137,747 | 252,898 | 272,026 | 503,774 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges on deposit accounts | 2,004 | 2,658 | 3,771 | 4,662 | 7,501 | |||||||||||||||
| Other commissions and fees | 10,111 | 9,721 | 11,590 | 19,832 | 22,598 | |||||||||||||||
| Leased equipment income | 12,037 | 12,251 | 9,182 | 24,288 | 18,464 | |||||||||||||||
| Gain on sale of loans and leases | 346 | 87 | 326 | 433 | 326 | |||||||||||||||
| Gain on sale of securities | 7,715 | 182 | 22,192 | 7,897 | 24,353 | |||||||||||||||
| Other income | 6,645 | 4,201 | 3,832 | 10,846 | 8,715 | |||||||||||||||
| Total noninterest income | 38,858 | 29,100 | 50,893 | 67,958 | 81,957 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Compensation | 61,910 | 61,282 | 68,956 | 123,192 | 139,801 | |||||||||||||||
| Occupancy | 14,494 | 14,207 | 14,457 | 28,701 | 28,777 | |||||||||||||||
| Data processing | 7,102 | 6,454 | 6,817 | 13,556 | 13,742 | |||||||||||||||
| Other professional services | 4,146 | 4,258 | 4,629 | 8,404 | 9,142 | |||||||||||||||
| Insurance and assessments | 9,373 | 4,249 | 4,098 | 13,622 | 8,136 | |||||||||||||||
| Intangible asset amortization | 3,882 | 3,948 | 4,870 | 7,830 | 9,740 | |||||||||||||||
| Leased equipment depreciation | 7,102 | 7,205 | 5,558 | 14,307 | 11,209 | |||||||||||||||
| Foreclosed assets (income) expense, net | (146 | ) | 66 | (146 | ) | (80 | ) | (117 | ) | |||||||||||
| Acquisition, integration and reorganization costs | - | - | - | - | 618 | |||||||||||||||
| Customer related expense | 4,408 | 3,932 | 3,405 | 8,340 | 6,348 | |||||||||||||||
| Loan expense | 3,379 | 2,650 | 3,451 | 6,029 | 6,336 | |||||||||||||||
| Goodwill impairment | - | 1,470,000 | - | 1,470,000 | - | |||||||||||||||
| Other expense | 11,315 | 9,719 | 9,332 | 21,034 | 17,982 | |||||||||||||||
| Total noninterest expense | 126,965 | 1,587,970 | 125,427 | 1,714,935 | 251,714 | |||||||||||||||
| Earnings (loss) before income taxes | 46,172 | (1,421,123 | ) | 178,364 | (1,374,951 | ) | 334,017 | |||||||||||||
| Income tax expense | 12,968 | 11,988 | 50,239 | 24,956 | 93,288 | |||||||||||||||
| Net earnings (loss) | $ | 33,204 | $ | (1,433,111 | ) | $ | 128,125 | $ | (1,399,907 | ) | $ | 240,729 | ||||||||
| Basic and diluted earnings (loss) per share | $ | 0.28 | $ | (12.23 | ) | $ | 1.07 | $ | (11.98 | ) | $ | 1.99 | ||||||||
| Dividends declared and paid per share | $ | 0.25 | $ | 0.60 | $ | 0.60 | $ | 0.85 | $ | 1.20 | ||||||||||
Page 15
PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS (LOSS) PER SHARE CALCULATIONS
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
| Basic Earnings (Loss) Per Share: | ||||||||||||||||||||
| Net earnings (loss) | $ | 33,204 | $ | (1,433,111 | ) | $ | 128,125 | $ | (1,399,907 | ) | $ | 240,729 | ||||||||
| Less: earnings allocated to unvested restricted stock (1) | (362 | ) | (939 | ) | (1,190 | ) | (1,251 | ) | (2,343 | ) | ||||||||||
| Net earnings (loss) allocated to common shares | $ | 32,842 | $ | (1,434,050 | ) | $ | 126,935 | $ | (1,401,158 | ) | $ | 238,386 | ||||||||
| Weighted-average basic shares and unvested restricted stock outstanding | 118,192 | 118,775 | 120,042 | 118,484 | 121,128 | |||||||||||||||
| Less: weighted-average unvested restricted stock outstanding | (1,606 | ) | (1,495 | ) | (1,462 | ) | (1,551 | ) | (1,407 | ) | ||||||||||
| Weighted-average basic shares outstanding | 116,586 | 117,280 | 118,580 | 116,933 | 119,721 | |||||||||||||||
| Basic earnings (loss) per share | $ | 0.28 | $ | (12.23 | ) | $ | 1.07 | $ | (11.98 | ) | $ | 1.99 | ||||||||
| Diluted Earnings (Loss) Per Share: | ||||||||||||||||||||
| Net earnings (loss) allocated to common shares | $ | 32,842 | $ | (1,434,050 | ) | $ | 126,935 | $ | (1,401,158 | ) | $ | 238,386 | ||||||||
| Weighted-average diluted shares outstanding | 116,586 | 117,280 | 118,580 | 116,933 | 119,721 | |||||||||||||||
| Diluted earnings (loss) per share | $ | 0.28 | $ | (12.23 | ) | $ | 1.07 | $ | (11.98 | ) | $ | 1.99 | ||||||||
(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.
Page 16
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
| Three Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2020 | March 31, 2020 | June 30, 2019 | ||||||||||||||||||||||||||||||||||
| 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: | ||||||||||||||||||||||||||||||||||||
| Loans and leases (1)(2) | $ | 19,951,603 | $ | 248,474 | 5.01 | % | $ | 19,065,035 | $ | 262,764 | 5.54 | % | $ | 18,239,690 | $ | 284,513 | 6.26 | % | ||||||||||||||||||
| Investment securities (3) | 3,846,459 | 27,430 | 2.87 | % | 3,853,217 | 28,641 | 2.99 | % | 3,790,436 | 29,462 | 3.12 | % | ||||||||||||||||||||||||
| Deposits in financial institutions | 733,142 | 186 | 0.10 | % | 537,384 | 1,608 | 1.20 | % | 228,702 | 1,349 | 2.37 | % | ||||||||||||||||||||||||
| Total interest-earning assets (1) | 24,531,204 | 276,090 | 4.53 | % | 23,455,636 | 293,013 | 5.02 | % | 22,258,828 | 315,324 | 5.68 | % | ||||||||||||||||||||||||
| Other assets | 2,090,023 | 3,643,404 | 3,590,361 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 26,621,227 | $ | 27,099,040 | $ | 25,849,189 | ||||||||||||||||||||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||||||||||||||||||||||
| Interest checking | $ | 4,001,750 | 1,573 | 0.16 | % | $ | 3,466,812 | 7,135 | 0.83 | % | $ | 3,242,960 | 10,644 | 1.32 | % | |||||||||||||||||||||
| Money market | 6,114,354 | 2,856 | 0.19 | % | 5,247,866 | 10,016 | 0.77 | % | 5,046,021 | 14,604 | 1.16 | % | ||||||||||||||||||||||||
| Savings | 524,335 | 33 | 0.03 | % | 497,959 | 160 | 0.13 | % | 525,648 | 227 | 0.17 | % | ||||||||||||||||||||||||
| Time | 2,475,858 | 8,613 | 1.40 | % | 2,684,143 | 10,936 | 1.64 | % | 2,731,156 | 13,245 | 1.95 | % | ||||||||||||||||||||||||
| Total interest-bearing deposits | 13,116,297 | 13,075 | 0.40 | % | 11,896,780 | 28,247 | 0.95 | % | 11,545,785 | 38,720 | 1.35 | % | ||||||||||||||||||||||||
| Borrowings | 871,110 | 1,319 | 0.61 | % | 2,026,749 | 6,778 | 1.35 | % | 1,142,223 | 7,210 | 2.53 | % | ||||||||||||||||||||||||
| Subordinated debentures | 459,466 | 5,402 | 4.73 | % | 458,399 | 6,560 | 5.76 | % | 454,901 | 7,705 | 6.79 | % | ||||||||||||||||||||||||
| Total interest-bearing liabilities | 14,446,873 | 19,796 | 0.55 | % | 14,381,928 | 41,585 | 1.16 | % | 13,142,909 | 53,635 | 1.64 | % | ||||||||||||||||||||||||
| Noninterest-bearing demand deposits | 8,292,151 | 7,357,717 | 7,544,027 | |||||||||||||||||||||||||||||||||
| Other liabilities | 435,353 | 402,617 | 343,364 | |||||||||||||||||||||||||||||||||
| Total liabilities | 23,174,377 | 22,142,262 | 21,030,300 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 3,446,850 | 4,956,778 | 4,818,889 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 26,621,227 | $ | 27,099,040 | $ | 25,849,189 | ||||||||||||||||||||||||||||||
| Net interest income (1) | $ | 256,294 | $ | 251,428 | $ | 261,689 | ||||||||||||||||||||||||||||||
| Net interest spread (1) | 3.98 | % | 3.86 | % | 4.04 | % | ||||||||||||||||||||||||||||||
| Net interest margin (1) | 4.20 | % | 4.31 | % | 4.72 | % | ||||||||||||||||||||||||||||||
| Total deposits (4) | $ | 21,408,448 | $ | 13,075 | 0.25 | % | $ | 19,254,497 | $ | 28,247 | 0.59 | % | $ | 19,089,812 | $ | 38,720 | 0.81 | % | ||||||||||||||||||
(1) Tax equivalent.
(2) Includes discount accretion on acquired loans of $2.5 million, $4.8 million, and $3.5 million for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019, respectively.
(3) Includes tax-equivalent adjustments of $1.4 million, $1.2 million, and $0.5 million for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019 related to tax-exempt income on investment securities.
The federal statutory tax rate utilized was 21%.
(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculated as annualized interest expense on total deposits divided by average total deposits.
Page 17
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||
| Cash and due from banks | $ | 174,059 | $ | 172,570 | $ | 172,585 | $ | 252,596 | $ | 185,075 | ||||||||||
| Interest-earning deposits in financial institutions | 1,747,077 | 439,690 | 465,039 | 483,405 | 422,663 | |||||||||||||||
| Total cash and cash equivalents | 1,921,136 | 612,260 | 637,624 | 736,001 | 607,738 | |||||||||||||||
| Securities available-for-sale | 3,851,141 | 3,757,663 | 3,797,187 | 3,817,348 | 3,807,244 | |||||||||||||||
| Federal Home Loan Bank stock | 17,250 | 54,244 | 40,924 | 26,865 | 43,146 | |||||||||||||||
| Total investment securities | 3,868,391 | 3,811,907 | 3,838,111 | 3,844,213 | 3,850,390 | |||||||||||||||
| Gross loans and leases held for investment | 19,780,476 | 19,806,394 | 18,910,740 | 18,796,011 | 18,532,740 | |||||||||||||||
| Deferred fees, net | (85,845 | ) | (61,089 | ) | (63,868 | ) | (60,468 | ) | (59,888 | ) | ||||||||||
| Total loans and leases held for investment, net of deferred fees | 19,694,631 | 19,745,305 | 18,846,872 | 18,735,543 | 18,472,852 | |||||||||||||||
| Allowance for loan and lease losses | (301,050 | ) | (221,292 | ) | (138,785 | ) | (138,552 | ) | (135,037 | ) | ||||||||||
| Total loans and leases held for investment, net | 19,393,581 | 19,524,013 | 18,708,087 | 18,596,991 | 18,337,815 | |||||||||||||||
| Equipment leased to others under operating leases | 295,191 | 306,530 | 324,084 | 295,854 | 300,668 | |||||||||||||||
| Premises and equipment, net | 42,299 | 39,799 | 38,585 | 37,926 | 38,162 | |||||||||||||||
| Foreclosed assets, net | 1,449 | 1,701 | 440 | 1,366 | 1,472 | |||||||||||||||
| Goodwill | 1,078,670 | 1,078,670 | 2,548,670 | 2,548,670 | 2,548,670 | |||||||||||||||
| Core deposit and customer relationship intangibles, net | 30,564 | 34,446 | 38,394 | 42,547 | 47,380 | |||||||||||||||
| Other assets | 734,457 | 733,941 | 636,811 | 621,059 | 612,119 | |||||||||||||||
| Total assets | $ | 27,365,738 | $ | 26,143,267 | $ | 26,770,806 | $ | 26,724,627 | $ | 26,344,414 | ||||||||||
| LIABILITIES: | ||||||||||||||||||||
| Noninterest-bearing deposits | $ | 8,629,543 | $ | 7,510,218 | $ | 7,243,298 | $ | 7,441,185 | $ | 7,299,213 | ||||||||||
| Interest-bearing deposits | 14,299,036 | 12,065,619 | 11,989,738 | 12,292,018 | 11,506,543 | |||||||||||||||
| Total deposits | 22,928,579 | 19,575,837 | 19,233,036 | 19,733,203 | 18,805,756 | |||||||||||||||
| Borrowings | 60,000 | 2,295,000 | 1,759,008 | 1,253,031 | 1,913,059 | |||||||||||||||
| Subordinated debentures | 460,772 | 458,994 | 458,209 | 456,145 | 456,112 | |||||||||||||||
| Accrued interest payable and other liabilities | 463,489 | 423,047 | 365,856 | 362,140 | 317,477 | |||||||||||||||
| Total liabilities | 23,912,840 | 22,752,878 | 21,816,109 | 21,804,519 | 21,492,404 | |||||||||||||||
| STOCKHOLDERS' EQUITY (1) | 3,452,898 | 3,390,389 | 4,954,697 | 4,920,108 | 4,852,010 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 27,365,738 | $ | 26,143,267 | $ | 26,770,806 | $ | 26,724,627 | $ | 26,344,414 | ||||||||||
| Book value per share | $ | 29.17 | $ | 28.75 | $ | 41.36 | $ | 41.06 | $ | 40.49 | ||||||||||
| Tangible book value per share (2) | $ | 19.80 | $ | 19.31 | $ | 19.77 | $ | 19.43 | $ | 18.83 | ||||||||||
| Shares outstanding | 118,374,603 | 117,916,789 | 119,781,605 | 119,831,192 | 119,829,104 | |||||||||||||||
| (1) Includes net unrealized gain on securities available-for-sale, net | $ | 145,038 | $ | 90,916 | $ | 78,658 | $ | 95,887 | $ | 73,066 | ||||||||||
| (2) Non-GAAP measure. |
Page 18
PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)
| Three Months Ended | ||||||||||||||||||||
| June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans and leases | $ | 247,851 | $ | 262,278 | $ | 263,402 | $ | 275,978 | $ | 284,236 | ||||||||||
| Investment securities | 26,038 | 27,446 | 28,135 | 28,806 | 28,948 | |||||||||||||||
| Deposits in financial institutions | 186 | 1,608 | 2,056 | 2,424 | 1,349 | |||||||||||||||
| Total interest income | 274,075 | 291,332 | 293,593 | 307,208 | 314,533 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | 13,075 | 28,247 | 34,802 | 40,703 | 38,720 | |||||||||||||||
| Borrowings | 1,319 | 6,778 | 5,189 | 6,852 | 7,210 | |||||||||||||||
| Subordinated debentures | 5,402 | 6,560 | 6,983 | 7,417 | 7,705 | |||||||||||||||
| Total interest expense | 19,796 | 41,585 | 46,974 | 54,972 | 53,635 | |||||||||||||||
| Net interest income | 254,279 | 249,747 | 246,619 | 252,236 | 260,898 | |||||||||||||||
| Provision for credit losses | 120,000 | 112,000 | 3,000 | 7,000 | 8,000 | |||||||||||||||
| Net interest income after provision for credit losses | 134,279 | 137,747 | 243,619 | 245,236 | 252,898 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges on deposit accounts | 2,004 | 2,658 | 3,611 | 3,525 | 3,771 | |||||||||||||||
| Other commissions and fees | 10,111 | 9,721 | 10,170 | 10,855 | 11,590 | |||||||||||||||
| Leased equipment income | 12,037 | 12,251 | 10,648 | 9,615 | 9,182 | |||||||||||||||
| Gain on sale of loans and leases | 346 | 87 | 23 | 765 | 326 | |||||||||||||||
| Gain on sale of securities | 7,715 | 182 | 184 | 908 | 22,192 | |||||||||||||||
| Other income | 6,645 | 4,201 | 2,540 | 7,761 | 3,832 | |||||||||||||||
| Total noninterest income | 38,858 | 29,100 | 27,176 | 33,429 | 50,893 | |||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Compensation | 61,910 | 61,282 | 74,637 | 71,424 | 68,956 | |||||||||||||||
| Occupancy | 14,494 | 14,207 | 14,541 | 14,089 | 14,457 | |||||||||||||||
| Data processing | 7,102 | 6,454 | 6,770 | 7,044 | 6,817 | |||||||||||||||
| Other professional services | 4,146 | 4,258 | 4,261 | 4,400 | 4,629 | |||||||||||||||
| Insurance and assessments | 9,373 | 4,249 | 4,168 | 4,100 | 4,098 | |||||||||||||||
| Intangible asset amortization | 3,882 | 3,948 | 4,153 | 4,833 | 4,870 | |||||||||||||||
| Leased equipment depreciation | 7,102 | 7,205 | 6,856 | 5,951 | 5,558 | |||||||||||||||
| Foreclosed assets (income) expense, net | (146 | ) | 66 | (3,446 | ) | 8 | (146 | ) | ||||||||||||
| Acquisition, integration and reorganization costs | - | - | (269 | ) | - | - | ||||||||||||||
| Customer related expense | 4,408 | 3,932 | 3,952 | 3,539 | 3,405 | |||||||||||||||
| Loan expense | 3,379 | 2,650 | 2,967 | 3,628 | 3,451 | |||||||||||||||
| Goodwill impairment | - | 1,470,000 | - | - | - | |||||||||||||||
| Other expense | 11,315 | 9,719 | 5,138 | 7,793 | 9,332 | |||||||||||||||
| Total noninterest expense | 126,965 | 1,587,970 | 123,728 | 126,809 | 125,427 | |||||||||||||||
| Earnings (loss) before income taxes | 46,172 | (1,421,123 | ) | 147,067 | 151,856 | 178,364 | ||||||||||||||
| Income tax expense | 12,968 | 11,988 | 29,186 | 41,830 | 50,239 | |||||||||||||||
| Net earnings (loss) | $ | 33,204 | $ | (1,433,111 | ) | $ | 117,881 | $ | 110,026 | $ | 128,125 | |||||||||
| Basic and diluted earnings (loss) per share | $ | 0.28 | $ | (12.23 | ) | $ | 0.98 | $ | 0.92 | $ | 1.07 | |||||||||
| Dividends declared and paid per share | $ | 0.25 | $ | 0.60 | $ | 0.60 | $ | 0.60 | $ | 0.60 | ||||||||||
Page 19
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, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Performance Ratios: | ||||||||||||||||||||
| Return on average assets (1) | 0.50 | % | (21.27 | )% | 1.77 | % | 1.65 | % | 1.99 | % | ||||||||||
| Return on average equity (1) | 3.87 | % | (116.28 | )% | 9.49 | % | 8.93 | % | 10.66 | % | ||||||||||
| Return on average tangible equity (1)(2) | 6.39 | % | 6.88 | % | 20.68 | % | 19.84 | % | 24.03 | % | ||||||||||
| Efficiency ratio | 42.9 | % | 40.6 | % | 44.8 | % | 42.3 | % | 41.6 | % | ||||||||||
| Noninterest expense as a percentage of average assets (1) | 1.92 | % | 23.57 | % | 1.86 | % | 1.91 | % | 1.95 | % | ||||||||||
| Average Yields/Costs (1): | ||||||||||||||||||||
| Yield on: | ||||||||||||||||||||
| Average loans and leases (3) | 5.01 | % | 5.54 | % | 5.67 | % | 5.91 | % | 6.26 | % | ||||||||||
| Average interest-earning assets (3) | 4.53 | % | 5.02 | % | 5.14 | % | 5.41 | % | 5.68 | % | ||||||||||
| Cost of: | ||||||||||||||||||||
| Average interest-bearing deposits | 0.40 | % | 0.95 | % | 1.14 | % | 1.34 | % | 1.35 | % | ||||||||||
| Average total deposits | 0.25 | % | 0.59 | % | 0.71 | % | 0.83 | % | 0.81 | % | ||||||||||
| Average interest-bearing liabilities | 0.55 | % | 1.16 | % | 1.36 | % | 1.60 | % | 1.64 | % | ||||||||||
| Net interest spread (3) | 3.98 | % | 3.86 | % | 3.78 | % | 3.81 | % | 4.04 | % | ||||||||||
| Net interest margin (3) | 4.20 | % | 4.31 | % | 4.33 | % | 4.46 | % | 4.72 | % | ||||||||||
| Average Balances: | ||||||||||||||||||||
| Assets: | ||||||||||||||||||||
| Loans and leases, net of deferred fees | $ | 19,951,603 | $ | 19,065,035 | $ | 18,470,583 | $ | 18,539,281 | $ | 18,239,690 | ||||||||||
| Interest-earning assets | 24,531,204 | 23,455,636 | 22,779,867 | 22,793,676 | 22,258,828 | |||||||||||||||
| Total assets | 26,621,227 | 27,099,040 | 26,380,739 | 26,406,603 | 25,849,189 | |||||||||||||||
| Liabilities: | ||||||||||||||||||||
| Noninterest-bearing deposits | 8,292,151 | 7,357,717 | 7,338,888 | 7,487,555 | 7,544,027 | |||||||||||||||
| Interest-bearing deposits | 13,116,297 | 11,896,780 | 12,102,902 | 12,031,776 | 11,545,785 | |||||||||||||||
| Total deposits | 21,408,448 | 19,254,497 | 19,441,790 | 19,519,331 | 19,089,812 | |||||||||||||||
| Borrowings | 871,110 | 2,026,749 | 1,179,220 | 1,181,313 | 1,142,223 | |||||||||||||||
| Subordinated debentures | 459,466 | 458,399 | 456,997 | 456,011 | 454,901 | |||||||||||||||
| Interest-bearing liabilities | 14,446,873 | 14,381,928 | 13,739,119 | 13,669,100 | 13,142,909 | |||||||||||||||
| Stockholders' equity | 3,446,850 | 4,956,778 | 4,930,182 | 4,890,746 | 4,818,889 | |||||||||||||||
(1) Annualized.
(2) Non-GAAP measure.
(3) Tax equivalent.
Page 20
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, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2019 | 2019 | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Credit Quality Ratios: | ||||||||||||||||||||
| Nonaccrual loans and leases held for investment to loans and leases held for investment | 0.84 | % | 0.48 | % | 0.49 | % | 0.53 | % | 0.44 | % | ||||||||||
| Nonperforming assets to loans and leases held for investment and foreclosed assets | 0.85 | % | 0.49 | % | 0.49 | % | 0.54 | % | 0.45 | % | ||||||||||
| Classified loans and leases held for investment to loans and leases held for investment | 1.49 | % | 0.75 | % | 0.93 | % | 1.01 | % | 1.03 | % | ||||||||||
| Provision for credit losses (for the quarter) to average loans and leases held for investment (annualized) | 2.42 | % | 2.36 | % | 0.06 | % | 0.15 | % | 0.18 | % | ||||||||||
| Net charge-offs (for the quarter) to average loans and leases held for investment (annualized) | 0.27 | % | 0.40 | % | 0.02 | % | 0.10 | % | 0.25 | % | ||||||||||
| Trailing 12 months net charge-offs to average loans and leases held for investment | 0.20 | % | 0.19 | % | 0.09 | % | 0.20 | % | 0.18 | % | ||||||||||
| Allowance for credit losses to loans and leases held for investment | 1.94 | % | 1.39 | % | 0.93 | % | 0.92 | % | 0.92 | % | ||||||||||
| Allowance for credit losses to nonaccrual loans and leases held for investment | 229.7 | % | 287.5 | % | 189.1 | % | 174.0 | % | 209.1 | % | ||||||||||
| PacWest Bancorp Consolidated: | ||||||||||||||||||||
| Tier 1 leverage capital ratio (1) | 8.93 | % | 8.63 | % | 9.74 | % | 9.50 | % | 9.49 | % | ||||||||||
| Common equity tier 1 capital ratio (1) | 9.97 | % | 9.22 | % | 9.78 | % | 9.55 | % | 9.53 | % | ||||||||||
| Tier 1 capital ratio (1) | 9.97 | % | 9.22 | % | 9.78 | % | 9.55 | % | 9.53 | % | ||||||||||
| Total capital ratio (1) | 13.18 | % | 12.07 | % | 12.41 | % | 12.16 | % | 12.18 | % | ||||||||||
| Risk-weighted assets (1) | $ | 22,781,405 | $ | 24,214,209 | $ | 23,582,495 | $ | 23,579,614 | $ | 23,117,199 | ||||||||||
| Equity to assets ratio | 12.62 | % | 12.97 | % | 18.51 | % | 18.41 | % | 18.42 | % | ||||||||||
| Tangible common equity ratio (2) | 8.93 | % | 9.10 | % | 9.79 | % | 9.65 | % | 9.50 | % | ||||||||||
| Book value per share | $ | 29.17 | $ | 28.75 | $ | 41.36 | $ | 41.06 | $ | 40.49 | ||||||||||
| Tangible book value per share (2) | $ | 19.80 | $ | 19.31 | $ | 19.77 | $ | 19.43 | $ | 18.83 | ||||||||||
| Pacific Western Bank: | ||||||||||||||||||||
| Tier 1 leverage capital ratio (1) | 10.03 | % | 9.71 | % | 10.95 | % | 10.72 | % | 10.76 | % | ||||||||||
| Common equity tier 1 capital ratio (1) | 11.18 | % | 10.38 | % | 11.00 | % | 10.79 | % | 10.80 | % | ||||||||||
| Tier 1 capital ratio (1) | 11.18 | % | 10.38 | % | 11.00 | % | 10.79 | % | 10.80 | % | ||||||||||
| Total capital ratio (1) | 12.44 | % | 11.39 | % | 11.74 | % | 11.52 | % | 11.53 | % | ||||||||||
(1) Capital information for June 30, 2020 is preliminary.
(2) Non-GAAP measure.
Page 21
GAAP TO NON-GAAP RECONCILIATIONS
This press release contains certain non-GAAP financial disclosures for: (1) PPNR, (2) PPNR return on average assets (3) return on average tangible equity, (4) tangible common equity ratio, and (5) tangible book value per share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. In particular, the use of return on average tangible equity, tangible common equity ratio, tangible book value per share, and PPNR is prevalent among banking regulators, investors, and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) net earnings, (2) return on average assets, (3) return on average equity, (4) equity to assets ratio, and (5) book value per share.
The tables below present the reconciliations of these GAAP financial measures to the related non-GAAP financial measures:
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| PPNR and PPNR Return | June 30, | March 31, | June 30, | June 30, | ||||||||||||||||
| on Average Assets | 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Net earnings (loss) | $ | 33,204 | $ | (1,433,111 | ) | $ | 128,125 | $ | (1,399,907 | ) | $ | 240,729 | ||||||||
| Add: Provision for credit losses | 120,000 | 112,000 | 8,000 | 232,000 | 12,000 | |||||||||||||||
| Add: Goodwill impairment | - | 1,470,000 | - | 1,470,000 | - | |||||||||||||||
| Add: Income tax expense | 12,968 | 11,988 | 50,239 | 24,956 | 93,288 | |||||||||||||||
| Pre-provision, pre-goodwill impairment, | ||||||||||||||||||||
| pre-tax net revenue ("PPNR") | $ | 166,172 | $ | 160,877 | $ | 186,364 | $ | 327,049 | $ | 346,017 | ||||||||||
| Average assets | $ | 26,621,227 | $ | 27,099,040 | $ | 25,849,189 | $ | 26,860,133 | $ | 25,812,771 | ||||||||||
| Return on average assets (1) | 0.50 | % | (21.27 | )% | 1.99 | % | (10.48 | )% | 1.88 | % | ||||||||||
| PPNR return on average assets (2) | 2.51 | % | 2.39 | % | 2.89 | % | 2.45 | % | 2.70 | % | ||||||||||
(1) Annualized net earnings (loss) divided by average assets.
(2) Annualized PPNR divided by average assets.
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | March 31, | June 30, | June 30, | |||||||||||||||||
| Return on Average Tangible Equity | 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Net earnings (loss) | $ | 33,204 | $ | (1,433,111 | ) | $ | 128,125 | $ | (1,399,907 | ) | $ | 240,729 | ||||||||
| Add: Intangible asset amortization | 3,882 | 3,948 | 4,870 | 7,830 | 9,740 | |||||||||||||||
| Add: Goodwill impairment | - | 1,470,000 | - | 1,470,000 | - | |||||||||||||||
| Adjusted net earnings | $ | 37,086 | $ | 40,837 | $ | 132,995 | $ | 77,923 | $ | 250,469 | ||||||||||
| Average stockholders' equity | $ | 3,446,850 | $ | 4,956,778 | $ | 4,818,889 | $ | 4,201,814 | $ | 4,817,435 | ||||||||||
| Less: Average intangible assets | 1,111,302 | 2,569,189 | 2,598,762 | 1,840,246 | 2,601,288 | |||||||||||||||
| Average tangible common equity | $ | 2,335,548 | $ | 2,387,589 | $ | 2,220,127 | $ | 2,361,568 | $ | 2,216,147 | ||||||||||
| Return on average equity (1) | 3.87 | % | (116.28 | )% | 10.66 | % | (67.00 | )% | 10.08 | % | ||||||||||
| Return on average tangible equity (2) | 6.39 | % | 6.88 | % | 24.03 | % | 6.64 | % | 22.79 | % | ||||||||||
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.
Page 22
| Tangible Common Equity Ratio/ | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
| Tangible Book Value Per Share | 2020 | 2020 | 2019 | 2019 | 2019 | |||||||||||||||
| (Dollars in thousands, except per share data) | ||||||||||||||||||||
| Stockholders' equity | $ | 3,452,898 | $ | 3,390,389 | $ | 4,954,697 | $ | 4,920,108 | $ | 4,852,010 | ||||||||||
| Less: Intangible assets | 1,109,234 | 1,113,116 | 2,587,064 | 2,591,217 | 2,596,050 | |||||||||||||||
| Tangible common equity | $ | 2,343,664 | $ | 2,277,273 | $ | 2,367,633 | $ | 2,328,891 | $ | 2,255,960 | ||||||||||
| Total assets | $ | 27,365,738 | $ | 26,143,267 | $ | 26,770,806 | $ | 26,724,627 | $ | 26,344,414 | ||||||||||
| Less: Intangible assets | 1,109,234 | 1,113,116 | 2,587,064 | 2,591,217 | 2,596,050 | |||||||||||||||
| Tangible assets | $ | 26,256,504 | $ | 25,030,151 | $ | 24,183,742 | $ | 24,133,410 | $ | 23,748,364 | ||||||||||
| Equity to assets ratio | 12.62 | % | 12.97 | % | 18.51 | % | 18.41 | % | 18.42 | % | ||||||||||
| Tangible common equity ratio (1) | 8.93 | % | 9.10 | % | 9.79 | % | 9.65 | % | 9.50 | % | ||||||||||
| Book value per share | $ | 29.17 | $ | 28.75 | $ | 41.36 | $ | 41.06 | $ | 40.49 | ||||||||||
| Tangible book value per share (2) | $ | 19.80 | $ | 19.31 | $ | 19.77 | $ | 19.43 | $ | 18.83 | ||||||||||
| Shares outstanding | 118,374,603 | 117,916,789 | 119,781,605 | 119,831,192 | 119,829,104 | |||||||||||||||
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.
Page 23