Significant Items
- Net Earnings of $45.5 Million, or $0.38 Per Diluted Share
- Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $156.2 Million
- Strong Capital Position – CET1 Ratio up 49 Basis Points to 10.46%
- Core Deposits Up $1.6 Billion or 10% in Q3; Represents 88% of Total Deposits
- Tax Equivalent Net Interest Margin of 3.90% Compared to 4.20% in Q2
- Cost of Average Total Deposits Decreased to 17 Basis Points
LOS ANGELES, Oct. 14, 2020 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the third quarter of 2020 of $45.5 million, or $0.38 per diluted share, compared to net earnings for the second quarter of 2020 of $33.2 million, or $0.28 per diluted share. The increase in net earnings for the third quarter was due primarily to a $23 million decrease in the provision for credit losses.
Matt Wagner, President and CEO, commented, “Our operations continue to produce strong revenues and internal capital as evidenced by $156.2 million in PPNR during the third quarter, which resulted in a PPNR return on average assets of 2.22%. These solid operating earnings highlight the resilience of our business as we navigate the challenging economic conditions.”
Mr. Wagner continued, “We experienced strong deposit growth again in the third quarter, resulting in a significant increase in liquidity. Our average deposits in financial institutions balance was $2.6 billion in the third quarter with a yield of 10 basis points. While our focus is on managing net interest income, this excess liquidity had a negative impact on our third quarter NIM of 32 basis points.”
Mr. Wagner added, “Our priority continues to be on mitigating potential credit losses in our portfolios, especially those portfolios impacted most by COVID-19. We were proactive in downgrading loans in the first quarter at the start of the pandemic, and the net loan migration to the special mention and classified categories during the second and third quarters was minimal. As of September 30, 2020, only 3.3% of loans are on deferral with the vast majority of those expiring in November 2020, while only 13% of loans previously granted a deferral received a second modification.”
FINANCIAL HIGHLIGHTS
| At or For the | At or For the | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | June 30, | Increase | September 30, | Increase | |||||||||||||||||||
| Financial Highlights | 2020 | 2020 | (Decrease) | 2020 | 2019 | (Decrease) | |||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||||||
| Net earnings (loss) | $ | 45,503 | $ | 33,204 | $ | 12,299 | $ | (1,354,404 | ) | $ | 350,755 | $ | (1,705,159 | ) | |||||||||
| Diluted earnings (loss) | |||||||||||||||||||||||
| per share | $ | 0.38 | $ | 0.28 | $ | 0.10 | $ | (11.60 | ) | $ | 2.91 | $ | (14.51 | ) | |||||||||
| Return on average assets | 0.65 | % | 0.50 | % | 0.15 | (6.65 | )% | 1.80 | % | (8.45 | ) | ||||||||||||
| Pre-provision, pre-goodwill | |||||||||||||||||||||||
| impairment, pre-tax net | |||||||||||||||||||||||
| revenue ("PPNR") (1) | $ | 156,174 | $ | 166,172 | $ | (9,998 | ) | $ | 483,223 | $ | 504,873 | $ | (21,650 | ) | |||||||||
| PPNR return on average | |||||||||||||||||||||||
| assets (1) | 2.22 | % | 2.51 | % | (0.29 | ) | 2.37 | % | 2.59 | % | (0.22 | ) | |||||||||||
| Return on average | |||||||||||||||||||||||
| tangible equity (1) | 8.20 | % | 6.39 | % | 1.81 | 7.16 | % | 21.77 | % | (14.61 | ) | ||||||||||||
| Net interest margin ("NIM") | |||||||||||||||||||||||
| (tax equivalent) | 3.90 | % | 4.20 | % | (0.30 | ) | 4.13 | % | 4.62 | % | (0.49 | ) | |||||||||||
| Yield on average loans and | |||||||||||||||||||||||
| leases (tax equivalent) | 5.01 | % | 5.01 | % | - | 5.18 | % | 6.11 | % | (0.93 | ) | ||||||||||||
| Cost of average total | |||||||||||||||||||||||
| deposits | 0.17 | % | 0.25 | % | (0.08 | ) | 0.32 | % | 0.79 | % | (0.47 | ) | |||||||||||
| Efficiency ratio | 45.1 | % | 42.9 | % | 2.2 | 42.9 | % | 42.1 | % | 0.8 | |||||||||||||
| Total assets | $ | 28,426,716 | $ | 27,365,738 | $ | 1,060,978 | $ | 28,426,716 | $ | 26,724,627 | $ | 1,702,089 | |||||||||||
| Loans and leases held | |||||||||||||||||||||||
| for investment, | |||||||||||||||||||||||
| net of deferred fees | $ | 19,026,200 | $ | 19,694,631 | $ | (668,431 | ) | $ | 19,026,200 | $ | 18,735,543 | $ | 290,657 | ||||||||||
| Noninterest-bearing | |||||||||||||||||||||||
| demand deposits | $ | 9,346,744 | $ | 8,629,543 | $ | 717,201 | $ | 9,346,744 | $ | 7,441,185 | $ | 1,905,559 | |||||||||||
| Core deposits | $ | 21,117,629 | $ | 19,535,814 | $ | 1,581,815 | $ | 21,117,629 | $ | 16,471,264 | $ | 4,646,365 | |||||||||||
| Total deposits | $ | 23,965,695 | $ | 22,928,579 | $ | 1,037,116 | $ | 23,965,695 | $ | 19,733,203 | $ | 4,232,492 | |||||||||||
| As percentage of total | |||||||||||||||||||||||
| deposits: | |||||||||||||||||||||||
| Noninterest-bearing | |||||||||||||||||||||||
| demand deposits | 39 | % | 38 | % | 1 | 39 | % | 38 | % | 1 | |||||||||||||
| Core deposits | 88 | % | 85 | % | 3 | 88 | % | 84 | % | 4 | |||||||||||||
| Equity to assets ratio | 12.26 | % | 12.62 | % | (0.36 | ) | 12.26 | % | 18.41 | % | (6.15 | ) | |||||||||||
| Tangible common equity | |||||||||||||||||||||||
| ratio (1) | 8.71 | % | 8.93 | % | (0.22 | ) | 8.71 | % | 9.65 | % | (0.94 | ) | |||||||||||
| Book value per share | $ | 29.42 | $ | 29.17 | $ | 0.25 | $ | 29.42 | $ | 41.06 | $ | (11.64 | ) | ||||||||||
| Tangible book value per | |||||||||||||||||||||||
| share (1) | $ | 20.09 | $ | 19.80 | $ | 0.29 | $ | 20.09 | $ | 19.43 | $ | 0.66 | |||||||||||
| (1) Non-GAAP measure. | |||||||||||||||||||||||
INCOME STATEMENT HIGHLIGHTS
Net Interest Income
Net interest income decreased by $3.0 million to $251.3 million for the third quarter of 2020 compared to $254.3 million for the second quarter of 2020 due mainly to a lower balance of average loans and leases. The tax equivalent yield on average loans and leases was 5.01% for both the third and second quarters of 2020.
The tax equivalent NIM was 3.90% for the third quarter of 2020 compared to 4.20% for the second quarter of 2020. The decrease in the NIM was due mostly to the change in the earning asset mix. Average loans and leases decreased by $756 million, while the average balance of deposits in financial institutions increased by $1.8 billion in the third quarter of 2020. This excess liquidity had a negative impact on the third quarter tax equivalent NIM of 32 basis points, while the PPP loans, which have a coupon rate of 1%, had a negative impact of seven basis points.
The cost of average total deposits decreased to 0.17% for the third quarter of 2020 from 0.25% for the second quarter of 2020. The lower cost of average total deposits was due primarily to the repricing of maturing time deposits. The cost of deposits at September 30, 2020 was 0.13%.
Provision for Credit Losses
The following table presents details of the provision for credit losses for the periods indicated:
| Three Months Ended | |||||||||||
| September 30, | June 30, | Increase | |||||||||
| Provision for Credit Losses | 2020 | 2020 | (Decrease) | ||||||||
| (In thousands) | |||||||||||
| Addition to allowance for loan and lease losses | $ | 81,000 | $ | 93,000 | $ | (12,000 | ) | ||||
| Addition to reserve for unfunded | |||||||||||
| loan commitments | 16,000 | 27,000 | (11,000 | ) | |||||||
| Total provision for credit losses | $ | 97,000 | $ | 120,000 | $ | (23,000 | ) | ||||
The provision for credit losses was $97.0 million for the third quarter of 2020, down $23.0 million from the second quarter of 2020. This reduction reflected improvement in certain key macro-economic forecast variables (unemployment and real GDP growth), partially offset by deterioration in other key macro-economic variables, including CRE price index and BBB spreads, and increased provisions for individually evaluated loans and leases.
Noninterest Income
The following table presents details of noninterest income for the periods indicated:
| Three Months Ended | |||||||||||
| September 30, | June 30, | Increase | |||||||||
| Noninterest Income | 2020 | 2020 | (Decrease) | ||||||||
| (In thousands) | |||||||||||
| Service charges on deposit accounts | $ | 2,570 | $ | 2,004 | $ | 566 | |||||
| Other commissions and fees | 10,541 | 10,111 | 430 | ||||||||
| Leased equipment income | 9,900 | 12,037 | (2,137 | ) | |||||||
| Gain on sale of loans and leases | 35 | 346 | (311 | ) | |||||||
| Gain on sale of securities | 5,270 | 7,715 | (2,445 | ) | |||||||
| Other income: | |||||||||||
| Dividends and gains on equity investments | 6,945 | 2,947 | 3,998 | ||||||||
| Warrant income | 500 | 1,973 | (1,473 | ) | |||||||
| Other | 2,491 | 1,725 | 766 | ||||||||
| Total noninterest income | $ | 38,252 | $ | 38,858 | $ | (606 | ) | ||||
Noninterest income decreased by $0.6 million to $38.3 million for the third quarter of 2020 compared to $38.9 million for the second quarter of 2020 due primarily to decreases of $2.4 million in gain on sale of securities, $2.1 million in leased equipment income, and $1.5 million in warrant income, offset partially by a $4.0 million increase in dividends and gains on equity investments. The decrease in gain on sale of securities resulted from the sale of $17 million of securities for a gain of $5.3 million in the third quarter compared to sales of $122 million of securities for a gain of $7.7 million in the second quarter. The decrease in leased equipment income was due to lower gains from early lease terminations and lower rental income due to an operating lease placed on nonaccrual status in the third quarter. The decrease in warrant income was due to lower gains from exercised warrants. The increase in dividends and gains on equity investments resulted primarily from net fair value gains of $5.9 million on equity investments still held.
Noninterest Expense
The following table presents details of noninterest expense for the periods indicated:
| Three Months Ended | |||||||||||
| September 30, | June 30, | Increase | |||||||||
| Noninterest Expense | 2020 | 2020 | (Decrease) | ||||||||
| (In thousands) | |||||||||||
| Compensation | $ | 75,131 | $ | 61,910 | $ | 13,221 | |||||
| Occupancy | 14,771 | 14,494 | 277 | ||||||||
| Data processing | 6,505 | 7,102 | (597 | ) | |||||||
| Other professional services | 4,713 | 4,146 | 567 | ||||||||
| Insurance and assessments | 3,939 | 9,373 | (5,434 | ) | |||||||
| Intangible asset amortization | 3,751 | 3,882 | (131 | ) | |||||||
| Leased equipment depreciation | 7,057 | 7,102 | (45 | ) | |||||||
| Foreclosed assets expense (income), net | 335 | (146 | ) | 481 | |||||||
| Customer related expense | 4,762 | 4,408 | 354 | ||||||||
| Loan expense | 3,499 | 3,379 | 120 | ||||||||
| Other | 8,939 | 11,315 | (2,376 | ) | |||||||
| Total noninterest expense | 133,402 | 126,965 | 6,437 | ||||||||
Noninterest expense increased by $6.4 million to $133.4 million for the third quarter of 2020 compared to $127.0 million for the second quarter of 2020 attributable primarily to a $13.2 million increase in compensation expense, offset partially by decreases of $5.4 million in insurance and assessments expense and $2.4 million in other expense. The increase in compensation expense was due mainly to higher bonus accruals of $12.4 million and stock compensation expense of $1.4 million. The decrease in insurance and assessments expense was due to a decrease in the FDIC assessment expense due primarily to increases in liquidity and uninsured deposits during the last two quarters. The decrease in other expense was due primarily to $6.6 million in prepayment penalties incurred in the second quarter from the early payoff of $750 million of FHLB term advances, which was offset partially by higher legal accruals in the third quarter.
Income Taxes
The effective income tax rate was 23.1% for the third quarter compared to 28.1% for the second quarter of 2020. Excluding non-deductible goodwill impairment, the effective tax rate for the full year 2020 is currently estimated to be in the range of 25-27%. The lower effective tax rate in the third quarter was due mainly to higher shortfall amounts from restricted stock vestings in the second quarter that elevated the second quarter effective tax rate.
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 | Nine Months Ended | |||||||||||
| Roll Forward of Loans and Leases Held | September 30, | June 30, | September 30, | |||||||||
| for Investment, Net of Deferred Fees (1) | 2020 | 2020 | 2020 | |||||||||
| (Dollars in thousands) | ||||||||||||
| Balance, beginning of period | $ | 19,694,631 | $ | 19,745,305 | $ | 18,846,872 | ||||||
| Additions: | ||||||||||||
| Production | 519,671 | 1,802,956 | 3,112,373 | |||||||||
| Disbursements | 1,008,336 | 800,458 | 3,805,874 | |||||||||
| Total production and disbursements | 1,528,007 | 2,603,414 | 6,918,247 | |||||||||
| Reductions: | ||||||||||||
| Payoffs | (982,889 | ) | (612,837 | ) | (2,408,433 | ) | ||||||
| Paydowns | (1,160,692 | ) | (2,022,376 | ) | (4,236,773 | ) | ||||||
| Total payoffs and paydowns | (2,143,581 | ) | (2,635,213 | ) | (6,645,206 | ) | ||||||
| Sales | (2,979 | ) | (3,089 | ) | (6,068 | ) | ||||||
| Transfers to foreclosed assets | (12,594 | ) | - | (14,370 | ) | |||||||
| Charge-offs | (37,284 | ) | (15,786 | ) | (73,275 | ) | ||||||
| Total reductions | (2,196,438 | ) | (2,654,088 | ) | (6,738,919 | ) | ||||||
| Net (decrease) increase | (668,431 | ) | (50,674 | ) | 179,328 | |||||||
| Balance, end of period | $ | 19,026,200 | $ | 19,694,631 | $ | 19,026,200 | ||||||
| Weighted average rate on production (2) | 4.95 | % | 2.33 | % | 3.27 | % | ||||||
| (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 23 basis points to loan | ||||||||||||
| yields in 2020. | ||||||||||||
Loans and leases held for investment, net of deferred fees, decreased by $668.4 million in the third quarter of 2020 to $19.0 billion at September 30, 2020. The majority of the decrease in the loans and leases balance in the third quarter of 2020 was in the commercial category as business lending demand has decreased during the COVID-19 pandemic. Total revolving balances declined by approximately $350 million in the third quarter due to a lower line utilization rate. The largest decreases were in the lender finance, equipment finance, venture capital, and security monitoring portfolios. The weighted average rate on third quarter production increased to 4.95%. The increase was due to the unusually low rate on second quarter production since $1.2 billion, or 69%, of second quarter loan production related to PPP loans at a coupon rate of 1%. Excluding PPP loans, the weighted average rate on second quarter production was 5.39%.
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:
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||
| % of | % of | % of | ||||||||||||
| Loan and Lease Portfolio | Balance | Total | Balance | Total | Balance | Total | ||||||||
| (In thousands) | ||||||||||||||
| Real estate mortgage: | ||||||||||||||
| Commercial | $ | 4,192,466 | 22 | % | $ | 4,222,075 | 22 | % | $ | 4,300,566 | 23 | % | ||
| Income producing and other | ||||||||||||||
| residential | 3,684,579 | 19 | % | 3,733,659 | 19 | % | 3,596,358 | 19 | % | |||||
| Total real estate mortgage | 7,877,045 | 41 | % | 7,955,734 | 41 | % | 7,896,924 | 42 | % | |||||
| Real estate construction and land: | ||||||||||||||
| Commercial | 1,241,647 | 7 | % | 1,167,609 | 6 | % | 1,009,362 | 6 | % | |||||
| Residential | 2,182,100 | 11 | % | 2,172,919 | 11 | % | 1,542,112 | 8 | % | |||||
| Total real estate construction | ||||||||||||||
| and land | 3,423,747 | 18 | % | 3,340,528 | 17 | % | 2,551,474 | 14 | % | |||||
| Total real estate | 11,300,792 | 59 | % | 11,296,262 | 58 | % | 10,448,398 | 56 | % | |||||
| Commercial: | ||||||||||||||
| Asset-based | 3,153,048 | 17 | % | 3,412,431 | 17 | % | 3,810,741 | 20 | % | |||||
| Venture capital | 1,637,132 | 9 | % | 1,814,341 | 9 | % | 2,209,649 | 12 | % | |||||
| Other commercial | 2,572,994 | 13 | % | 2,760,278 | 14 | % | 1,858,167 | 10 | % | |||||
| Total commercial | 7,363,174 | 39 | % | 7,987,050 | 40 | % | 7,878,557 | 42 | % | |||||
| Consumer | 362,234 | 2 | % | 411,319 | 2 | % | 408,588 | 2 | % | |||||
| Total loans and leases held for | ||||||||||||||
| investment, net of deferred fees | $ | 19,026,200 | 100 | % | $ | 19,694,631 | 100 | % | $ | 18,735,543 | 100 | % | ||
| Total unfunded loan commitments | $ | 7,178,506 | $ | 7,745,921 | $ | 7,790,796 | ||||||||
Allowance for Credit Losses
The following tables present roll forwards of the allowance for credit losses for the periods indicated:
| Three Months Ended September 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 | $ | 301,050 | $ | 80,571 | $ | 381,621 | |||||
| Charge-offs | (37,284 | ) | - | (37,284 | ) | ||||||
| Recoveries | 1,200 | - | 1,200 | ||||||||
| Net charge-offs | (36,084 | ) | - | (36,084 | ) | ||||||
| Provision | 81,000 | 16,000 | 97,000 | ||||||||
| Ending balance | $ | 345,966 | $ | 96,571 | $ | 442,537 | |||||
| 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 | |||||
The allowance for credit losses increased by $60.9 million in the third quarter of 2020 to $442.5 million. The increase in the allowance for credit losses during the third quarter was attributable to changes in the economic forecast and changes to modeling assumptions. Net charge-offs increased from $13.2 million in the second quarter to $36.1 million in the third quarter due primarily to one security monitoring loan with a charge-off of $32.8 million. This loan was the only junior lien exposure in the security monitoring portfolio and, accordingly, additional losses of this magnitude are not expected.
Gross charge-offs for the third quarter of 2020 were $37.3 million and included $35.4 million for other commercial loans and $1.5 million for commercial real estate mortgage loans compared to gross charge-offs for the second quarter of 2020 of $15.8 million that 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.
Recoveries for the third quarter of 2020 were $1.2 million and included $0.6 million for venture capital loans and $0.3 million for other commercial loans compared to recoveries for the second quarter of 2020 of $2.5 million that included $2.3 million for other commercial loans.
For the three and nine months ended September 30, 2020, annualized net charge-offs to average loans and leases were 0.75% and 0.47%, respectively.
The allowance for credit losses as a percentage of loans and leases held for investment was 2.33% at September 30, 2020 and 1.94% at June 30, 2020. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.82% at September 30, 2020 and 1.53% at June 30, 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 2.48% and 1.94% at September 30, 2020, respectively, compared to 2.06% and 1.63% at June 30, 2020, respectively.
Deposits and Client Investment Funds
The following table presents the composition of our deposit portfolio as of the dates indicated:
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||
| % of | % of | % of | ||||||||||||
| Deposit Composition | Balance | Total | Balance | Total | Balance | Total | ||||||||
| (Dollars in thousands) | ||||||||||||||
| Noninterest-bearing demand | $ | 9,346,744 | 39 | % | $ | 8,629,543 | 38 | % | $ | 7,441,185 | 38 | % | ||
| Interest checking | 4,657,511 | 20 | % | 4,858,168 | 21 | % | 3,645,660 | 18 | % | |||||
| Money market | 6,539,313 | 27 | % | 5,498,150 | 24 | % | 4,870,344 | 25 | % | |||||
| Savings | 574,061 | 2 | % | 549,953 | 2 | % | 514,075 | 3 | % | |||||
| Total core deposits | 21,117,629 | 88 | % | 19,535,814 | 85 | % | 16,471,264 | 84 | % | |||||
| Non-core non-maturity deposits | 1,123,909 | 5 | % | 1,217,266 | 5 | % | 479,732 | 2 | % | |||||
| Total non-maturity deposits | 22,241,538 | 93 | % | 20,753,080 | 90 | % | 16,950,996 | 86 | % | |||||
| Time deposits $250,000 and under | 1,047,621 | 4 | % | 1,522,928 | 7 | % | 2,282,976 | 12 | % | |||||
| Time deposits over $250,000 | 676,536 | 3 | % | 652,571 | 3 | % | 499,231 | 2 | % | |||||
| Total time deposits | 1,724,157 | 7 | % | 2,175,499 | 10 | % | 2,782,207 | 14 | % | |||||
| Total deposits | $ | 23,965,695 | 100 | % | $ | 22,928,579 | 100 | % | $ | 19,733,203 | 100 | % | ||
At September 30, 2020, core deposits totaled $21.1 billion, or 88% of total deposits, including $9.3 billion of noninterest-bearing demand deposits, or 39% of total deposits. Core deposits increased by $1.6 billion in the third quarter driven by continued strong deposit growth from our venture banking clients.
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 September 30, 2020 were $1.2 billion, of which $1.0 billion was managed by PWAM.
CREDIT QUALITY
The following table presents loan and lease credit quality metrics as of the dates indicated:
| September 30, | June 30, | Increase | |||||||||
| Credit Quality Metrics | 2020 | 2020 | (Decrease) | ||||||||
| (Dollars in thousands) | |||||||||||
| NPAs and Performing TDRs: | |||||||||||
| Nonaccrual loans and leases held for investment (1) | $ | 85,615 | $ | 166,113 | $ | (80,498 | ) | ||||
| Accruing loans contractually past due 90 days or more | - | - | - | ||||||||
| Foreclosed assets, net | 13,747 | 1,449 | 12,298 | ||||||||
| Total nonperforming assets ("NPAs") | $ | 99,362 | $ | 167,562 | $ | (68,200 | ) | ||||
| Performing TDRs held for investment | $ | 13,679 | $ | 15,037 | $ | (1,358 | ) | ||||
| Nonaccrual loans and leases held for investment | |||||||||||
| to loans and leases held for investment | 0.45 | % | 0.84 | % | |||||||
| Nonperforming assets to loans and leases | |||||||||||
| held for investment and foreclosed assets | 0.52 | % | 0.85 | % | |||||||
| Loan and Lease Credit Risk Ratings: | |||||||||||
| Pass | $ | 17,967,872 | $ | 18,635,004 | $ | (667,132 | ) | ||||
| Special mention | 783,756 | 766,397 | 17,359 | ||||||||
| Classified | 274,572 | 293,230 | (18,658 | ) | |||||||
| Total loans and leases held for investment, | |||||||||||
| net of deferred fees | $ | 19,026,200 | $ | 19,694,631 | $ | (668,431 | ) | ||||
| Classified loans and leases held for investment | |||||||||||
| to loans and leases held for investment | 1.44 | % | 1.49 | % | |||||||
| Allowance for Credit Losses: | |||||||||||
| Allowance for loan and lease losses | $ | 345,966 | $ | 301,050 | $ | 44,916 | |||||
| Reserve for unfunded loan commitments | 96,571 | 80,571 | 16,000 | ||||||||
| Allowance for credit losses | $ | 442,537 | $ | 381,621 | $ | 60,916 | |||||
| Provision for credit losses (for the quarter) | $ | 97,000 | $ | 120,000 | $ | (23,000 | ) | ||||
| Net charge-offs (for the quarter) | $ | 36,084 | $ | 13,242 | $ | 22,842 | |||||
| Net charge-offs to average loans and leases | |||||||||||
| (for the quarter) | 0.75 | % | 0.27 | % | |||||||
| Allowance for loan and lease losses to loans | |||||||||||
| and leases held for investment | 1.82 | % | 1.53 | % | |||||||
| Allowance for credit losses to loans and leases | |||||||||||
| held for investment | 2.33 | % | 1.94 | % | |||||||
| Allowance for credit losses to nonaccrual loans | |||||||||||
| and leases held for investment | 516.9 | % | 229.7 | % | |||||||
| (1) Nonaccrual loans include guaranteed amounts of $13.8 million at September 30, 2020 and $16.2 million | |||||||||||
| at June 30, 2020. | |||||||||||
During the third quarter of 2020, classified loans and leases decreased by $18.7 million driven mostly by payoffs, paydowns, and other reductions of $55.0 million, charge-offs of $35.7 million, and the transfer to other real estate owned of $12.6 million, offset partially by the migration of $66.0 million in loans and leases from special mention and downgrades from pass of $19.4 million. Special mention loans and leases increased by $17.4 million driven mainly by downgrades from pass of $167.3 million, offset partially by upgrades to pass of $39.4 million, payoffs, paydowns, and other reductions of $44.5 million, and the migration of $66.0 million in loans and leases to classified.
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:
| September 30, 2020 | June 30, 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 | $ | 45,120 | $ | - | $ | 61,771 | $ | - | $ | (16,651 | ) | $ | - | ||||||||||
| Income producing and other | |||||||||||||||||||||||
| residential | 2,008 | 1,761 | 2,207 | - | (199 | ) | 1,761 | ||||||||||||||||
| Total real estate mortgage | 47,128 | 1,761 | 63,978 | - | (16,850 | ) | 1,761 | ||||||||||||||||
| Real estate construction and land: | |||||||||||||||||||||||
| Commercial | 324 | - | 337 | - | (13 | ) | - | ||||||||||||||||
| Residential | - | 3,108 | - | 1,021 | - | 2,087 | |||||||||||||||||
| Total real estate | |||||||||||||||||||||||
| construction and land | 324 | 3,108 | 337 | 1,021 | (13 | ) | 2,087 | ||||||||||||||||
| Commercial: | |||||||||||||||||||||||
| Asset-based | 2,817 | - | 19,013 | 3,697 | (16,196 | ) | (3,697 | ) | |||||||||||||||
| Venture capital | 2,001 | 2,319 | 8,270 | 1,924 | (6,269 | ) | 395 | ||||||||||||||||
| Other commercial | 32,941 | 185 | 73,995 | 191 | (41,054 | ) | (6 | ) | |||||||||||||||
| Total commercial | 37,759 | 2,504 | 101,278 | 5,812 | (63,519 | ) | (3,308 | ) | |||||||||||||||
| Consumer | 404 | 791 | 520 | 1,067 | (116 | ) | (276 | ) | |||||||||||||||
| Total held for investment | $ | 85,615 | $ | 8,164 | $ | 166,113 | $ | 7,900 | $ | (80,498 | ) | $ | 264 | ||||||||||
During the third quarter of 2020, nonaccrual loans and leases decreased by $80.5 million due primarily to charge-offs of $35 million, payoffs of $29 million, and transfers to foreclosed assets of $12.6 million.
CAPITAL
The following table presents certain actual capital ratios and ratios excluding PPP loans:
| September 30, 2020 | ||||||||
| Excluding | June 30, | |||||||
| PPP | 2020 | |||||||
| Actual (1) | Loans (1) | Actual | ||||||
| PacWest Bancorp Consolidated: | ||||||||
| Tier 1 leverage capital ratio | 8.66 | % | 9.07 | % | (3) | 8.93 | % | |
| Common equity tier 1 capital ratio | 10.46 | % | 10.46 | % | 9.97 | % | ||
| Total capital ratio | 13.74 | % | 13.74 | % | 13.18 | % | ||
| Tangible common equity ratio (2) | 8.71 | % | 9.12 | % | (3) | 8.93 | % | |
| (1) Capital information for September 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 third 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 $28 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 72 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.
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, the magnitude of individual loan losses on security monitoring loans, 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.
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||||
| September 30, | June 30, | September 30, | |||||||||
| 2020 | 2020 | 2019 | |||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| ASSETS: | |||||||||||
| Cash and due from banks | $ | 187,176 | $ | 174,059 | $ | 252,596 | |||||
| Interest-earning deposits in financial institutions | 2,766,020 | 1,747,077 | 483,405 | ||||||||
| Total cash and cash equivalents | 2,953,196 | 1,921,136 | 736,001 | ||||||||
| Securities available-for-sale, at estimated fair value | 4,532,614 | 3,851,141 | 3,817,348 | ||||||||
| Federal Home Loan Bank stock, at cost | 17,250 | 17,250 | 26,865 | ||||||||
| Total investment securities | 4,549,864 | 3,868,391 | 3,844,213 | ||||||||
| Gross loans and leases held for investment | 19,101,680 | 19,780,476 | 18,796,011 | ||||||||
| Deferred fees, net | (75,480 | ) | (85,845 | ) | (60,468 | ) | |||||
| Total loans and leases held for investment, | |||||||||||
| net of deferred fees | 19,026,200 | 19,694,631 | 18,735,543 | ||||||||
| Allowance for loan and lease losses | (345,966 | ) | (301,050 | ) | (138,552 | ) | |||||
| Total loans and leases held for investment, net | 18,680,234 | 19,393,581 | 18,596,991 | ||||||||
| Equipment leased to others under operating leases | 286,425 | 295,191 | 295,854 | ||||||||
| Premises and equipment, net | 40,544 | 42,299 | 37,926 | ||||||||
| Foreclosed assets, net | 13,747 | 1,449 | 1,366 | ||||||||
| Goodwill | 1,078,670 | 1,078,670 | 2,548,670 | ||||||||
| Core deposit and customer relationship intangibles, net | 26,813 | 30,564 | 42,547 | ||||||||
| Other assets | 797,223 | 734,457 | 621,059 | ||||||||
| Total assets | $ | 28,426,716 | $ | 27,365,738 | $ | 26,724,627 | |||||
| LIABILITIES: | |||||||||||
| Noninterest-bearing deposits | $ | 9,346,744 | $ | 8,629,543 | $ | 7,441,185 | |||||
| Interest-bearing deposits | 14,618,951 | 14,299,036 | 12,292,018 | ||||||||
| Total deposits | 23,965,695 | 22,928,579 | 19,733,203 | ||||||||
| Borrowings | 60,000 | 60,000 | 1,253,031 | ||||||||
| Subordinated debentures | 463,282 | 460,772 | 456,145 | ||||||||
| Accrued interest payable and other liabilities | 451,508 | 463,489 | 362,140 | ||||||||
| Total liabilities | 24,940,485 | 23,912,840 | 21,804,519 | ||||||||
| STOCKHOLDERS' EQUITY (1) | 3,486,231 | 3,452,898 | 4,920,108 | ||||||||
| Total liabilities and stockholders’ equity | $ | 28,426,716 | $ | 27,365,738 | $ | 26,724,627 | |||||
| Book value per share | $ | 29.42 | $ | 29.17 | $ | 41.06 | |||||
| Tangible book value per share (2) | $ | 20.09 | $ | 19.80 | $ | 19.43 | |||||
| Shares outstanding | 118,489,927 | 118,374,603 | 119,831,192 | ||||||||
| (1) Includes net unrealized gain on securities | |||||||||||
| available-for-sale, net | $ | 155,474 | $ | 145,038 | $ | 95,887 | |||||
| (2) Non-GAAP measure. | |||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS) | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Interest income: | |||||||||||||||||||
| Loans and leases | $ | 240,811 | $ | 247,851 | $ | 275,978 | $ | 750,940 | $ | 834,443 | |||||||||
| Investment securities | 24,443 | 26,038 | 28,806 | 77,927 | 87,434 | ||||||||||||||
| Deposits in financial institutions | 654 | 186 | 2,424 | 2,448 | 4,423 | ||||||||||||||
| Total interest income | 265,908 | 274,075 | 307,208 | 831,315 | 926,300 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Deposits | 9,887 | 13,075 | 40,703 | 51,209 | 113,658 | ||||||||||||||
| Borrowings | 27 | 1,319 | 6,852 | 8,124 | 21,772 | ||||||||||||||
| Subordinated debentures | 4,670 | 5,402 | 7,417 | 16,632 | 22,860 | ||||||||||||||
| Total interest expense | 14,584 | 19,796 | 54,972 | 75,965 | 158,290 | ||||||||||||||
| Net interest income | 251,324 | 254,279 | 252,236 | 755,350 | 768,010 | ||||||||||||||
| Provision for credit losses | 97,000 | 120,000 | 7,000 | 329,000 | 19,000 | ||||||||||||||
| Net interest income after | |||||||||||||||||||
| provision for credit losses | 154,324 | 134,279 | 245,236 | 426,350 | 749,010 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Service charges on deposit accounts | 2,570 | 2,004 | 3,525 | 7,232 | 11,026 | ||||||||||||||
| Other commissions and fees | 10,541 | 10,111 | 10,855 | 30,373 | 33,453 | ||||||||||||||
| Leased equipment income | 9,900 | 12,037 | 9,615 | 34,188 | 28,079 | ||||||||||||||
| Gain on sale of loans and leases | 35 | 346 | 765 | 468 | 1,091 | ||||||||||||||
| Gain on sale of securities | 5,270 | 7,715 | 908 | 13,167 | 25,261 | ||||||||||||||
| Other income | 9,936 | 6,645 | 7,761 | 20,782 | 16,476 | ||||||||||||||
| Total noninterest income | 38,252 | 38,858 | 33,429 | 106,210 | 115,386 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||
| Compensation | 75,131 | 61,910 | 71,424 | 198,323 | 211,225 | ||||||||||||||
| Occupancy | 14,771 | 14,494 | 14,089 | 43,472 | 42,866 | ||||||||||||||
| Data processing | 6,505 | 7,102 | 7,044 | 20,061 | 20,786 | ||||||||||||||
| Other professional services | 4,713 | 4,146 | 4,400 | 13,117 | 13,542 | ||||||||||||||
| Insurance and assessments | 3,939 | 9,373 | 4,100 | 17,561 | 12,236 | ||||||||||||||
| Intangible asset amortization | 3,751 | 3,882 | 4,833 | 11,581 | 14,573 | ||||||||||||||
| Leased equipment depreciation | 7,057 | 7,102 | 5,951 | 21,364 | 17,160 | ||||||||||||||
| Foreclosed assets expense (income), net | 335 | (146 | ) | 8 | 255 | (109 | ) | ||||||||||||
| Acquisition, integration and | |||||||||||||||||||
| reorganization costs | - | - | - | - | 618 | ||||||||||||||
| Customer related expense | 4,762 | 4,408 | 3,539 | 13,102 | 9,887 | ||||||||||||||
| Loan expense | 3,499 | 3,379 | 3,628 | 9,528 | 9,964 | ||||||||||||||
| Goodwill impairment | - | - | - | 1,470,000 | - | ||||||||||||||
| Other expense | 8,939 | 11,315 | 7,793 | 29,973 | 25,775 | ||||||||||||||
| Total noninterest expense | 133,402 | 126,965 | 126,809 | 1,848,337 | 378,523 | ||||||||||||||
| Earnings (loss) before income taxes | 59,174 | 46,172 | 151,856 | (1,315,777 | ) | 485,873 | |||||||||||||
| Income tax expense | 13,671 | 12,968 | 41,830 | 38,627 | 135,118 | ||||||||||||||
| Net earnings (loss) | $ | 45,503 | $ | 33,204 | $ | 110,026 | $ | (1,354,404 | ) | $ | 350,755 | ||||||||
| Basic and diluted earnings (loss) per share | $ | 0.38 | $ | 0.28 | $ | 0.92 | $ | (11.60 | ) | $ | 2.91 | ||||||||
| Dividends declared and paid per share | $ | 0.25 | $ | 0.25 | $ | 0.60 | $ | 1.10 | $ | 1.80 | |||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| NET EARNINGS (LOSS) PER SHARE CALCULATIONS | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||
| Basic Earnings (Loss) Per Share: | |||||||||||||||||||
| Net earnings (loss) | $ | 45,503 | $ | 33,204 | $ | 110,026 | $ | (1,354,404 | ) | $ | 350,755 | ||||||||
| Less: earnings allocated to unvested | |||||||||||||||||||
| restricted stock (1) | (578 | ) | (362 | ) | (1,369 | ) | (1,603 | ) | (3,725 | ) | |||||||||
| Net earnings (loss) allocated to | |||||||||||||||||||
| common shares | $ | 44,925 | $ | 32,842 | $ | 108,657 | $ | (1,356,007 | ) | $ | 347,030 | ||||||||
| Weighted-average basic shares and | |||||||||||||||||||
| unvested restricted stock outstanding | 118,438 | 118,192 | 119,831 | 118,469 | 120,691 | ||||||||||||||
| Less: weighted-average unvested | |||||||||||||||||||
| restricted stock outstanding | (1,684 | ) | (1,606 | ) | (1,622 | ) | (1,596 | ) | (1,480 | ) | |||||||||
| Weighted-average basic shares | |||||||||||||||||||
| outstanding | 116,754 | 116,586 | 118,209 | 116,873 | 119,211 | ||||||||||||||
| Basic earnings (loss) per share | $ | 0.38 | $ | 0.28 | $ | 0.92 | $ | (11.60 | ) | $ | 2.91 | ||||||||
| Diluted Earnings (Loss) Per Share: | |||||||||||||||||||
| Net earnings (loss) allocated to | |||||||||||||||||||
| common shares | $ | 44,925 | $ | 32,842 | $ | 108,657 | $ | (1,356,007 | ) | $ | 347,030 | ||||||||
| Weighted-average diluted shares | |||||||||||||||||||
| outstanding | 116,754 | 116,586 | 118,209 | 116,873 | 119,211 | ||||||||||||||
| Diluted earnings (loss) per share | $ | 0.38 | $ | 0.28 | $ | 0.92 | $ | (11.60 | ) | $ | 2.91 | ||||||||
| (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. | |||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||
| AVERAGE BALANCE SHEET AND YIELD ANALYSIS | |||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | September 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) | $ | 19,195,737 | $ | 241,547 | 5.01 | % | $ | 19,951,603 | $ | 248,474 | 5.01 | % | $ | 18,539,281 | $ | 276,309 | 5.91 | % | |||||||||||||||||
| Investment securities (3) | 4,107,915 | 26,015 | 2.52 | % | 3,846,459 | 27,430 | 2.87 | % | 3,809,243 | 32,213 | 3.36 | % | |||||||||||||||||||||||
| Deposits in financial | |||||||||||||||||||||||||||||||||||
| institutions | 2,554,349 | 654 | 0.10 | % | 733,142 | 186 | 0.10 | % | 445,152 | 2,424 | 2.16 | % | |||||||||||||||||||||||
| Total interest-earning | |||||||||||||||||||||||||||||||||||
| assets (1) | 25,858,001 | 268,216 | 4.13 | % | 24,531,204 | 276,090 | 4.53 | % | 22,793,676 | 310,946 | 5.41 | % | |||||||||||||||||||||||
| Other assets | 2,077,192 | 2,090,023 | 3,612,927 | ||||||||||||||||||||||||||||||||
| Total assets | $ | 27,935,193 | $ | 26,621,227 | $ | 26,406,603 | |||||||||||||||||||||||||||||
| Liabilities and | |||||||||||||||||||||||||||||||||||
| Stockholders' Equity: | |||||||||||||||||||||||||||||||||||
| Interest checking | $ | 4,904,614 | 2,019 | 0.16 | % | $ | 4,001,750 | 1,573 | 0.16 | % | $ | 3,598,698 | 11,942 | 1.32 | % | ||||||||||||||||||||
| Money market | 7,170,842 | 3,081 | 0.17 | % | 6,114,354 | 2,856 | 0.19 | % | 5,121,856 | 14,807 | 1.15 | % | |||||||||||||||||||||||
| Savings | 565,395 | 35 | 0.02 | % | 524,335 | 33 | 0.03 | % | 515,649 | 218 | 0.17 | % | |||||||||||||||||||||||
| Time | 1,876,072 | 4,752 | 1.01 | % | 2,475,858 | 8,613 | 1.40 | % | 2,795,573 | 13,736 | 1.95 | % | |||||||||||||||||||||||
| Total interest-bearing | |||||||||||||||||||||||||||||||||||
| deposits | 14,516,923 | 9,887 | 0.27 | % | 13,116,297 | 13,075 | 0.40 | % | 12,031,776 | 40,703 | 1.34 | % | |||||||||||||||||||||||
| Borrowings | 181,315 | 27 | 0.06 | % | 871,110 | 1,319 | 0.61 | % | 1,181,313 | 6,852 | 2.30 | % | |||||||||||||||||||||||
| Subordinated debentures | 462,375 | 4,670 | 4.02 | % | 459,466 | 5,402 | 4.73 | % | 456,011 | 7,417 | 6.45 | % | |||||||||||||||||||||||
| Total interest-bearing | |||||||||||||||||||||||||||||||||||
| liabilities | 15,160,613 | 14,584 | 0.38 | % | 14,446,873 | 19,796 | 0.55 | % | 13,669,100 | 54,972 | 1.60 | % | |||||||||||||||||||||||
| Noninterest-bearing | |||||||||||||||||||||||||||||||||||
| demand deposits | 8,812,391 | 8,292,151 | 7,487,555 | ||||||||||||||||||||||||||||||||
| Other liabilities | 464,320 | 435,353 | 359,202 | ||||||||||||||||||||||||||||||||
| Total liabilities | 24,437,324 | 23,174,377 | 21,515,857 | ||||||||||||||||||||||||||||||||
| Stockholders' equity | 3,497,869 | 3,446,850 | 4,890,746 | ||||||||||||||||||||||||||||||||
| Total liabilities and | |||||||||||||||||||||||||||||||||||
| stockholders' equity | $ | 27,935,193 | $ | 26,621,227 | $ | 26,406,603 | |||||||||||||||||||||||||||||
| Net interest income (1) | $ | 253,632 | $ | 256,294 | $ | 255,974 | |||||||||||||||||||||||||||||
| Net interest spread (1) | 3.75 | % | 3.98 | % | 3.81 | % | |||||||||||||||||||||||||||||
| Net interest margin (1) | 3.90 | % | 4.20 | % | 4.46 | % | |||||||||||||||||||||||||||||
| Total deposits (4) | $ | 23,329,314 | $ | 9,887 | 0.17 | % | $ | 21,408,448 | $ | 13,075 | 0.25 | % | $ | 19,519,331 | $ | 40,703 | 0.83 | % | |||||||||||||||||
| (1) Tax equivalent. | |||||||||||||||||||||||||||||||||||
| (2) Includes discount accretion on acquired loans of $2.0 million, $2.5 million, and $2.6 million for the three months ended September 30, 2020, | |||||||||||||||||||||||||||||||||||
| June 30, 2020, and September 30, 2019, respectively. | |||||||||||||||||||||||||||||||||||
| (3) Includes tax-equivalent adjustments of $1.6 million, $1.4 million, and $3.4 million for the three months ended September 30, 2020, | |||||||||||||||||||||||||||||||||||
| June 30, 2020, and September 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. | |||||||||||||||||||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER BALANCE SHEET | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| ASSETS: | |||||||||||||||||||
| Cash and due from banks | $ | 187,176 | $ | 174,059 | $ | 172,570 | $ | 172,585 | $ | 252,596 | |||||||||
| Interest-earning deposits in financial | |||||||||||||||||||
| institutions | 2,766,020 | 1,747,077 | 439,690 | 465,039 | 483,405 | ||||||||||||||
| Total cash and cash equivalents | 2,953,196 | 1,921,136 | 612,260 | 637,624 | 736,001 | ||||||||||||||
| Securities available-for-sale | 4,532,614 | 3,851,141 | 3,757,663 | 3,797,187 | 3,817,348 | ||||||||||||||
| Federal Home Loan Bank stock | 17,250 | 17,250 | 54,244 | 40,924 | 26,865 | ||||||||||||||
| Total investment securities | 4,549,864 | 3,868,391 | 3,811,907 | 3,838,111 | 3,844,213 | ||||||||||||||
| Gross loans and leases held for investment | 19,101,680 | 19,780,476 | 19,806,394 | 18,910,740 | 18,796,011 | ||||||||||||||
| Deferred fees, net | (75,480 | ) | (85,845 | ) | (61,089 | ) | (63,868 | ) | (60,468 | ) | |||||||||
| Total loans and leases held for | |||||||||||||||||||
| investment, net of deferred fees | 19,026,200 | 19,694,631 | 19,745,305 | 18,846,872 | 18,735,543 | ||||||||||||||
| Allowance for loan and lease losses | (345,966 | ) | (301,050 | ) | (221,292 | ) | (138,785 | ) | (138,552 | ) | |||||||||
| Total loans and leases held for | |||||||||||||||||||
| investment, net | 18,680,234 | 19,393,581 | 19,524,013 | 18,708,087 | 18,596,991 | ||||||||||||||
| Equipment leased to others under | |||||||||||||||||||
| operating leases | 286,425 | 295,191 | 306,530 | 324,084 | 295,854 | ||||||||||||||
| Premises and equipment, net | 40,544 | 42,299 | 39,799 | 38,585 | 37,926 | ||||||||||||||
| Foreclosed assets, net | 13,747 | 1,449 | 1,701 | 440 | 1,366 | ||||||||||||||
| Goodwill | 1,078,670 | 1,078,670 | 1,078,670 | 2,548,670 | 2,548,670 | ||||||||||||||
| Core deposit and customer relationship | |||||||||||||||||||
| intangibles, net | 26,813 | 30,564 | 34,446 | 38,394 | 42,547 | ||||||||||||||
| Other assets | 797,223 | 734,457 | 733,941 | 636,811 | 621,059 | ||||||||||||||
| Total assets | $ | 28,426,716 | $ | 27,365,738 | $ | 26,143,267 | $ | 26,770,806 | $ | 26,724,627 | |||||||||
| LIABILITIES: | |||||||||||||||||||
| Noninterest-bearing deposits | 9,346,744 | 8,629,543 | 7,510,218 | 7,243,298 | 7,441,185 | ||||||||||||||
| Interest-bearing deposits | 14,618,951 | 14,299,036 | 12,065,619 | 11,989,738 | 12,292,018 | ||||||||||||||
| Total deposits | 23,965,695 | 22,928,579 | 19,575,837 | 19,233,036 | 19,733,203 | ||||||||||||||
| Borrowings | 60,000 | 60,000 | 2,295,000 | 1,759,008 | 1,253,031 | ||||||||||||||
| Subordinated debentures | 463,282 | 460,772 | 458,994 | 458,209 | 456,145 | ||||||||||||||
| Accrued interest payable and other | |||||||||||||||||||
| liabilities | 451,508 | 463,489 | 423,047 | 365,856 | 362,140 | ||||||||||||||
| Total liabilities | 24,940,485 | 23,912,840 | 22,752,878 | 21,816,109 | 21,804,519 | ||||||||||||||
| STOCKHOLDERS' EQUITY (1) | 3,486,231 | 3,452,898 | 3,390,389 | 4,954,697 | 4,920,108 | ||||||||||||||
| Total liabilities and stockholders’ | |||||||||||||||||||
| equity | $ | 28,426,716 | $ | 27,365,738 | $ | 26,143,267 | $ | 26,770,806 | $ | 26,724,627 | |||||||||
| Book value per share | $ | 29.42 | $ | 29.17 | $ | 28.75 | $ | 41.36 | $ | 41.06 | |||||||||
| Tangible book value per share (2) | $ | 20.09 | $ | 19.80 | $ | 19.31 | $ | 19.77 | $ | 19.43 | |||||||||
| Shares outstanding | 118,489,927 | 118,374,603 | 117,916,789 | 119,781,605 | 119,831,192 | ||||||||||||||
| (1) Includes net unrealized gain on | |||||||||||||||||||
| securities available-for-sale, net | $ | 155,474 | $ | 145,038 | $ | 90,916 | $ | 78,658 | $ | 95,887 | |||||||||
| (2) Non-GAAP measure. | |||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER STATEMENT OF EARNINGS (LOSS) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Interest income: | |||||||||||||||||||
| Loans and leases | $ | 240,811 | $ | 247,851 | $ | 262,278 | $ | 263,402 | $ | 275,978 | |||||||||
| Investment securities | 24,443 | 26,038 | 27,446 | 28,135 | 28,806 | ||||||||||||||
| Deposits in financial institutions | 654 | 186 | 1,608 | 2,056 | 2,424 | ||||||||||||||
| Total interest income | 265,908 | 274,075 | 291,332 | 293,593 | 307,208 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Deposits | 9,887 | 13,075 | 28,247 | 34,802 | 40,703 | ||||||||||||||
| Borrowings | 27 | 1,319 | 6,778 | 5,189 | 6,852 | ||||||||||||||
| Subordinated debentures | 4,670 | 5,402 | 6,560 | 6,983 | 7,417 | ||||||||||||||
| Total interest expense | 14,584 | 19,796 | 41,585 | 46,974 | 54,972 | ||||||||||||||
| Net interest income | 251,324 | 254,279 | 249,747 | 246,619 | 252,236 | ||||||||||||||
| Provision for credit losses | 97,000 | 120,000 | 112,000 | 3,000 | 7,000 | ||||||||||||||
| Net interest income after | |||||||||||||||||||
| provision for credit losses | 154,324 | 134,279 | 137,747 | 243,619 | 245,236 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Service charges on deposit accounts | 2,570 | 2,004 | 2,658 | 3,611 | 3,525 | ||||||||||||||
| Other commissions and fees | 10,541 | 10,111 | 9,721 | 10,170 | 10,855 | ||||||||||||||
| Leased equipment income | 9,900 | 12,037 | 12,251 | 10,648 | 9,615 | ||||||||||||||
| Gain on sale of loans and leases | 35 | 346 | 87 | 23 | 765 | ||||||||||||||
| Gain on sale of securities | 5,270 | 7,715 | 182 | 184 | 908 | ||||||||||||||
| Other income | 9,936 | 6,645 | 4,201 | 2,540 | 7,761 | ||||||||||||||
| Total noninterest income | 38,252 | 38,858 | 29,100 | 27,176 | 33,429 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||
| Compensation | 75,131 | 61,910 | 61,282 | 74,637 | 71,424 | ||||||||||||||
| Occupancy | 14,771 | 14,494 | 14,207 | 14,541 | 14,089 | ||||||||||||||
| Data processing | 6,505 | 7,102 | 6,454 | 6,770 | 7,044 | ||||||||||||||
| Other professional services | 4,713 | 4,146 | 4,258 | 4,261 | 4,400 | ||||||||||||||
| Insurance and assessments | 3,939 | 9,373 | 4,249 | 4,168 | 4,100 | ||||||||||||||
| Intangible asset amortization | 3,751 | 3,882 | 3,948 | 4,153 | 4,833 | ||||||||||||||
| Leased equipment depreciation | 7,057 | 7,102 | 7,205 | 6,856 | 5,951 | ||||||||||||||
| Foreclosed assets expense (income), net | 335 | (146 | ) | 66 | (3,446 | ) | 8 | ||||||||||||
| Acquisition, integration and | |||||||||||||||||||
| reorganization costs | - | - | - | (269 | ) | - | |||||||||||||
| Customer related expense | 4,762 | 4,408 | 3,932 | 3,952 | 3,539 | ||||||||||||||
| Loan expense | 3,499 | 3,379 | 2,650 | 2,967 | 3,628 | ||||||||||||||
| Goodwill impairment | - | - | 1,470,000 | - | - | ||||||||||||||
| Other expense | 8,939 | 11,315 | 9,719 | 5,138 | 7,793 | ||||||||||||||
| Total noninterest expense | 133,402 | 126,965 | 1,587,970 | 123,728 | 126,809 | ||||||||||||||
| Earnings (loss) before income taxes | 59,174 | 46,172 | (1,421,123 | ) | 147,067 | 151,856 | |||||||||||||
| Income tax expense | 13,671 | 12,968 | 11,988 | 29,186 | 41,830 | ||||||||||||||
| Net earnings (loss) | $ | 45,503 | $ | 33,204 | $ | (1,433,111 | ) | $ | 117,881 | $ | 110,026 | ||||||||
| Basic and diluted earnings (loss) per share | $ | 0.38 | $ | 0.28 | $ | (12.23 | ) | $ | 0.98 | $ | 0.92 | ||||||||
| Dividends declared and paid per share | $ | 0.25 | $ | 0.25 | $ | 0.60 | $ | 0.60 | $ | 0.60 | |||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER SELECTED FINANCIAL DATA | |||||||||||||||||||
| At or For the Three Months Ended | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Performance Ratios: | |||||||||||||||||||
| Return on average assets (1) | 0.65 | % | 0.50 | % | (21.27 | )% | 1.77 | % | 1.65 | % | |||||||||
| Pre-provision, pre-goodwill impairment, | |||||||||||||||||||
| pre-tax net revenue ("PPNR") | |||||||||||||||||||
| return on average assets (1)(2) | 2.22 | % | 2.51 | % | 2.39 | % | 2.26 | % | 2.39 | % | |||||||||
| Return on average equity (1) | 5.18 | % | 3.87 | % | (116.28 | )% | 9.49 | % | 8.93 | % | |||||||||
| Return on average tangible equity (1)(2) | 8.20 | % | 6.39 | % | 6.88 | % | 20.68 | % | 19.84 | % | |||||||||
| Efficiency ratio | 45.1 | % | 42.9 | % | 40.6 | % | 44.8 | % | 42.3 | % | |||||||||
| Noninterest expense as a percentage | |||||||||||||||||||
| of average assets (1) | 1.90 | % | 1.92 | % | 23.57 | % | 1.86 | % | 1.91 | % | |||||||||
| Average Yields/Costs (1): | |||||||||||||||||||
| Yield on: | |||||||||||||||||||
| Average loans and leases (3) | 5.01 | % | 5.01 | % | 5.54 | % | 5.67 | % | 5.91 | % | |||||||||
| Average interest-earning assets (3) | 4.13 | % | 4.53 | % | 5.02 | % | 5.14 | % | 5.41 | % | |||||||||
| Cost of: | |||||||||||||||||||
| Average interest-bearing deposits | 0.27 | % | 0.40 | % | 0.95 | % | 1.14 | % | 1.34 | % | |||||||||
| Average total deposits | 0.17 | % | 0.25 | % | 0.59 | % | 0.71 | % | 0.83 | % | |||||||||
| Average interest-bearing liabilities | 0.38 | % | 0.55 | % | 1.16 | % | 1.36 | % | 1.60 | % | |||||||||
| Net interest spread (3) | 3.75 | % | 3.98 | % | 3.86 | % | 3.78 | % | 3.81 | % | |||||||||
| Net interest margin (3) | 3.90 | % | 4.20 | % | 4.31 | % | 4.33 | % | 4.46 | % | |||||||||
| Average Balances: | |||||||||||||||||||
| Assets: | |||||||||||||||||||
| Loans and leases, net of deferred fees | $ | 19,195,737 | $ | 19,951,603 | $ | 19,065,035 | $ | 18,470,583 | $ | 18,539,281 | |||||||||
| Interest-earning assets | 25,858,001 | 24,531,204 | 23,455,636 | 22,779,867 | 22,793,676 | ||||||||||||||
| Total assets | 27,935,193 | 26,621,227 | 27,099,040 | 26,380,739 | 26,406,603 | ||||||||||||||
| Liabilities: | |||||||||||||||||||
| Noninterest-bearing deposits | 8,812,391 | 8,292,151 | 7,357,717 | 7,338,888 | 7,487,555 | ||||||||||||||
| Interest-bearing deposits | 14,516,923 | 13,116,297 | 11,896,780 | 12,102,902 | 12,031,776 | ||||||||||||||
| Total deposits | 23,329,314 | 21,408,448 | 19,254,497 | 19,441,790 | 19,519,331 | ||||||||||||||
| Borrowings | 181,315 | 871,110 | 2,026,749 | 1,179,220 | 1,181,313 | ||||||||||||||
| Subordinated debentures | 462,375 | 459,466 | 458,399 | 456,997 | 456,011 | ||||||||||||||
| Interest-bearing liabilities | 15,160,613 | 14,446,873 | 14,381,928 | 13,739,119 | 13,669,100 | ||||||||||||||
| Stockholders' equity | 3,497,869 | 3,446,850 | 4,956,778 | 4,930,182 | 4,890,746 | ||||||||||||||
| (1) Annualized. | |||||||||||||||||||
| (2) Non-GAAP measure. | |||||||||||||||||||
| (3) Tax equivalent. | |||||||||||||||||||
| PACWEST BANCORP AND SUBSIDIARIES | |||||||||||||||||||
| FIVE QUARTER SELECTED FINANCIAL DATA | |||||||||||||||||||
| At or For the Three Months Ended | |||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||
| 2020 | 2020 | 2020 | 2019 | 2019 | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Credit Quality Ratios: | |||||||||||||||||||
| Nonaccrual loans and leases held for | |||||||||||||||||||
| investment to loans and leases | |||||||||||||||||||
| held for investment | 0.45 | % | 0.84 | % | 0.48 | % | 0.49 | % | 0.53 | % | |||||||||
| Nonperforming assets to loans and | |||||||||||||||||||
| leases held for investment and | |||||||||||||||||||
| foreclosed assets | 0.52 | % | 0.85 | % | 0.49 | % | 0.49 | % | 0.54 | % | |||||||||
| Classified loans and leases held for | |||||||||||||||||||
| investment to loans and leases | |||||||||||||||||||
| held for investment | 1.44 | % | 1.49 | % | 0.75 | % | 0.93 | % | 1.01 | % | |||||||||
| Provision for credit losses (for the | |||||||||||||||||||
| quarter) to average loans and leases | |||||||||||||||||||
| held for investment (annualized) | 2.01 | % | 2.42 | % | 2.36 | % | 0.06 | % | 0.15 | % | |||||||||
| Net charge-offs (for the quarter) to | |||||||||||||||||||
| average loans and leases held | |||||||||||||||||||
| for investment (annualized) | 0.75 | % | 0.27 | % | 0.40 | % | 0.02 | % | 0.10 | % | |||||||||
| Trailing 12 months net charge-offs | |||||||||||||||||||
| to average loans and leases | |||||||||||||||||||
| held for investment | 0.36 | % | 0.20 | % | 0.19 | % | 0.09 | % | 0.20 | % | |||||||||
| Allowance for loan and lease losses to | |||||||||||||||||||
| loans and leases held for investment | 1.82 | % | 1.53 | % | 1.12 | % | 0.74 | % | 0.74 | % | |||||||||
| Allowance for credit losses to loans | |||||||||||||||||||
| and leases held for investment | 2.33 | % | 1.94 | % | 1.39 | % | 0.93 | % | 0.92 | % | |||||||||
| Allowance for credit losses to | |||||||||||||||||||
| nonaccrual loans and leases | |||||||||||||||||||
| held for investment | 516.9 | % | 229.7 | % | 287.5 | % | 189.1 | % | 174.0 | % | |||||||||
| PacWest Bancorp Consolidated: | |||||||||||||||||||
| Tier 1 leverage capital ratio (1) | 8.66 | % | 8.93 | % | 8.63 | % | 9.74 | % | 9.50 | % | |||||||||
| Common equity tier 1 capital ratio (1) | 10.46 | % | 9.97 | % | 9.22 | % | 9.78 | % | 9.55 | % | |||||||||
| Tier 1 capital ratio (1) | 10.46 | % | 9.97 | % | 9.22 | % | 9.78 | % | 9.55 | % | |||||||||
| Total capital ratio (1) | 13.74 | % | 13.18 | % | 12.07 | % | 12.41 | % | 12.16 | % | |||||||||
| Risk-weighted assets (1) | $ | 22,109,592 | $ | 22,781,836 | $ | 24,214,209 | $ | 23,582,495 | $ | 23,579,614 | |||||||||
| Equity to assets ratio | 12.26 | % | 12.62 | % | 12.97 | % | 18.51 | % | 18.41 | % | |||||||||
| Tangible common equity ratio (2) | 8.71 | % | 8.93 | % | 9.10 | % | 9.79 | % | 9.65 | % | |||||||||
| Book value per share | $ | 29.42 | $ | 29.17 | $ | 28.75 | $ | 41.36 | $ | 41.06 | |||||||||
| Tangible book value per share (2) | $ | 20.09 | $ | 19.80 | $ | 19.31 | $ | 19.77 | $ | 19.43 | |||||||||
| Pacific Western Bank: | |||||||||||||||||||
| Tier 1 leverage capital ratio (1) | 9.70 | % | 10.03 | % | 9.71 | % | 10.95 | % | 10.72 | % | |||||||||
| Common equity tier 1 capital ratio (1) | 11.71 | % | 11.18 | % | 10.38 | % | 11.00 | % | 10.79 | % | |||||||||
| Tier 1 capital ratio (1) | 11.71 | % | 11.18 | % | 10.38 | % | 11.00 | % | 10.79 | % | |||||||||
| Total capital ratio (1) | 12.97 | % | 12.44 | % | 11.39 | % | 11.74 | % | 11.52 | % | |||||||||
| (1) Capital information for September 30, 2020 is preliminary. | |||||||||||||||||||
| (2) Non-GAAP measure. | |||||||||||||||||||
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 | Nine Months Ended | ||||||||||||||||||
| PPNR and PPNR Return | September 30, | June 30, | September 30, | September 30, | |||||||||||||||
| on Average Assets | 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Net earnings (loss) | $ | 45,503 | $ | 33,204 | $ | 110,026 | $ | (1,354,404 | ) | $ | 350,755 | ||||||||
| Add: Provision for credit losses | 97,000 | 120,000 | 7,000 | 329,000 | 19,000 | ||||||||||||||
| Add: Goodwill impairment | - | - | - | 1,470,000 | - | ||||||||||||||
| Add: Income tax expense | 13,671 | 12,968 | 41,830 | 38,627 | 135,118 | ||||||||||||||
| Pre-provision, pre-goodwill impairment, | |||||||||||||||||||
| pre-tax net revenue ("PPNR") | $ | 156,174 | $ | 166,172 | $ | 158,856 | $ | 483,223 | $ | 504,873 | |||||||||
| Average assets | $ | 27,935,193 | $ | 26,621,227 | $ | 26,406,603 | $ | 27,221,102 | $ | 26,012,890 | |||||||||
| Return on average assets (1) | 0.65 | % | 0.50 | % | 1.65 | % | (6.65 | )% | 1.80 | % | |||||||||
| PPNR return on average assets (2) | 2.22 | % | 2.51 | % | 2.39 | % | 2.37 | % | 2.59 | % | |||||||||
| (1) Annualized net earnings (loss) divided by average assets. | |||||||||||||||||||
| (2) Annualized PPNR divided by average assets. | |||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| Return on Average Tangible Equity | 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Net earnings (loss) | $ | 45,503 | $ | 33,204 | $ | 110,026 | $ | (1,354,404 | ) | $ | 350,755 | ||||||||
| Add: Intangible asset amortization | 3,751 | 3,882 | 4,833 | 11,581 | 14,573 | ||||||||||||||
| Add: Goodwill impairment | - | - | - | 1,470,000 | - | ||||||||||||||
| Adjusted net earnings | $ | 49,254 | $ | 37,086 | $ | 114,859 | $ | 127,177 | $ | 365,328 | |||||||||
| Average stockholders' equity | $ | 3,497,869 | $ | 3,446,850 | $ | 4,890,746 | $ | 3,965,453 | $ | 4,842,140 | |||||||||
| Less: Average intangible assets | 1,107,548 | 1,111,302 | 2,593,925 | 1,594,231 | 2,598,806 | ||||||||||||||
| Average tangible common equity | $ | 2,390,321 | $ | 2,335,548 | $ | 2,296,821 | $ | 2,371,222 | $ | 2,243,334 | |||||||||
| Return on average equity (1) | 5.18 | % | 3.87 | % | 8.93 | % | (45.62 | )% | 9.68 | % | |||||||||
| Return on average tangible equity (2) | 8.20 | % | 6.39 | % | 19.84 | % | 7.16 | % | 21.77 | % | |||||||||
| (1) Annualized net earnings divided by average stockholders' equity. | |||||||||||||||||||
| (2) Annualized adjusted net earnings divided by average tangible common equity. | |||||||||||||||||||
| Tangible Common Equity Ratio/ | September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||
| Tangible Book Value Per Share | 2020 | 2020 | 2020 | 2019 | 2019 | ||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Stockholders' equity | $ | 3,486,231 | $ | 3,452,898 | $ | 3,390,389 | $ | 4,954,697 | $ | 4,920,108 | |||||||||
| Less: Intangible assets | 1,105,483 | 1,109,234 | 1,113,116 | 2,587,064 | 2,591,217 | ||||||||||||||
| Tangible common equity | $ | 2,380,748 | $ | 2,343,664 | $ | 2,277,273 | $ | 2,367,633 | $ | 2,328,891 | |||||||||
| Total assets | $ | 28,426,716 | $ | 27,365,738 | $ | 26,143,267 | $ | 26,770,806 | $ | 26,724,627 | |||||||||
| Less: Intangible assets | 1,105,483 | 1,109,234 | 1,113,116 | 2,587,064 | 2,591,217 | ||||||||||||||
| Tangible assets | $ | 27,321,233 | $ | 26,256,504 | $ | 25,030,151 | $ | 24,183,742 | $ | 24,133,410 | |||||||||
| Equity to assets ratio | 12.26 | % | 12.62 | % | 12.97 | % | 18.51 | % | 18.41 | % | |||||||||
| Tangible common equity ratio (1) | 8.71 | % | 8.93 | % | 9.10 | % | 9.79 | % | 9.65 | % | |||||||||
| Book value per share | $ | 29.42 | $ | 29.17 | $ | 28.75 | $ | 41.36 | $ | 41.06 | |||||||||
| Tangible book value per share (2) | $ | 20.09 | $ | 19.80 | $ | 19.31 | $ | 19.77 | $ | 19.43 | |||||||||
| Shares outstanding | 118,489,927 | 118,374,603 | 117,916,789 | 119,781,605 | 119,831,192 | ||||||||||||||
| (1) Tangible common equity divided by tangible assets. | |||||||||||||||||||
| (2) Tangible common equity divided by shares outstanding. | |||||||||||||||||||
| Contact: | Matthew P. Wagner | Patrick J. Rusnak | |
| President and CEO | Executive Vice President and CFO | ||
| Phone: | 303-802-8900 | 714-989-4705 | |
| Contact: | William J. Black | ||
| Executive Vice President | |||
| Strategy and Corporate Development | |||
| Phone: | 919-597-7466 | ||